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A Typical SPT System

Limits: Typically Not Restrictive

Bet Limit or No Bet Limit

Recalculation Interval

Level of Set Prices vs. Variable Prices

Confirmation of Bets

A Typical SPT System

The pari-mutuel version is likely to be the most common version of the SPT.

In this version, only pari-mutuel variable price bets would be accepted by the system until a particular time or until the pool reached a particular level. Then set price betting would commence and set price bets would be written against the pool existing at that time.

Set price punters would, in essence, receive the price available at the time they made their bet. In practice, this would mean that most set price punters will receive the price that they see on the screen. Of course, at the present time, set price betting cannot be offered by a totalizator system in this way.

The timing of this process would be quite similar to that on racetracks today where set price (fixed odds) betting occurs, such as on Australian racetracks. Set price betting generally becomes available on-course from bookmakers about 40 minutes prior to a race, which is just after the running of the previous race. Variable price tote betting on the race occurs beforehand and, by the time set price betting opens, the size of the tote pool is usually at least 10% of the size of the final pool.

Of course, this in turn means that about 90% of the betting occurs in the last half hour or so before a race and this is exactly when the SPT is able to provide set price betting - right up to race time.

Limits: Typically Not Restrictive

It is expected that typically, a pool size of about 10% of the size of the final pool would be more than enough to ensure that most punters would not be restricted in any significant way in placing their set price bets. And as betting for the race proceeds, the pool size would increase and even bigger bets could be made.

Bet Limit or No Bet Limit

Of course, some sort of a limit is necessary on the amount that can be paid out.

Limits are used for two reasons, both of which are important: firstly, so that price changes will be at generally acceptable levels; and secondly, so that the amount to be paid out on set price bets doesn’t exceed the available pool.

Various types of limits can be used:

In this variation, the set price is offered to the punter before he makes any attempt to place his bet. Typically, after a limit bet the price is recalculated at a lower level. Therefore, a punter may be able to have another bet after a limit bet but it would be at a lower price.

However, it is believed that typically the bet limit will provide no practical impediment to the average punter. Naturally, the situation will vary from country to country and from race to race but, for example, on a typical Saturday gallops race on an average Australian track, it is expected that the pool size at the beginning of set price betting will allow a bet limit which is at least 10 times the size of the average bet. Of course, it is also expected that the pool size, and therefore the bet limit, will be much higher at later stages in betting.

It should be emphasised that the size of the variable price pool, especially at an early stage of betting, does not need to be large in order to accommodate set price bets. In Australia for example, the average totalisator bet size is about $10 and, assuming set price bets of a similar size, a variable price pool of $1,000 would be sufficient to operate the system even though larger pools would be more suitable.

In this variation there would be no limit at all on the size of the bet. This is because the price offered to the punter would be the price that is set after the punter’s bet is made. That is, the price offered to the punter takes account of the punter's own bet. But for average punters, the price would not change significantly because their bets are usually relatively small compared to the size of the pool.

This is similar in some ways to the situation for the existing variable price system except that for the existing system, the price can vary quite significantly after the punter's bet is made.  Even with the existing system, if a punter’s bet is large enough, the price received is significantly affected by the placing of his own bet.

Recalculation Interval

The rate of inflow of bets into typical pools indicates that the prices would usually be recalculated at intervals of about half a minute to a minute. This is the sort of recalculation period that is often already used for totalizator systems and so there would be little change in this respect.

Of course, the computer could recalculate prices after each bet should that be necessary and there will be occasions when that will occur. But typically it would be expected that prices would be relatively stable and generally they would be recalculated about as frequently as happens now.

Naturally there will be fluctuations in the prices as the demand for various runners changes during betting. Some prices will go in (become shorter) and others will go out (become longer). Still others will go in at some stage during betting and go out at others. It is only natural that prices will change on a regular basis but generally the price changes will be similar to those for the current system. [top]

Level of Set Prices vs. Variable Prices

Even though the SPT can operate in other ways, it is believed that one of the best approaches, and also one of the fairest, is to offer set price betting at about the same level as bookmakers' prices and at slightly lower prices than the corresponding variable prices. This can be done while still producing a single rate of commission for the tote operator.

