Mailbag: Bookies vs. Tote

Bookmakers vs. Tote

In the on-going argument/debate  between David Thiselton (Tote) and Tony Mincione and  Basil Thomas (Bookmakers), may I ask Mr Thomas or Mr Mincione (or both) to provide us with their model to sustain the horse racing industry, were the bookmakers to assume total responsibility for it. Obviously you would no longer have the “take out” of the tote, to rely on. It would give us, the readers, an opportunity to judge for ourselves. We know how the operators currently do it, let’s see how bookmakers will do it.

Theuns Botha, Durban

*

Editor: Note that Mr Thomas is away until early in December

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  1. Tony Mincione says:

    The question Mr Botha asks is like the teacher asking Johnny, who is late again, “Johnny, what would happen if everyone came late?”.

    These are pointless questions so lets not waste the time to create unreal answers to unreal questions.

    But clearly the teacher is using a question to make a point and teach a lesson.

    May I rather ask Mr Botha what is the real point he’s making?

  2. thebot says:

    Mr. Mincione, in your reply to David Tisselton under the heading “Mafia’s Cut to the Local Godfather” you say the following:”As interesting as this debate may be, it amazes me that these clever writers continue to mix apples and oranges without apparently noticing.”

    Until you tell us how bookmakers will cater for the entire racing product, if the function of the tote is removed, then it is you that “continue to mix apples and oranges without apparently noticing.” I do not wish to take sides without knowing all the facts.

  3. Tony Mincione says:

    Mr Botha, nowhere do I say that the bookmakers will cater for the entire racing product.

    In fact, I say the exact opposite. Mr Thistleton says, and echoed by the Phumelela CEO (in this weeks Financial Mail) that “In effect, bookmakers contribute only 12% of the cost of running the sport and we [Gold Circle and Phumelela] bring in 88%,” says Du Plessis.

    This is incorrect. The bookmakers contribution is zero. That “contribution” is wholly a deduction from each and every winning bet paid to the bookmaker’s punter.

    This separation of tote customers and bookmakers customers is also rubbish. Punters can happily choose how they want to lose their hard earned money. The only difference is that the tote taxes bets before the result (and is hugely expensive to punters) and the bookmakers after the results and at a MUCH lower rate.

    The reason that the operators can “contribute” more, is because the tote offers a diabolically over priced product compared to a bookmaker. But however the punter is taxed, ALL the revenue is from him one way or the other. However racing wants more money, the cost will go to the punter.

    The campaign against the bookmakers by the operators is just disingenuous.

    Take two even money bets as an example. A punter bets 10K on the tote and wins. He then loses the 10K. He is square, and tote revenue at 20% take-out is R4000 and therefore the punters wallet.

    Another punter played same bet with a bookmaker. Wins 10K (R600 deducted), and then loses 10K (9400 + additional R600). Bookmaker is square, punter -R600.

    This simple example. But it shows that the tote cannot lose, the bookmaker could have lost 20K, the punter in the long run will lose 20% to the tote or 6% to the (deduction) + (guess) 8% to the bookmaker.

    Totes with huge take-outs like ours generally do well in very big markets and when they have banned all competition. Small markets are supported by individuals who risk their own bank. If we can get the political will to ban all competition for the tote then possibly we can move on to nationalizing mines and what-have-you.

    The tote is such a moneymaking vehicle, that in most places you can only have one if licensed from a government, like the lottery and casinos. Our operators have huge assets, all previously paid for. The owners purchase and supply at vast cost the participants of the spectacle. The tote operates without any competition by law and is massively profitable. The SA product is sold overseas, and the same tote offers betting on other jurisdictions and other sports, all 100% risk free and taxation turned down to a minimum.

    Our leaders better sharpen up smartly because all the above advantages will get worse, not better. Pretty soon the tote’s monopoly licence is up anyway. At the same time the bookmakers fastest growing segments are soccer, sport and lotto betting.

    It will be interesting if the soccer people with their R2 billion p.a. decide to open a tote that also offers horse racing. What model would work then?

  4. avanza says:

    I too do not know all the facts either. However there are some known facts about life and such that need to be taken into account.

    1. Money breeds corruption and incites greed.
    2. No one likes giving money away without some benefit unless Charity is involved.

    Bookmakers are driven by profit. The Tote is not. In other words a shared pool with a take out is a lot less corruptable than a profit driven business with a stake in the results of races. A balance must be struck.

    Surely this calls for a separation of duties? If the sport is to maintain its sense of ‘the sport of kings’ and not ‘the sport of rogues’.

    It stands to reason that the bookmakers should be kept at armslength when it comes to running this sport. With all due respect.
    Unless profit is involved???

    The industry needs a transparent, squeaky clean glossy look to separate it from a game of pure chance or mafia controlled profiteering.

    Oh what a web you weave when at first you begin to deceive…..

  5. thebot says:

    Mr. Mincione, thanks for your replies but my original question simply asks bookmakers to provide us with their model to sustain the horse racing industry, were the bookmakers to assume total responsibility for it.

    I hope that somebody will answer the question.

