I’ve written before about betting on horse racing before and even ran a sweep for the Grand National a couple of times. In the post linked I warned of keeping a tight rein of both horse and wallet, so I’m not getting back the whole right-wrong discussion here (so don’t go jumping in with mug’s game comments), but I am returning to bookmakers as an example of how complexity is employed to con the customer.
Pricing services is something all businesses have to do carefully so as to ensure a return.
Tradesmen often use “cost of materials multiplied by 3″ as a rule of thumb to build in time/labour into a quotation. Personally I charge x per hour for my time. If that hour is to be spent giving a course, then I charge xy+z, where y is the hours preparation needed and z the cost of materials handed out. In both cases the customer knows in advance what the final bill will be.
In the case of a mobile phone company the tariffs are so complex that it is virtually impossible to predict exactly what your bill will be in advance. Even if you have a good idea of the minutes you will spend on the phone they are billed at so many varying rates depending on time of day, type of number called etc., that the whole business just becomes unfathomable. If you ever get it right, it is most likely because you haven’t used up the free minutes in your package - you have paid for unused time.
Similarly if you enquire about putting money on deposit the bank will list off what the interest rate for the amount in question is currently (but that it could change) and tell you about how that rate translates into a % APR or AER, which of course may, or may not, be subject to DIRT. Translates? What? How?
But we toddle along making calls on our mobiles to the banks and never knowing what we will win or lose at the end of the day. Why? Because it’s just so complex we are resigned to take their word for it.
Banks and mobile phone companies thrive on this complexity and use it to their advantage, often increasing that complexity to hoodwink us. The bookmakers invented it.
Granted some things are acceptable. Take an over simplified example: 10 horses in race with a theoretically equal chance of winning. Statistically the odds for each are 10/1. The bookie will set the odds at 9/1. This is called an overround book and in practice is a far more complex calculation, but we accept the bookie needs to take a cut for their services.
However, overrounding occurs in other situations. When a horse at 6/1 wins in a deadheat you would expect to be paid on odds of 3/1. Wrong. It will actually be 5/2. Another somewhat complex calculation.
Tattersalls Rule 4 is the bane of the punter’s life. If a horse is withdrawn at a late stage and insufficient time is available to reset the odds, then a deduction is made from any winnings based on the odds that horse was at the time. It can vary from no deduction to 90c in the €.
There are many, many, many, many more rules that affect payout. And to further complicate matters, individual bookmakers may, at their discretion, lessen the deductions or increase the prices in the guise of special offers.
See where I’m going here? No matter what odds it says on your winning docket, you can not be confident that is what you will be paid out on.
While the bookmakers invented complexity to confuse the customer and other businesses followed suit, my punter pals tell me of a case of a reverse knowledge transfer from the phone companies. Here’s the way it works.
A punter hands in a docket just as the race begins. (The local betting chain accept bets up to 10 seconds after the off as a favour or special). This is scanned in, as you would an photograph into your computer, the exact time is automatically recorded in their computer system, a photocopy of the docket is returned to the customer and the information on the digital copy is later manually entered into the system by the staff.
If the horse wins but the docket was scanned in past the 10 seconds after the official off-time (as transmitted from the racecourse system to the bookie’s system) the bet is declared void and only the stake is returned.
Fair enough you’d say, the staff, as humans, can’t be expected to monitor the off-time versus bet-placed time accurately and especially so in a busy shop.
But here’s the scam. If the late bet is a losing one, it remains valid and the stake is not returned.
Suspecting this to be the case one of my pals and I organised an experiment. We wrote out two dockets. 1€ on the short-priced favourite (expected to win) and €1 on a rank outsider and presented both as close to the passing of the 10 seconds as we dared. (Any later, and the staff member would know it was too late). We made sure to pass the one we expected to lose win* over the counter first. [*Hat tip to emorindo for correcting the wording.]
Sure enough the favourite won and we were told the bet was void as it was late. When we presented the second docket we were told it was a losing one. When pressed about the timing the staff member told us it was valid as it was placed before the 10 second grace period. She even allowed us see that on her screen.
The conclusion was the software detected a loser and clocked back the timestamp. It begs the question whether wining bets placed, at say 8 seconds, are clocked forward past the 10 mark. That is an experiment we have yet to conduct.
Bottom line, complexity, but a little more in this case. It is akin to being billed for unsed minutes on your phone tariff.