How the Tote Pool and Fixed Odds Really Differ

Inside the totalisator at Ascot racecourse, Brisbane, February 1939. Photo: Sunday Truth (Brisbane, Qld.), Public domain

The pool: what a totalisator actually is

Queensland's Wagering Act 1998 gives a plain legal description. Section 8 defines a totalisator as a system that lets people invest on an event "with a view to successfully predicting" an outcome, and that enables "the totalisator pool to be divided and distributed" among those who got it right. The same section says the pool is what is left after allowing for refunds, deducting commission, and adding any pool top-up.

That definition holds the whole idea. Nobody at the tote is laying odds against you. Punters are betting against each other, and the operator takes a fee for running the pool. The dividend you collect is simply the net pool divided by the money that sits on the winner.

How much comes out before the pool is shared

Commission is set by each state's rules, and the ceilings are published. The Tasmanian Betting Rules for UBET TAS say the licence holder may deduct "an amount not exceeding 25%" of the total invested in a totalisator, and up to 35% for international pooled bet totalisators. Those are caps, not the rate on every pool.

Actual rates by bet type appear in other official documents. A New Zealand Gazette notice, the Betting Rules Amendment Notice (No.1) 2023 published on 17 January 2023, lists the Tabcorp deductions that apply to merged pools with commingling partners: Win 14.5%, Place 14.25%, Quinella 17.5%, Trifecta 20%, First4 22.5% and Quaddie 20%. The pattern is the useful part. The more exotic the bet, the larger the slice taken before any winner is paid.

Worked example: one win pool, two moments

The figures below are our own illustration, not a real race. We use the 14.5% win deduction from the gazette notice and the rounding rule in section 164 of the Queensland Act, which says a fraction of 10c under 5c is disregarded and a fraction of 5c or more is taken to be 5c.

1. Ten minutes before the jump. The win pool holds $100,000, and $20,000 of it is on runner 4.
2. Take out commission. 14.5% of $100,000 is $14,500, leaving a net pool of $85,500.
3. Divide by the money on the winner. $85,500 / $20,000 = $4.275 for every $1 unit.
4. Round. The fraction of 10c is 7.5c, which is taken to be 5c, so the dividend shown would be $4.25.
5. Late money arrives. In the final minute, another $5,000 goes on runner 4 and the pool grows to $105,000. Net pool: $105,000 x 0.855 = $89,775. Divided by $25,000 on runner 4 = $3.591, which rounds to $3.55.

Nothing about the horse changed between those two moments. The dividend fell by 70c because other punters agreed with you. That is the core trade-off of the tote: you do not know your price until betting closes, and the most popular selections are the ones most exposed to a late slide.

Fixed odds and the products built on top of them

Western Australia's Rules of Wagering 2005 define a fixed odds wager as one where the amount won "is determined before the wager is accepted". Once the bet is struck, later money does not move your return. The bookmaker carries the risk instead, which is why fixed prices are shaped by the bookmaker's own margin rather than by a published commission rate.

Several product names that punters see in betting apps have formal definitions in the same WA rules:

• Top fluc wager is a win bet paid at "the highest on-course bookmakers' odds" for that runner.
• Starting price guarantee wager pays the higher of the fixed odds at the time of the bet and the final on-course bookmakers' odds.
• Tote bet wager is a win or place bet where the odds follow the final totalisator price.

Rule 50(2)(h) adds that a tote bet win wager can be settled on either the highest dividend paid by an Australian totalisator or the middle dividend. The rules define an Australian totalisator as one licensed in New South Wales, Victoria or Queensland, and the middle dividend as the middle of three dividends, or the higher of two. Operators sell the highest-of-the-pools version under names such as "Best Tote". The exact basis, including any caps and which races qualify, sits in each operator's own terms, so read them before relying on the label. Rule 50(4) restricts SP guarantee, top fluc and tote bet wagers in WA to telephone and internet betting.

Side by side

How the main ways of backing a horse compare on the points that decide your return.

When each one tends to pay more

We cannot give you a percentage of races where one product beats the other, because no official source we found publishes one. What the mechanics do tell you is where the pressure points sit.

Cases that lean towards the tote

A runner the betting public overlooks keeps a large share of a pool that is mostly sitting on other horses, so its dividend can drift out. In big, deep pools on major race days, a single large bet moves the price less, which makes the final dividend less of a lottery. Taking the best of several pools also helps, simply because the maximum of three numbers can never be below any one of them.

Cases that lean towards fixed odds

When you expect a runner to be heavily backed late, a fixed price protects you from the slide shown in our worked example. Small pools, such as those on minor meetings, can swing sharply on one bet, and a fixed price removes that uncertainty. Exotic bets are the other consideration: the gazette rates show commission on a First4 is 8 points higher than on a win bet, so the pool you are sharing is thinner before anyone collects.

For a broader primer on reading prices, our explainer on how decimal and fractional odds work covers the conversions, and the guide to how a bet is placed and settled fills in the basics.

If you are comparing approaches over a season, the notes on betting strategy and staking are the next step.

Keep the bet sized to the budget

Victoria's gambling regulator, the VGCCC, warns on its racing page that quinellas, trifectas and multi-race bets "increase potential losses" and advises sticking to "simple bets and a clear budget". Exotics carry the highest commission in the rate table above as well, so the warning and the arithmetic point the same way. If racing has stopped being fun, BetStop, the National Self-Exclusion Register, blocks you from all licensed Australian online and phone wagering providers at no cost, and the free, confidential Gambling Helpline on 1800 858 858 runs 24 hours a day, 7 days a week, alongside chat support at Gambling Help Online. Our safer gambling page lists the state services too.