Types of betting
Betting has always been an integral part of racing. Before the totalisator was introduced in 1880, bookmakers, sweepstakes or private wagers were the only ways of betting. Initially regarded with suspicion, the ‘tote’ became popular. Clubs and the government realised they could collect a percentage of the wagered money, and supported the totalisator’s widespread use. Opposing it were bookmakers (who saw it as competition) and some Protestant church groups (who disapproved of gambling).
The totalisator was based on the French parimutuel system, where all the money bet on a race formed a pool from which the winning dividend was calculated. The more bets on the winning horse, the smaller the amount each successful bettor won. The reverse also applied, so effectively the public set the odds, rather than a bookmaker. Over time the totalisator developed from a crudely designed, manually operated device into an automated and ultimately computerised machine.
Regulation of gambling
With public feeling over gambling running high, the Gaming and Lotteries Act was passed in 1881 to regulate what had been uncontrolled gambling. Totalisators were licensed and other types of gambling (on sport, card games and billiards) were banned, although bookmakers were still allowed to operate on horse racing. At first the tote calculated only win bets, but in 1901 split-pool betting, with the second horse getting 25% of the pool, was introduced. Next came doubles (for winners of two specified races). Further bet types were developed when an automatic totalisator was introduced in 1913. Meanwhile, in the face of more anti-gambling agitation, the government had banned bookmakers in 1910.
During the next 40 years, racing continued to boom and illegal bookies turned over millions of pounds. Finally, recognising the loss of tax and duty revenue, the government set up its own off-course betting agency. The Totalisator Agency Board (TAB), established in 1950, opened its first two branches in Dannevirke and Feilding in 1951. Their popularity was instant and more TABs quickly appeared around the country. They operated under stringent conditions. The idea was to allow off-course betting, not to encourage it. No advertising, no broadcasting of races, no seating (encouraging ‘loitering’) and no same-day payouts were permitted.
Gradually attitudes changed. From 1986 there were TAB outlets in pubs. New-style TABs offered an enormous range of betting options and provided punters with many home comforts, including television screens. After Sunday racing began in 1992, punters could bet virtually every day of the year. In 2011 the TAB offered betting on around 10,600 domestic and 42,000 overseas races (covering gallops, harness and greyhounds). An increasing proportion of betting was done online.
It is an odd fact that an Australian race, the 3,200-metre Melbourne Cup, is easily the most popular betting event for New Zealanders. It is the world’s richest handicap race (most big international races are run at set weights). In 2011 the prize money was around $6 million, an attraction for increasing numbers of foreign horses.
Legislation in 1995 allowed the TAB to operate more sophisticated forms of betting, including fixed-odds betting and betting on sport. Fixed-odds is the method bookmakers use, where the dividend is set at the time of placing a bet, whereas the tote dividend can change right up to the race start. From a modest beginning, fixed-odds betting on racing grew to around $150 million annually by 2011, though the totalisator, at $1,200 million, was still the preferred method.
Racing had a virtual monopoly on gambling before Lotto’s introduction in 1987, followed by gaming machines and casinos. By 2011 it had dropped to a distant fourth place behind these other forms of gambling.