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The Effect on Totes of larger bets

I was asked by someone about the effect a large bet has on the ultimate price of a horse under the tote system these days. Good question.

And, as with many things, all but impossible to answer in anything but general terms. A lot of any impact has to do with the existing price when your investment is made, what tote you are betting on and the day of the week.

Let me explain: it goes without saying really that the "insecurity" of the final tote dividend is the very reason why many who take this stuff seriously use Betfair and NOT a tote - once you are "set" on Betfair, that's the odds! Of course this also the very reason why the totes would love to see Betfair sent packing by court cases and government regulation!

The effect of a larger bet on the tote is not as pronounced on the weekend as it is during the week simply because of the much larger pool sizes on a Saturday and to a lesser degree on a Sunday. Suffice to say if you are going to throw $800 on something in the Melbourne Cup the effect will be negligible when they are holding million dollar pools. Try putting that $800 on a Class 1 race at Kempsey on a lazy winter's Monday afternoon and the story will be totally different!!

These fluctuation movements (very hard to estimate if not impossible) are also the reason many serious punters hold TAB accounts in each State of Australia so that they can bet on the home state tote of the race in question because the home State tote will always (almost always) hold more in the pools than other States and the divvy reduction effect of a largish bet is less.

By way of example, take a random race from yesterday's offering (May 6, 2012): let's go with Race 5 at Geelong and look at the win pools.

Tattsbet held $26959, the NSW TAB held $30353 while the home state tote in Victoria held $50262.

Obviously if you had a lazy grand to throw on something in that particular race or you were getting a long way down the path in any loss chasing progression, the last place you'd want to bet would be on Tattsbet because the win pool was about half the size of the Victorian TAB so the odds reduction effect of a substantial bet would be twice as much and if you are betting $1000 into a $25000 pool you are owning about 4% of the action.

It follows that of you aren't betting at the pointy end of the market and ranging wide as far as price is concerned, a large bet will have a matching large effect in the smaller pools.

If you don't have the time to bet real time, you are therefore obliged to bet on the totes and cop it in the neck. If you have the time (and inclination) to bet real race time on Betfair, it follows any logic that you will probably finish further in front. Or, at worst, way less frustrated by the last minute "dividend high dives"!

May 2012
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