The Australian Punters Association has brought to the attention of the Racing authorities what they believe is an unfair situation when a horse is scratched at the barrier.

PRESS RELEASE

BOOKMAKER DEDUCTIONS - LATE SCRATCHINGS

The Australian Punters' Association ("APA") today called for a revision of the manner in which deductions for late scratchings are calculated.

Presently, the deduction schedule is based on an assumed bookmaker margin of approximately 6%. As has been amply demonstrated on our website, bookmakers do not offer anything approaching that margin, particularly at starting time.

Accordingly, the present method (6% assumption) means that bookmakers effectively take profits from cancelled bets, with punters on the scratched horse(s) receiving money-back, but remaining punters effectively paying bookies for the privilege of not having bet on the scratched horse(s).

We are proposing a principle that the deduction for late scratchings be based on P x (1+M), where P is the prevailing price and M the prevailing margin, at time of scratching. Currently, the deduction assumes that the margin is approx. 6%, which very severely understates the true margin. For example the scratching of an even money chance, leading to a deduction of just under 50c, would see the bookmaker margin on what is currently a 20% margin race explode out to almost 40%!

The principle which we suggest is that the bookmaker margin be exactly the same before the scratching as afterwards. This would be similar to a TAB - a TAB takes almost exactly the same percentage pound of flesh from remaining punters after a scratching as before.

If we take, for example, the average SP margins which applied to bookmakers' offerings at Saturday class races in Adelaide, Brisbane, Melbourne and Sydney for the 2004/5 season, these were:

Adelaide 33.01%
Brisbane 29.14%
Melbourne 20.91%
Sydney 14.96%

Comparing the current scheduled deductions over a range of prices would give the following:

Proposed Deduction
Current on above margins
Odds Decimal Deduction Adel Brisb Melb Syd
1/2 $1.50 0.62 0.50 0.52 0.55 0.58
Evens $2.00 0.47 0.38 0.39 0.41 0.43
3/1 $4.00 0.23 0.19 0.19 0.21 0.22
6/1 $7.00 0.13 0.11 0.11 0.12 0.12
10/1 $11.00 0.08 0.07 0.07 0.08 0.08
20/1 $21.00 0.04 0.04 0.04 0.04 0.04

The current deduction schedules leads to the following post-scratching bookmaker margins

Odds Decimal Adel Brisb Melb Syd
1/2 $1.50 74.6% 64.4% 42.7% 27.1%
Evens $2.00 56.6% 49.3% 33.8% 22.6%
3/1 $4.00 40.3% 35.2% 24.6% 16.8%
6/1 $7.00 36.5% 32.0% 22.6% 15.7%
10/1 $11.00 34.7% 30.5% 21.5% 15.1%
20/1 $21.00 33.6% 29.6% 21.0% 14.8%

which can be compared to pre-scratching margins as shown above. The APA's suggested schedule would bring all post-scratching margins exactly in line with the pre-scratching margins.

For the more technically minded, the algebra underlying the principle is attached, it is a very straightforward alteration to the current calculation, and quite easy to apply in practice, given that bookmaker margins are shown on the computer screens on course.

For further information contact:
AIDRIAN O'DOMHNAILL 0411 680 408, or
DENIS MORONEY 03 9853 7318

Or email info@auspunters.com.au

PROPOSED CHANGE IN BOOKIE DEDUCTIONS

M0 = margin before scratching
Mc = margin after scratching, assuming deduction calculated as at present
Mp = margin after scratching, assuming deduction calculated under proposed method
Di = Dividend on horse i (before scratching)
S = Dividend on scratched horse

M0 = 1/D1 + 1/D2 + … + 1/Dn - 1

Assume deduction of 1/S

Then
Mc = 1/(D1*(1-1/S)) + 1/(D2*(1-1/S)) + … + 1/(Dn*(1-1/S)) - 1/(S*(1-1/S)) - 1

= (1+M0)/(1-1/S) - 1/(S*(1-1/S)) - 1

= (1/(1-1/S)) * (1 + M0 - 1/S - 1 + 1/S)

= M0/(1-1/S)

Mp = 1/(D1*(1-1/S*(1+M0))) + 1/(D2*(1-1/S*(1+M0))) + …..
+ 1/(Dn*(1-1/S*(1+M0))) - 1/(S*(1-1/S*(1+M0))) -1

= (1+M0)/(1-1/S*(1+M0)) - 1/(S*(1-1/S*(1+M0))) - 1

= S* (1+M0)2/(S*(1+M0)-1) - S*(1+M0)/(S*(S*(1+M0)-1)) - 1

= [S2*(1+M0)2 - S*(1+M0) - S*(S*(1+M0)-1)] / (S*(S*(1+M0)-1))

Taking the item in square brackets
= S2 + 2*M0*S2 + M02*S2 - S - M0*S - S2 - M0*S2 + S

= S2*(M0+M02) - M0*S

= M0*((S2*(1+M0) - S)

= M0*S*(S*(1+M0) - 1))

Canceling out the S*(S*(1+M0) - 1)

Mp = M0

Then the difference between post-scratching margins
Mp - Mc = M0 - M0/(1-1/S)

= -M0/(S-1)

This makes intuitive sense. The bigger the pre-scratching margin the greater the reduction and the bigger the price the lower the reduction.