In addition to making variable prices higher than set prices in this way, it can also be arranged that early variable price bets receive a higher price than later variable price bets. This will improve the distribution of bets and the fairness of the system even though it is not believed to be necessary to ensure that the system is viable. [top]

Confirmation of Bets

It is believed that set price punters should be given the opportunity to ensure that they are satisfied with a bet  -  not only that it is correct but also that the price is what they wanted. After all, to not do so would tend to defeat the whole purpose of providing set prices.

Of course, a punter could simply take a chance that the price had not changed since the time he placed his bet and, on most occasions, it would not have changed significantly or at all. This may be appropriate, for example, if there is a rush to place a number of bets at a particular stage in betting, such as can happen at the end of betting.

But it would only be fair to give a punter the opportunity to ensure that he is satisfied with the price. This can be done by a process which confirms that the bet is indeed what the punter wanted and it can be achieved in a number of ways. [top]

What Price Can Punters Expect?

Probably the best approach is for a punter to specify the minimum price that is acceptable to him. If the price changes before his bet is processed and goes below the price that he requested, then he would be given the chance to take the latest price. Of course, if the price had increased then the punter would be given the higher price.

For example, if the dividend shown on the screen is 4.2 then the punter may specify that price or a price that is higher or lower. If he specified a price of 4.2 then he would be very likely to receive either the requested price or a higher one. However, the punter may be quite content with a price of 4.0 and, in order to be even more certain of having his set price bet successfully processed, he may decide to specify the slightly lower price of 4.0. Of course, he would still be given the 4.2 (or higher) if it was available. But if the price had changed and only 3.8 was now available, the punter would be given an opportunity to accept this price instead. [top]

What About Price Manipulation by Using Set Price Bets?

The sort of process just described can be easily accommodated within the mathematical operations of the SPT. What is more, it can be done in a way that combats price manipulation.

When a set price bet is first placed, it is not certain to be confirmed. Therefore, a suitable approach would be to allow for the liability of the unconfirmed bet by reducing the price for the runner on which the bet was made but, until the bet is confirmed, not increasing the price on other runners to reflect the increase in the pool resulting from that bet. This approach emphasises safety and the integrity of the system. If the punter does not confirm the bet within a reasonable time then it automatically lapses.

Without some sort of preventative measure like this, it would be possible for large bets to be made on one or more runners to increase the prices of other runners. Bets could then be made on those other runners at the inflated prices and after that, the bets on the original runners could be cancelled. One of the aims of the confirmation procedure is to ensure that unscrupulous punters cannot manipulate the system in this way. [top]

Can the SPT Handle Peak Betting Periods?

Peak betting periods, such as just prior to a race, do not pose a problem because:

What About Price Manipulation by Using Variable Price Bets?

Of course, steps can also be taken to combat unscrupulous punters who would seek to make manipulative variable price bets which would have the same sort of effect as the set price bets previously described. A similar type of confirmation procedure could be used for variable price bets but this is not essential. Instead, a similar result could be achieved by preventing punters from cancelling their variable price bets after set price betting had begun. This sort of rule already applies in many places where totalizators currently operate.

Such a rule should not be a problem in practice, especially if punters are provided with a system where they can check their variable price bets before they are made. A number of such systems currently exist, including one where punters fill out cards that are then read by a machine. And a totalizator operator could always have the discretion to allow a punter to cancel a bet if it was thought that the bet was a genuine mistake rather than an attempt to manipulate the system. So, in practice, there does not need to be any problem with this aspect of the system’s operation.

If a confirmation process was adopted for variable price bets, at most only the runner and the amount of the bet would need to be checked, not the price. One possible approach is for punters to key in the bets themselves. And if a punter was confident that he had placed the bet correctly, he would not need to be concerned about confirming it.

Alternatively, if a punter called a bet to an operator, it would be most unusual indeed for the the operator to make a mistake as they are generally highly skilled.