What is Parimutuel Betting?
The parimutuel betting system is so different from all other types of sports betting that it deserves its own segment in this guide. Parimutuel betting is used across multiple racing formats, especially horse racing and greyhound racing. It is also the standard for betting on jai alai.
Parimutuel refers to a collaborative betting system that was devised by Frenchman Pierre Oller in 1870. The idea is to share the entire pool ““ the sum of all bets – with all bettors who wagered on a winning outcome. This is easily explained with a simple example.
Let’s say 25 people bet $15 each on Horse-7 to Win, and 65 people collectively bet $15 each on other horses to win. We add all bettors together and multiply by the bets made.
25 + 65 = 90
90 x 15 = $1,335
Since 25 people won the bet, they would divide the total $1,350 pool between them, resulting in a win of $54 each. In reality, the payout would be smaller because the racebook or track first deducts taxes and a commission to cover expenses from the pool, but you get the idea.
What makes the pari-mutuel betting system so unique is that the payout for each bet is based mostly upon its popularity. The more people there are placing the winning bet, the lower the prize will be. In the same token, the more people here are placing the wrong bet, the larger the pool will be for the winners.
The amount wagered will also affect the payout, of course. In the above example, all bettors wagered $15, but that simply isn’t realistic. If one punter chose to bet $100, they would receive a larger portion of the pool. It is divided by betting units. If the pool is $1,500 and a $15 bettor wins $50, than a total of $3.33 is paid for each $1 bet [50/15 = 3.33]. Thus a $100 bet would win $333.33 [100×3.33 = 333.33].
Because of its fluctuating nature, the posted payout for a pari0mutuel horse racing bet can change constantly leading up to the start of the race. Racetracks are responsible for posting up-to-the-minute stats on the tote board, which are retrieved and posted nearly as quickly by off-location racebooks.
Virtually all horse racing bets are paid via the collective pari-mutuel pool.
Win: A bet on a specific horse to win the race outright.
Place: A bet on a specific horse to win or place (i.e. come in 1st or 2nd) in the race.
Show: A bet on a specific horse to win, place or show (i.e. come in 1st, 2nd or 3rd) in the race.
Exacta: A bet on two specific horse to win and place (i.e. come in 1st and 2nd) in any order. For example, if betting on Horse-A and Horse-B, a winning result would be either “Horse-A Win, Horse-B Place”? or Horse-B Win, Horse-A Place”?. So long as these two horses come in 1st and 2nd, the bet is won.
Trifecta: A bet on three specific horse to win, place and show (i.e. come in 1st, 2nd and 3rd) in no particular order. So long as the three selected horses come in 1st, 2nd and 3rd, the bet is won.
Daily Double: Tracks will offer a special Daily Double with each day at the races. The race track will choose which to races are in the Daily Double. The bettor then attempts to choose the exact winner of each race. This is one of the most difficult wagers to win in horse race betting, and the payouts can be incredible.