ANDREW Black, he who revolutionised betting with the invention of the betting exchange, is at it again.

Black has recently outlined his ideas to revolutionise modern betting, but his idea of replacing each-way betting with a “performance” bet that rewards punters more fairly for their ability to find value, lacks the simplicity which made person-to-person betting such an instant game changer.

Black is – you don’t need me to tell you – a very clever fella, and some of his observations are undoubtedly on the money. Each-way betting, he says is a “dinosaur fit for extinction” and he has a point.

The constrictions of betting on places determined by win price means that place odds are rarely a fair representation of value, but while that is an obvious flaw, it also represents the reason why each-way betting remains so popular.

There are occasions where the place terms are massively in favour of the bookmaker and occasions when the mathematics add up firmly in the punters’ favour and, while Black’s idea of a return based on a degrading Fibonacci scale is fairer to both parties, it’s not only very unattractive to serious players, but the people it suits are those who are unlikely to understand the benefit.

One well-known wit on social media summed up this dichotomy by saying: “Explaining the payout to Sid on his Saturday Lucky 15, settled on the degrading Fibonacci scale, could be a slight challenge.”

Of course, it’s unfair to make that observation without qualification. An algorithm that calculates a fair return based on win odds and places offered is bound to sound complicated, but punters don’t have to understand the mathematics to grasp the basic concept.

Winning harder

The problem for me is that, if the algorithm is too good, it merely makes winning harder for the serious bettor, while reducing the rate of loss for the ‘fun’ player. If I back a 50/1 shot on the basis that it offers value for a place, I know perfectly well which place it’s usually value for.

Paying me more if it finishes second is great in theory, but us snides know that sneaking into third, 35 lengths behind the easy winner, is where the 50/1 shot really shows his worth.

That is the rub, of course.

The Gambling Commission expects punters to buy into the idea that gambling is fun, but it should never be a way to make money. For the majority, that may be true, but even those punters who are happy to set aside a betting pot and are prepared to lose that money without complaint (grumbling, perhaps, but not complaint), do not necessarily agree that the money is there purely to pay for the fun of a flutter.

Your idea of a serious punter might be one who bets in high stakes and calls himself (or herself) a professional, but I consider a serious punter to be one for whom betting is a challenge. The fun, such as it is, is in winning that challenge, irrelevant of staking levels or bet frequency, and there are a lot more serious bettors around than you might imagine. Some win a little, some lose a little, but all of them are dedicated to their art.

Many of us bet in the hope, if not belief, that we can make our betting pay, if only do a modest extent.

Finding an occasional edge fuels that belief, whereas the supposedly level playing field of graduated returns based in sound mathematics means there can be no edge, but merely a mechanism for losing money slightly more slowly.

That is good news for the truly casual punter, for whom the concept of value will forever remain a mystery, but I’m not sure that each-way betting is ready for extinction just yet, and accelerating its demise might do more harm than good.

Stifling betting turnover

Black believes that a lack of innovation is stifling betting turnover on horse racing and, to an extent, that is true. His ideas for replacing the Placepot and Jackpot have merits in themselves, but it’s how such ideas are implemented which is key.

One thing much more important to betting on racing than innovation is liquidity, and the problem with horse racing betting at present is that lack of liquidity in betting markets is a turnoff to both punters and bookmakers.

Try having an ante-post bet for Cheltenham online, for example. Bookmakers don’t want to take heavy liabilities in illiquid markets and, the restrictions applied as a result, lead to less liquidity. It’s a vicious circle.

Any innovation in betting usually means the creation of new products, but the problem with an entirely new market is that it must compete with others already in existence and, however good the idea might be in theory, the inevitable lack of liquidity will cause it to fail, unless guarantees are put in place.

Such guarantees are a risk for those offering the markets and can go spectacularly wrong. For example, a new pool bet backed by racing insiders was launched 20 years ago, went unwon and unsupported for some time, leading the organisers to offer a £1m guarantee for a big-race weekend.

The initiative worked to a degree, with turnover up significantly, but the bet – and the guaranteed prize - was won on both days and the backers, forced to make up the shortfall, retired permanently from the betting business.

Leaderboard bet

If Black’s ideas are to take root, it’s likely to be in partnership, rather than in competition, with the current Tote and it’s interesting that the idea of a Leaderboard bet to rival the Placepot/Jackpot is something the Tote have dabbled in, in respect of Tote Fantasy, although that offering is currently unavailable, or to quote the Tote: “We’ve Temporarily Taken a Pull”.

That’s a pity, as the game did seem to create a buzz and offered prizes for performance beyond a single winner. In reality, the prospect of picking up a big prize for small outlay is much more appealing than graduated prizes with no big winner, and the potential for a bumper payout is a big stimulator for turnover. The prize structure of fantasy games and the fact that such social betting is also being offered on other platforms - At The Races launched Stable Duel last year, for example - means that multiple products are once again fighting for limited liquidity, and that is not sustainable.

If there is an answer, it is refining the product to maximise its appeal and to develop a partnership between operators, so all players can bet (although I suspect play is the preferred term with the current generation) via a single platform, even if that platform is shared.

That would increase participation, and therefore liquidity. It might even be fun.