Tote investing majority of own money in Placepot bet pools, claims punter

The Gambling Commission (GC) has been urged to investigate the extent to which the Tote is a player in its own Placepot pools by a punter and racing fan who has analysed the liquidity involved over the past two years, and believes that the operator’s own money now accounts for up to 60% of the cash invested in them.

In an extensive analysis sent to the GC last week, a copy of which has been seen by the Guardian, the author suggests that the extent to which the Tote is now involved in its own pools marks “a fundamental change” to “100 years of precedent of pools being player against player”, and that the Tote enjoys a “significant information advantage” over its punters in terms of its overall view of the market, particularly in the two-to-three minute period immediately before the “off”.

The author also suggests that this “model where UK Tote is a sizeable … participant in their own Placepot” creates “an inherent conflict of interest” in which “their profit or loss is dependent upon, and inversely correlated with, their customer’s loss.”

The Tote’s terms and conditions state that the pool operator “and its group companies may participate in the Tote pools by placing bets on Tote products”, and the operator first started “seeding” its own pools in May 2020, when the coronavirus pandemic forced racing behind closed doors with a significant impact on the overall liquidity of pools.

The new Pool Guarantee Service (PGS), the Tote said at the time, would start up to four hours before a race “in single leg pools” and was intended to “add consistent layers of early liquidity to make the pools deeper and more robust”.

The analysis seen by the Guardian, however, suggests that Tote’s involvement has increasingly extended to multi-leg pools such as the Placepot, one of its flagship bets, which required punters to find a horse that makes the frame in six races on a card and offers a potentially significant return for a relatively low stake.

The analysis also suggests that rather than “seeding” the Placepot market from an early stage to encourage liquidity, there is a late spike of activity, of a type more usually associated with high-frequency, automated trading by professional syndicates.

The Placepot pools at both Southwell and Carlisle on Monday followed the same pattern. From 20 minutes before the start of the first race at both meetings, the pool size increased by between 1% and 2% per minute, before a big spike in the pool size – 39% at Southwell and 55% at Carlisle – between three and two minutes before the off.

Was this big injection into the pools from the Tote itself, or an outside party, or perhaps a mixture of the two? It is impossible to be sure from the information available, and the eventual dividend will also not disclose whether one or more winning tickets were held by the Tote.

Late surges of money into betting pools are familiar in pari-mutuel systems around the world, but these are, by and large, from professional players with advanced models and automated betting platforms that analyse the markets from one second to the next and find potentially under-valued permutations. These syndicates often receive rebates from the pool operators in return for bringing liquidity to the pools.

It is unusual, though, for the operator itself to get involved in squeezing value from the market via high-frequency trading, and while the Tote’s involvement in the pools is clearly covered in its T&Cs, it is certainly arguable that the company could be more transparent with punters about the extent to which it has now diverted from the traditional image of a “punter-versus-punter” process. Certainly, if it is now the biggest individual player in one of its key markets, that fact should be generally understood.

Susannah Gill, the Tote’s communications and corporate affairs director, said on Monday that “some of the funds” arriving in the pool at the last minute would be from the PGS.

“All pools around the world build late,” Gill said, “particularly from off-course channels. This is a typical function of pari-mutuel betting. This is especially the case on days where it’s quieter at the racecourse and the majority of the money comes from off-course players. Liquidity from Pool Guarantee Service will be some of the funds coming into the pool in the last few minutes as the market forms. We cannot disclose the make-up of the pool by player as this is commercially sensitive information.

“Racing fans, bettors and our distribution partners have told us they want bigger and more predictable pools from the Tote to make them easier to market and more attractive to play into. We have responded to this with guaranteed Placepots of £50,000 to £1m which in recent years have seen some huge payouts, including the record payout of £129,858.80 at Newcastle on 15 September 2022.”