With a TAB, all the money bet on a race goes into a pool. The computer quickly calculates how many winning tickets there are and declares a dividend that will result in 85 per cent of the pool being paid out to punters. So the TAB cannot lose. The other 15 per cent goes to government taxes, the racing industry and operating costs.
The more money that goes through, the more the TAB gets. So the TAB wants as much money bet as possible. It does not care whether that money comes from very skilled punters who win more than they lose. The TAB just passes its losses to those punters on to the mugs. A bookie on the other hand does not want the custom of the smart big punter. The bookie determines the odds before the race irrespective of his pool and therefore the bookie has to bear the loss.
So it is important for state TABs to attract and keep big punters even though big punters can and do take more out of the TAB than they put in. Sounds bizarre, but it is logical.
The big punters win (they beat the 15 per cent loaded against them) through better knowledge of horses’ form and through being able to cover trifecta combinations better. They also have better statisticians and probability theorists to find the magic time when the return on a horse is greater than the odds.
In the ordinary course of events, the ACT TAB would not matter much on the Australian scene. However, the ACT has joined Victoria, South Australia, Western Australia, Tasmania and Northern Territory in forming a super pool under the head of the Victorian TAB. All money bet in those states (about $5 billion a year) goes into one pool for determining the dividends. This is important. It means that if someone puts a lot on money on one race on the ACT TAB he will not distort the pool and still get a reasonable return.
Big punters, however, do not like having to beat the 15 per cent government take.
Enter the Vanuatu-based Vitab, which is licensed to run a betting shop in Vanuatu (even though there is no racecourse there).
Last year it put a proposal to ACTTAB under which ACTTAB would provide computer software and hardware and access to the pool. In return Vitab would pay ACTTAB one and a half per cent of turnover.
Berry agreed to it. The Assembly was told he did not check the pincipals very well. Some were allegedly involved in illegal SP book-making.
The agreement was signed. Vitab uses exactly the same computer system as ACTTAB. Its phone system and ticket printing show exactly the same dividends for the same races. In other words, it pays 85 per cent of turnover back to the punter, just like ACTTAB. But it has the other 15 per cent to play with. One and a half per cent of it goes to ACTTAB, another 2 per cent to the Vanuatu Government, leaving nine and a half per cent. Unlike ACTTAB it does not pay this in tax or to the racing industry.
It can use it in marketing. It can use it to induce Asian punters by offering an extra dividend paid in brown-paper bags or in kind. These Asian punters could easily be acting as agents for big Australian punters who do not like paying the 15 per cent premium with Australian TABs, especially as Vanuatu is a low-tax nation with very limited reporting and accounting requirements.
The Victorian TAB thought this was a possibility. It gave notice it would terminate the agreement giving the ACT access to the super pool.
In effect it was terminating Vitab’s access to the super pool, because the ACT’s tiny $90 million annual turnover was of no moment one way or the other.
Berry was told about the Victorian severance, but did not tell the Assembly for four weeks. Rather he pretended all was well with the Vitab deal. This is what hanged him.
You could conclude that some smart Australian punters set up Vitab with the aim of getting into the $5 billion super pool without having to pay the 15 per cent levied by Australian TABs.
Some punting syndicates put more than $2 million a year through TABs and get say $2.1 million back. Through Vitab, they would get, say, $2.2 or $2.3 million. That sort of return would underwrite the Vitab operation.
They chose the ACT as a way in to the super pool, and the ACT fell for it. Berry told the Assembly it was a wonderful deal when it was a fiasco.
The upshot has been ACT has been cut out of the super pool.
The position now is that unless the ACT cuts Vitab loose (paying damages for breach of contract) and does a pooling deal with NSW or goes cap in hand back to Victoria, the ACT will be left on its own with a pool of only $90 million a year. Without the super pool, dividends will be erratic. Medium or large bets will distort the odds on particular races or trifectas and returns for them will be lower. Even a $1000 bet will distort the return, making it much lower than in NSW or Victoria. The big and medium punters will desert. They will bet (by phone) interstate instead. Returns to the ACT Government and ACT racing industry will fall.
Oddly enough, mug small punters might be slightly better off. Wayne Berry always had the battler at heart.