David Havyatt
November 2, 2015

Betting, voting and innovation

Betting, voting and innovation

A winning bet: TAB is an example of innovation, that arose while another problem was being solved*

In considering innovation policy in Australia it can be instructive to consider the history of innovation, not just its future. Melbourne Cup week provides a particularly good opportunity.

One area where Australia has a profound reputation has been innovation in democratic elections. What we know as the secret ballot is known elsewhere as the Australian ballot after its origins in Australian colonies in the 1850s. In the 1890s the British colonies of New Zealand, South Australia and Western Australia were the first places in the world to provide women with equal political rights.

Australia was also an early adopter of proportional representation but we don’t have a claim to any specific innovations.

As part of that innovation a young engineer George Julius, working for the Western Australia railways, designed a 'cheat proof' mechanical vote-counting machine. Despite making a sale to the State of New York, USA no buyers were found in Australia.

Julius searched for new applications for his calculator. In this he is much like Bell who invented the telephone while researching hearing aids, or the CSIRO scientists who were just trying to solve a data aggregation problem when they developed the algorithms for Wi-Fi.

The application he landed on was an “automatic totalisator”. Many Australians will place a bet on a horse in cup week at their TAB (Totalisator Agency Board) without knowing the history or the difference.

When you bet with a bookmaker you are quoted fixed odds. Given that there is an element of luck with which horse wins a race (who got the rails run), you come out ahead in the long run by consistently backing horses for which the real chance of a horse winning is better than that quoted by the bookie.

When you place a bet on the TAB, your return depends on the size of the pool being held, and the number of other punters betting. This is called “pari-mutuel.” But this gets tremendously complicated when there are a lot of bets.

The latter is far preferred by Governments to regulate betting. Firstly it is risk free to the “bookie” – there can’t be a bigger payout required than the pool. As a consequence of that it is also much easier to tax – you extract the tax before determining the size of the pool.

But it can also be argued to be fairer. The punter isn’t betting his assessment against the bookie but against the assessment of all the other punters.

By the time Julius launched his machine he was working as a consulting engineer in Sydney, in the firm Julius, Poole & Gibson (which is still listed in the Yellow Pages). The history of the first eighty years of that firm was published in the book From Tote to CAD.

The patent was issued on 21 December 1914, a centenary which wasn’t marked with any fanfare. The company Automatic Totalisators Limited was formed in 1917 to manufacture, install and operate totes throughout the world. By 1970 most major race centers, across 23 countries, were using Australian Totalisators.

Julius, in 1922 promoted the formation of the Standards Association of Australia, which in 1988 became Standards Australia.

In 1926 he was appointed the first Chair of the Council for Scientific and Industrial Research, the forerunner to the CSIRO. He served until his retirement in 1945.

Today, of course, the totalisators are simply applications on generic computing platforms. Julius played his own role in that development. The world’s fourth computer was the CSIRO’s CSIRAC. One of the leading CSIRO computer scientists was David Myers of whom it has been said:

Myers would eventually become one of the CSIRO’s chief computer scientists and he was instrumental in, amongst other things, the development of CSIRAC. It was a glorious career, and in fact it was a career that Myers had been set upon ever since the day George Julius had visited his high school and given a lecture on the Totalisator and mechanical calculation, an inspirational talk within which the young schoolboy had found a lifetime of encouragement.

More detail can be found in Connections in the History of Australian Computing. Interestingly CSIRAC was primarily used by the Radiophysics Division, the same Division responsible for Wi-Fi. It was also one of the three divisions that Julius was instrumental in forming inside CSIR as it expanded beyond agricultural research.

So as we celebrate our Cup winnings (or mourn our losses), we should spend a little time reflecting on what we can learn from the inventor George Julius.

We can re-learn the lesson that great innovations don’t always arise from the specific problem that is being solved. Sometimes the application comes after the initial creativity. As a corollary we need to acknowledge the value that comes from investing in research that isn’t narrowly defined about a commercialisation agenda.

We can acknowledge just how rewarding innovation can be. The revenue earned by state and territory governments from TABs in the period 2005-6 to 2013-4 is $2,959 million. That is 47.5 per cent of the expenditure on the CSIRO in the same period.

Finally we should ask ourselves why our great innovators do not get the public recognition they warrant. The tote wasn’t just a betting machine; it was a mechanical computer. We need to celebrate people like George Julius, who not only took his invention to commercialization but through his later work helped develop the industry that replaced his invention.

*Photo Credit: iStock

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