  6. karel says:

    When thebot says ‘were the bookmakers to assume total responsibility for it’, does he mean that the bookmakers would own the racecourses, stage race-meetings, and have a monopoly on a Tote, like the operators do? And then run a tight ship financially to balance expenses (stake money, management costs, etc.) which the current operators apparently find so difficult to do?
    If thebot’s answer to this is in the affirmative we can probably structure an answer.

  7. thebot says:

    Karel, you are getting there, but no Tote, as by now we know it is the “monster” that should be killed at all cost. It is the root of all evil.

    Surely your plan would not be to duplicate what is in place at the moment?

  8. karel says:

    “no Tote, as by now we know it is the “monster” that should be killed at all cost. It is the root of all evil.”
    Where does that come from? Who says this? I have not seen it in the submissions of anyone so far.
    It seems thebot makes it up as he goes along to suit an argument.

    The real evil that haunts the Operators (why must there be two if there is no competition?) is the inability to manage expenses, with owner’s entitlement to prize money at the root.
    There is this peculiar notion that without owners there would be no racing.
    A little historical research might pay dividends and show a different light.
    Think Hong Kong in terms of ownership of horses, then and now.
    Take it from there.
    It is not difficult.

  9. thebot says:

    Karel, excellent point about ownership in Hong Kong. What did your research reveal about bookmakers in Hong Kong?

    Like you said: “Take it from there. It is not difficult.”

  10. thebot says:

    The point quite simply is that Hong Kong is not good for the “pro-bookmaker” camp.

    In starting this I was hoping to hear some “revolutionary” ideas from bookmakers or the “pro-boomaker” side on runing the entire racing product. I am not giving up yet.

    • karel says:

      … but Hong Kong is very good for a model on how to administer racing, even though it has no bookmakers or breeders or NHA to have to deal with.
      So let’s get to the real point and forget the unrealistic theories:
      If I wake up tomorrow morning and own a Racing Operator, what must I do to ensure the long-term viability of my business.
      There are core-issues to address, like which and how.
      Hong Kong has some clever ideas.

  11. rsfaux says:

    The original question is based on a premise that is incorrect.Go to any Bookmakers site you choose and explain to me why bookmakers should be regarded as part of the horseracing industry,any more than they are part of the soccer,rugby,cricket,boxing or any other industry on which they take bets….they are part of the gambling industry.
    The danger that Saftote has,is that their strategy appears to be to diversify into soccer,rugby,Fruit machines,etc.and they could end up where,like bookmakers,
    horseracing bets merely become an incidental part of their business.and they will then fall into the same category.
    That is why I support the notion of the Gambling Review commission,that suggests that maybe present operators should not control tote betting on local horseracing.
    IMO gambling on local horseracing should be controlled by those who rely solely on the industry for survival and who would therefore focus on the local product.In my opinion Phumulela are less and less about local racing and would need to reposition themselves,to qualify.

  12. Tony Mincione says:

    MR Faux has it in a nutshell. The Gambling Board that marshals the bookmakers also manages casinos and bingo and don’t seem bothered what the gamble is as long as it’s controlled.

    The point isn’t whether one feels that bookmakers ought to contribute. The point is that Phumelela is a listed company (which pays dividends to it’s owners) that controls a licenced monopoly, and it’s having a go off the field at a collection of small businesses who are essentially its competition.

    As much as one would like to have an opinion based of facts, (a) no one says HOW much of an effect the open bet is having, I have never seen a single figure. (b)the turnover comparisons are completely misleading as the tote is risk free and wildly profitable and (c)other businesses currently have no obligation to contribute to stakes and the legalization of that would be an interesting process.

    Whatever happens, it’s poor form for Phumelela to take such a public and aggressive stance without making a proper case, and this against a group with which (even 4 years ago) the watchword was “symbiosis”.

  13. Tony Mincione says:

    Barry, just having a tote is like a casino only having slot machines (cannot think of anything more unattractive).

    I’m surprised you are not more of an advocate for competition and choice. Is it possible that you make the usual assumption that smart money played at bookmakers would definitely otherwise have gone to the tote?

  14. jarrad69 says:

    Why is anybody even responding to this ludicrous question?It’s not even a hypothetical question.It’s never going to happen.

    Maladministration on the behalf of the operators=bookmakers don’t pay enough to the running of racing.I think not!

  15. rsfaux says:

    I think it is time to put the Mr Barry Irwins comments into perspective.We know,from the forums that he makes no contribution to betting pools so his participaton is limited to the “take-out’aspect of the pools.His beef with bookmakers ,therefore,is that they ALSO make no contribution to the juice he sucks!

  16. Joe says:

    There is a very simple answer: before Phumelela the deduction on a winning bet was 10%, this is now 6% of which the stakes pool gets 3%, we should lobby the gambling board to increase the deduction to 10% with the extra 4% going to racing.
    If this does not happen then SA racing is doomed, especially in the Cape.

  17. Akesh says:

    @Joe- so in other words screw the punter even more ?? I am afraid this does not make sense.How about if all bookmakers pay a levy on all their winning bets ie punters losing bets ?

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