The Gaming Amendment Act of 1920 made bookmaking illegal and drove it underground to flourish so that after the war it had a bigger turnover than all the totalisators together. It was not true bookmaking. The bookmakers paid out totalisator odds with limits; consequently, a bettor had in many cases to be satisfied with smaller and often very cramped odds. This gave rise to a certain amount of dissatisfaction, but there was little the public could do about it if they wished to bet off course. Racing officials had long contended that the bookmakers had a bad influence on racing. The Racing and Trotting Conferences made detailed submissions to the 1946 Royal Commission in support of an off-course betting scheme which advocated off-course betting through the totalisator, by means of totalisator agencies throughout the country.

The report of the Royal Commission was strongly in favour of the conference's scheme. The Government decided to hold a referendum on the issue and, on 9 March 1949, with 623,625 votes cast (approximately 56 per cent of the electoral roll), 424,219 were in favour and 199,406 against. A Totalisator Agency Board was then set up under a Gaming Amendment Act (15 December 1949) to operate the scheme, which was approved by the Minister of Internal Affairs on 20 September 1950. A revised scheme was approved in July 1956 and further amendments followed in December 1957. A Board of six members (later eight) administered the scheme. It comprised the presidents of the Racing and Trotting Conferences and an equal number of members from each. It is a corporate body having some special powers under the Act.

The Act prevents the setting up of purely betting shops and makes certain nothing is done to encourage betting. Advertising is restricted to no more than a prescribed notice that the Board intends to open a branch or agency; any staff member or agent is debarred from touting for betting; and all persons prohibited from attending racecourses are also prohibited from entering the Board's branches or agencies. Money to set the scheme up became a subject for argument, as many were strongly opposed to the use of Government funds. Finally, the Gaming Amendment Act of 1950 allowed the Board to receive 7½ per cent of all off-course-betting turnover accepted and placed on the totalisator. This is the same proportion as clubs receive on on-course turnover. Establishment and capital finance was provided by a levy of one-half per cent on totalisator-betting turnover for five years from 1 November 1950. The levy is now paid to racing and trotting clubs solely to maintain and replace public amenities and to improve racecourses.

The Board set up its headquarters in Wellington and, as it had had no experience of systematic off-course betting, went carefully about establishing branches and totalisator agencies. Many details had to be worked out with the Post Office, as the scheme would stand or fall on the efficiency of its telephone system. Experimental branches were opened at Dannevirke and Feilding on 28 March 1951. They were the size (5,000 people) that was considered the minimum for the economic operation of a branch. More branches and agencies were soon opened. At the end of the second year the Board had 21 branches in all the main cities and almost all towns of 5,000 or over. Other places were served by offices with individual agents. Four agents under the control of the two experimental branches began operating in May 1951 and, by the end of the second year, there were 126 agencies. In 1964 the Board had 25 branches and 285 agencies.

The preceding table shows the great growth of off-course investments on racing clubs' meetings.