Change needed as bet restrictions suffocate betting on horse racing
We are rarely short of big issues to debate in horse racing, but what I believe to be the biggest threat to the future prosperity of horse racing remains under-discussed in the racing media. That is the ever-growing issue of bookmakers restricting the stakes which they allow bettors to place on horse races.
This is not a new issue. For as long as bookmakers have existed, those that are skilled enough to make a significant consistent profit from their betting have struggled to find bookmakers to do business with. However, the birth and relentless growth of online betting has changed the betting landscape immensely and has led to getting a bet on becoming a major problem not just for the very best bettors, but for many less skilled and casual bettors.
The reasons behind the growth of this bookmaker practice have been outlined in this space in the past and do not warrant repeating, but the consequences of these actions do.
Horse racing is a complex sport. It is notoriously difficult to attract new supporters to it that fully embrace those complexities. Thus, those that commit the time and effort into doing so to an extent that enables them to bet competently on the sport should be greatly valued. Yet, it is that very group that is being aggressively targeted by bet restrictions by bookmakers, which risks driving these highly-important racing supporters away from the sport.
However, it is just as worrying that reports of casual small-staking bettors being hit with bet restrictions have risen greatly in recent years. Given that small-stake betting is the foundation block on which a stronger interest in racing tends to be built on, such behaviour from bookmakers risks these bettors being turned off horse racing and lost to other sports.
In terms of the bigger picture, this restriction culture inevitably reduces betting turnover on horse racing. This is a direct cost to horse racing in Ireland where betting tax is taken as 1% on turnover. Both in Great Britain and Ireland, a reduction is betting turnover on horse racing is a long-term threat to racing’s finances as the less turnover there is on racing, the less valuable horse racing is as a betting product, which will inevitably lead to a fall in value of all-important media and data rights.
All told, it cannot be overstated how important this issue is. While it is easy to perceive it as an issue that only affects bettors, that is most certainly not the case. Everyone in racing needs to be aware of the issues before the implications of this bookmaker behaviour has damaging ramifications for the sport as a whole.
Those are the problems we face and while this is obviously a complex issue, there are two steps that could be taken that would go a long way to helping the situation.
Firstly, a minimum bet guarantee must be implemented across the industry. The precedent has been set and has stood the test of time in Australia. In 2014, New South Wales imposed regulations on bookmakers which obliged them to lay bets to lose at least AUS$1,000 at country tracks and AUS$2,000 at city tracks to every customer.
While the bookmakers made loud protests at the time, feedback from Down Under suggests that it has worked well both for the betting public and the bookmakers. Indeed, Victoria have since introduced similar guarantees and Queensland are set to join them in 2018.
Significantly, many of the leading bookmakers in this part of the world have operations in New South Wales/Victoria and have no problem adhering to the regulations down there, so why not up here?
Indeed, the William Hill-owned CentreBet not only adhere to the regulations in those states, they relaunched their business earlier this year and guaranteed to lay bets to lose a minimum of AUS$20,000 on Group 1 racing, AUS$5,000 on Saturday racing, AUS$2,500 on midweek metropolitan horse racing and AUS$1,000 on all other horse racing.
The guarantees apply to all racing across Australia, not just in Victoria and NSW. Yet, William Hill has shown no interest in introducing any sort of minimum bet guarantee in this part of the world. Why is that?
The only major bookmakers that have voluntarily introduced such a guarantee in this part of the world are Coral. In late-2014 they introduced their first minimum bet policies, which only applied to their betting shops and not their online/telephone customers, and these have been gradually extended in subsequently to their current levels which are £5,000 on races shown on ITV from 9am, £2,000 on Class 4 or better handicaps, Listed and Group races from 11am and £500 all other UK and Irish races from 11am.
While Corals and Ladbrokes have merged since these guarantees have been put in place, as of yet Ladbrokes shops have only replicated the £5,000 guarantee on races shown on ITV from 9am, but an extension to this policy is reportedly being considered.
Despite the bookmaking sector being extremely competitive, with any new innovation offered by one bookmaker often quickly being replicated by their rivals, it is very telling indeed that no other major bookmaker has chosen to replicate this particular policy. That is what is likely to make it necessary for there to be regulatory intervention to make this an industry-wide policy.
The second major change that needs to be made in the world of betting on horse racing if it is to be considered a fair betting medium for both bettors and bookmakers is to change the antiquated each-way betting system that we use.
The each-way terms that all bookmakers use are grossly inefficient for both sides of the betting divide. The mathematical attractiveness of an each-way bet varies wildly depending on the shape of a race, be it an eight-runner maiden with an odds-on favourite or a 15-runner handicap and this can be turned upside-down by a non-runner changing the each-way terms.
It is a deeply-unsatisfactory system, one that gives bookmakers legitimate reason to restrict bets. It also breeds a type of bettor that is less concerned with learning the intricacies of race-reading as they are on focusing on exploiting mathematical inefficiencies in the each-way system.
Again, the solution is staring us in the face, as the alternative to the current each-way system is to separate the win and place markets as is done on the betting exchanges. This means that the place prices are formed within the context of the shape of the race, leading to much more reflective and efficient prices. That system also leaves the place terms unchanged after non-runners, which is much fairer and transparent to the bettor.
The ultimate goal for everyone involved in racing should be to make the sport as attractive a betting product as possible so that both bookmakers and bettors can have the confidence to bet strongly on it. As well as the proposed changes to minimum bet limits and the each-way system, there is also scope for improvement in the areas of stewarding, ground reports and just greater reporting and accuracy of racing information in general.
If horse racing is to hold its own in the ever-escalating battle for betting turnover, it needs to up its game to the highest possible standards.