Saturday, 14 October 2017

Minimum Bet Rules

One of the best comments in terms of new information, discussion points and all clearly explained, comes from Australia's Nick responding to my post on the ability for punters to all "get on". Nick writes:

Dear Sir,

In Australia we have an on course bookmaker minimum bet rule that applies at all tracks. The bookmaker must bet the odds to win $1000 ( some tracks will be higher) at the price displayed on his/her board.
There are no ifs, buts or maybes. At the price displayed anyone can come and have a bet to win at least the minimum amount.

A bookmaker by definition tries to make "an over round book" laying horses so as to make a profit regardless of which horse wins.
This is not always possible but taking a long term approach and making "book" as often as possible is the business principle.
The minimum bet rule has now been made a rule with the off course (internet) bookmakers as well (as it should ).
You may ask why a bookmaker should "have" to accept a bet.

A punter bets to win. a bookmaker accepts bets with an inbuilt margin so as to balance a ledger and have a profit.

The minimum bet rules allow the bookmaker plenty of scope to balance his/her book. In fact the amount of money that is eroded by long term winning punters is very small when compared to the final bottom line.
Winning punters can be equated to "loss leaders" that many other businesses have.

Pinnacle have displayed the capacity for a bookmaker to welcome winners. Given that they are very much predominately a sports (low margin) rather than race (high margin) bookmaker is a sad indictment to those bookmakers who have large racing offerings.
It can also be seen that bookmakers banning/restricting punters whilst targeting (they'll deny deny deny) problem gamblers is nothing short of predatory.
Comparisons have been made to casinos banning advantage players (predominantly blackjack). In days gone by i was an advantage (card counter) blackjack player. I was banned.

Casinos have addressed the problem of card counters by now utilising continuous shuffle machines which negate the advantage that a card counter can have.
Casinos had the problem of not being able to "balance their book" against teams of card counters which could conceivably bankrupt them if not addressed, unlike bookmakers who can change their price as money is bet on a horse.
Enough for now
Cheers Nick
Excellent comments! I do have a few follow up questions, not necessarily for Nick, but for anyone.

Does anyone in the UK have a problem getting a bet on at the racecourse, or is it only shops and Internet where restrictions are applied?

Does the "minimum bet" rule in Australia apply only to horse racing or is there a minimum for sports betting? If so, what is the minimum, or does it vary from sport to sport, league to league? I'd imagine that any minimum would be higher for an English Premier League game than say a National Premier Leagues South Australia match.

Is there anything to stop an Australian on-line book from closing an account or declining to re-open a previously closed account? It seems a rather Pyrrhic victory to force a book to take a minimum bet only to find your account subsequently closed.

What happens if a known problem gambler wants the "minimum bet"? Are there exceptions in the small print of the rule? Nick says there are no "ifs, buts or maybes" - really? Pubs don't have to serve anyone, and are negligent if they serve someone who is clearly drunk.   

How is this rule working out in practice? 

I totally agree with Nick that it would make more sense for traditional bookies to follow Pinnacle's example and allow winners, but where perhaps we differ is that in my opinion it is, or should be, ultimately their decision. 

From a UK perspective, I'd say that it would appear that for many bookmakers, their interest in bookmaking, whether traditional or modern, is somewhat less than their interest in installing FOBTs in low income high streets.

As for targeting problem gamblers, I'm totally with Nick here. Unfortunately the Gambling Commission in the UK are very weak on this, and other things, giving out pointless slaps on the hand rather then hitting them where it hurts.

As for adjusting prices to balance their books, certainly a bookmaker should be able to easily do this in a liquid market to manage their risk, and like I said in the original post, it's really rather silly of them not to take a bet on an EPL match or any high volume event.

Without knowing what sports the minimum bet rule applies to in Australia, it's difficult to add much more, but so long as the minimum bet is set at a level proportionate to the expected volume for the event, the idea has some merit.

But as I said above, it's of little use if your account can be closed. 


Nick said...

Dear Sir,

A follow up to my previous comments.

Australian internet bookmakers are not allowed to close an account simply due to someone backing winners. They can if you have breached terms and conditions. They also have to re open accounts that had been previously closed by them.
There is no provision for minimum bets on sport. Given the world wide liquidity on sport and the small price fluctuations (especially compared to racing), then barring or severely restricting punters on sport makes no sense at all.

To be able to win betting (trading) on racing and sport involves knowledge, bankroll and discipline and the amount of people who have all these traits (and you need all of them) is very small. There are lots of people who have knowledge and bankroll but no discipline and they just add the pool of losing punters.

If a "problem gambler" and by that i mean a person who has excluded themselves from betting is seen to be betting then it is an offence under legislation.

Without wishing to appear cynical.........but why not, it's not in a bookmakers interest to stop people from losing money.

I know of an employee of Centrebet who advised the powers that be of a client who appeared to a possible addict. They assured him that they were aware of this client and that everything was above board and ok.....

Enough for now.....again

Cheers Nick

Steve, Albufeira said...

I think the main difference with racing in the UK is the size of the margin. The UK soft books have been forced to run a very different business model to an Australian bookmaker. Due to competition and prevalence of odds comparison sites, margins have been squeezed to an extent that at best prices in the popular Saturday races, you can bet at less than 100%! They also offer best odds guaranteed, so if a horse drifts you get the better starting price. It is virtually impossible for a bookmaker to make a balanced book, within their margin, in a majority of UK races. In reality, for anyone with half a brain, it is harder to lose on UK racing with a soft book, than it is to win. The UK soft books have taken a business decision to use this loss leader model and only accept recreational gamblers who will lose their money on other channels.

This is not as bad as it initially sounds. The majority of punters are long term losers and will never suffer from restrictions. The fact that the margins on UK soft books at best prices, have been reduced to such a small amount, that recreational punters will lose money much slower than they used to. More than likely there will be more winning punters than before. OK, its due to luck rather than skill, but in reality most punters in the UK have not been effected by restrictions and are actually better off then they were pre-restrictions.

The punters that have been effected by restrictions, if they can really beat the market, still have the option to play on the base books and exchanges who do not restrict.

Markets and conditions change. Winning punters have to learn to change with them, instead of complaining that the edge they used to have has been taken away.