The growth of fixed odds betting in Australia over the past ten years has been absolutely enormous.
In a Daily Telegraph article back in 2014 TAB betting boss Craig Nugent noted that;
“Fixed Odds betting has just taken off in Australia,”
“We’ve grown from a $42 million business in our first year to $4.2 billion in 16 years.”
Well, after speaking with industry executives in recent weeks we can confirm that it’s continued its meteoric rise over the past three years as well.
Tote turnover (and therefore government tax revenue) both in-venue and on track is plummeting while fixed odds betting is skyrocketing.
Online bookmakers in Australia have gradually ‘stolen’ market share over the past decade from the Totes and Retail TAB’s through aggressive marketing, product innovation and improved the user experience.
For an in-depth look, download this Aus Gambling Stats product sheet. You’ll be blown away by some of the numbers.
Punters like to know what they can potentially win (like sports betting) and as more fixed odds options have been put forward they’ve voted with their cash and deviated away from derivative and pool betting.
Sports betting has continued to grow in Australia at a faster rate than Racing Betting.
The latest edition of the Australian Gambling Statistics revealed
- total race betting expenditure in Australia increased from $2.815 billion to $2.943 billion (a 4.1 per cent increase)
- total sports betting expenditure in Australia increased from $815 million to $921 million (a 13.0 per cent increase).
However, there is a factor arguably as big as consumer choice contributing to this rapid growth in fixed odds racing betting.
After luring in customers with derivatives and better value products online bookmakers in Australia are now doing their absolute best to push their punters towards fixed odds betting.
Here’s why;
Fixed odds betting for the most part in comparison with traditional racing products, offers the operator (bookie) a much higher margin.
It also allows them to build and control their book because they know the final dividend that they’ll be required to pay.
The average fixed odds horse racing market (assuming a 12 runner field) could go up as high as 140%. As jump time nears this percentage that the bookmakers are betting drops all the way down to as low as 114 or 115 at the death.
Whereas the following derivative products offer a margin to the bookmaker that is much, much lower.
Best Tote or SP – 9-10% but often much lower in low liquidity events
Best Tote – 11-12% but again, much much lower in low liquidity events.
Top Fluc – less of a factor now with VOP/QOP etc but some races can still get below 110%
Related: Australia’s Horse Racing Products Explained
In recent times we’ve seen an increased disparity in tote prices which has caused the aforementioned derivative products to operate at super low margins.
Great value for punters, but after product fees are accounted for not enough of a margin for the bookies. Hence the push towards fixed odds!
That’s why the majority of bookmaker promotions on horse racing now apply to fixed odds bets only.
There is a good chunk of bookmakers who now also only allow bonus/free bets to be used on fixed odds markets.
The biggest lesson to learn from this?
Beware the early fixed odds market percentage and only bet fixed odds when you are confident you have an edge or an overlay against a rated price.