The new procedure for returning SPs - the prices at which most bets placed in off-course betting shops are settled - will be introduced on November 1, following a review of the current system by the Starting Price Regulatory Commission under the chairmanship of Lord Donoughue.
The profit margin built into starting prices - which is also the gross profit margin on racing for off-course bookmakers - has been falling steadily in recent years, from 2.07 per cent per runner in September 2000 to 1.45 per cent per runner in September 2006.
The ability of on-course bookmakers, whose prices at the start of a race form the basis of the SP, to hedge with the ultra-competitive markets on the Betfair betting exchange has been a significant factor in this reduction, resulting in a better deal for punters.
The new rules, however, seem certain to reduce prices, and leave punters worse off. At present, SPs are determined by taking a sample of bookmakers' prices, and taking the lowest price among the best third available "to good money" at the off. In future, the SP will be the lowest price among the top 50 per cent.
As a result, Halloween seems likely to herald a gruesome change of fortune for the average punter, particularly where the prices of favourites and second-favourites are concerned. "The key thing isn't the detail of how many bookmakers are going to be involved, or the mechanics of it," Elliott said yesterday.
"What everyone needs to be concerned about is what the practical effect will be, and I can't see it being anything other than to the disadvantage of the punter, and to the advantage of bookmakers' profits, and therefore to the advantage of racing by increasing its income through the Levy.
"I suspect that everyone knows that this is what will happen, and that the racing establishment will be rather pleased if that is indeed the effect."
Representatives of Betfair, which already has a significant indirect effect on SPs, made a submission to the SPRC suggesting that the prices available on the exchange should form part of the overall calculation of the SP. This offer was rejected by the Commission.
"Betfair offered to provide data from its audit trail to assist in returning an SP that was more equitable, transparent and fair than the incumbent system," Jack Houghton, a spokesman for the exchange, said yesterday. "Betfair's concern is that the new approach, regrettably, does not prioritise the interests of punters."
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