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Balancing the Book

The process of trying to make commitments from a series of set price (fixed odds) bets provided by a bookmaker balance each other so that he makes a profit no matter what the outcome of the event. Usually a bookmaker does this by adjusting his prices; reducing the prices of the outcomes on which he has a large commitment and increasing the prices on outcomes on which he has a smaller commitment.

Bet

A process of risking money on the outcome of an event in the hope of receiving a greater amount of money in return if the selected outcome eventuates.

Betting Percentages

Betting percentages are used to give an indication of the overall level of prices for an event; the higher the betting percentage for the event, the lower (worse) is the overall level of prices.

The term refers to the total of the percentage chances for an event as determined from the prices on offer. Betting percentages are usually calculated for fixed odds (set prices) for bookmakers, but the technique is equally applicable to variable prices.

The percentages are determined by taking the reciprocal of the dividend (the number which results from adding one to the odds).

For example, for the chances in an event with the following odds 1/1, 3/1, 4/1 and 4/1, the relevant reciprocals would be:   0.50 (= 1/(1+1));   0.25 (= 1/(3+1));   0.20 (= 1/(4+1)); and   0.20 (= 1/(4+1)) which is a total of 1.15 or 115%. This means that the odds are set at a level which provides a general disadvantage to the punter of about 15% because the chances in the race add up to 15% more than 100%.

The 15% is about the level of profit for the totalizator because it is guaranteed its profit as a result of the way it works. (Actually, more accurately, the level of profit is really (1 – 100/115) x 100 = 13.04%).

The 15% figure is also the potential level of profit for a bookmaker. But the actual level of profit, or rate of return, is usually well below this level because it is virtually impossible to set a market which reflects the actual chances with perfect accuracy, particularly in complex markets such as horse races.

Big Punters

Punters who make relatively large bets.

Blow / Blow Out

A term used to indicate that a price is becoming longer (higher) as time passes. The term is more often used with respect to a price that is becoming significantly longer, that is, “drifting out” a lot.

Bookmaker / Bookmaking System

A person or betting system that provides a market for an event; usually prices for all the possible outcomes of the event. These prices are typically fixed odds (set prices). The bookmaker then takes bets according to that market. So, as soon as a bookmaker takes a bet, he is at risk of a specified payout if that outcome occurs.

There is no guarantee that bets made on other outcomes will balance the bets already taken even though the bookmaker weights his market in his favour (see Betting Percentages above). The process of trying to make the bets balance each other in this way is called “balancing the book” and the bookmaker attempts to do this by adjusting his prices. Therefore, the bookmaker or a bookmaking system cannot guarantee a particular rate of commission. Indeed, the situation is worse than that because a bookmaker can actually lose money on an event or on a series of events. While the weight of money is often a factor in the market that is provided because of the process of trying to balance the book, the bookmaker’s own information is usually a significant factor as well, particularly at an initial stage.

Dividend

The amount won plus the unit amount bet if a bet of a single unit, such as $1 (the stake), is successful.

Drift / Drifting Out

A term used to indicate that a price is becoming longer (higher) as time passes. Usually not as sever a price change as “blowing out”.

Fixed Odds

A price obtained during the betting period that is determined (fixed / set) at the time of making the bet. Also known as a set price or a fixed price.

Fixed Price

See Fixed Odds.

Fluctuations

This is a term that is often used in relation to bookmakers’ prices. Prices change during the betting period reflecting changes to the market (“market moves”) as money is wagered on various runners. These price changes are referred to as fluctuations e.g. 4.0, 2.8, 3.2 is a typical sort of fluctuation.

Gallops

A common name for thoroughbred races where the horses gallop rather than use some other gait.

Gaming

A term which is typically used for gambling types such as slots (poker machines) which do not involve wagering on races.

Handle

A term used in the US having the same meaning as the term “turnover” used in Australia and the UK.

Limit

The maximum amount which can be returned to the punter on any one bet. Typically this amount includes the punter's winnings and also the amount of the bet although it may be defined as the amount of the winnings only. Any bet which potentially gives a return above the limit may be automatically reduced to the size of the limit.

Limit Bet

A bet which is large enough to give a return to the punter equal to the limit (see Limit). Any bet above the limit may be automatically reduced to the size of the limit bet.

Market

A set of prices for each of the possible outcomes of an event. Typically the term refers to set prices (fixed odds) because they are definite prices available at a particular time. But the term can be used for a series of variable prices even though they can change because the prices at a particular time at least give some indication of the price that might eventually be received.

Net Pool

The total of the pool of bets after allowance has been made for the commission subtracted by the various authorities. For example, if the pool totalled $10,000 and a 15% commission rate was applied then the net pool would be $8,500.

Odds

Can be used interchangeably with “dividend”, often in a general sense. In Australia it is often taken to mean the amount won if a bet of a single unit, such as $1, is successful.

OTB (Off Track Betting facility)

A betting facility that is allowed off of the track (racecourse) and in general community areas such as shopping centres.

Pari-mutuel

A pari-mutuel system is understood to be where the holders of winning tickets divide the total amount of money bet on a race (the pool) after deductions for expenses such as commission and tax.

Plunge

A large decrease in the price of a runner in a race. Usually the term refers to a relatively sudden decrease in the price although it is not necessary for this to be the case.

Poker Machines

A term used in Australia having the same meaning as the term “slots” used in the US. It refers to a machine which provides a payout if certain events occur when the machine is operated, for example, if the same icon appears on the screen for each column of rotating icons set in motion after a button is pressed.

Pool

The collection of bets on a particular event. The term can be used in several different ways, including referring to the total of those bets.

Price

Used to mean either (or both) “odds” or “dividend”, depending on the context.

Professional Punter

A punter who makes his regular living from betting. There are very few true professional punters; often the term is also incorrectly used for any punter (whether he is successful or not) who bets relatively large amounts, particularly if that is done regularly.

Punters

Those who make a bet (a wager) on the outcome of an event such as a race.

Rate of Return

The actual level of gross profit (i.e. before expenses) achieved by a betting system operator, usually expressed as a percentage of the amount of turnover (handle) for that operator.

Set Price

A price obtained during the betting period that is determined (set / fixed) at the time of making the bet. Also known as fixed odds or a fixed price. See Fixed Odds, SPT.

Shorten

A term used to indicate that a price is becoming shorter (lower).

Slots / Slot Machines

A term used in the US having the same meaning as the term “poker machines” used in Australia.

Sports Betting

This term is commonly used to refer to the betting that occurs on sports other than racing.

SPT

The Set Price Tote (Totalizator, Totalisator). This totalizator system enables a punter to take the price available at the time of his bet rather than taking a chance on what that price might be at the end of the betting period. And it achieves this while still guaranteeing the operator the full rate of commission.

TAB (Totalizator Agency Board)

An off track betting facility (OTB) in Australia. Some are still owned by the local Government and some have been privatised.

Totalizator (also; Totalisator, Tote)

A system, typically operated by computer, which enables the pari-mutuel betting system to be implemented. More primitive and older versions used to be operated manually and in some jurisdictions this may still be the case.

Totalizator Agency Board

See TAB.

Tote

See totalizator (totalisator).

Turnover

A term used in Australia and the UK having the same meaning as the term “handle” used in the US.

Variable Price

The price obtained from a traditional totalisator (parimutuel). The prices shown during the betting period vary throughout that period. So the price shown at the time of placing a bet is only a guide and the final price is not known until after the event is decided. That is, it is a variable price until the event is decided.

Wager