Pari-Mutuel Betting

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As one of the oldest sports betting systems, pari-mutuel betting is often used in horse racing.

It can be applied to other sports as well including jai alai and greyhound racing. It is usually available for all sports events with a short duration and modified pari-mutuel systems are sometimes used in lottery games.

How Does Pari-Mutuel Betting Work?

Although it sounds complicated, pari-mutuel betting is easy to understand. Instead of betting on fixed odds, you wager on selections with probable odds. They are probable because the payout is determined by the number of bettors that have placed a bet and the total amount of money in the pool. Whenever a punter makes a selection, his wager goes into a shared pool. When the event is finished, the house takes its cut no matter the outcome and the winning bettors share the prize.

Let’s see an example using a horse race. There are four horses in the race, labeled #1, #2, #3, and #4. Bettors have already made their choices – a total of $400 were placed on horse #1; there’s a total of $300 on #2; $100 on #3, and $300 on #4. The betting pool total is $1,100. The house takes its 10% cut, leaving $990 in the pool – this is the prize winners will share.

Next, in order to determine how much money can be made on each horse, the remaining total amount in the shared pool is divided by the amount wagered on each of the horses. This brings horse #1 to $2.475; #2 with $3.3; #3 with $9.9, and #4 with $3.3. These numbers indicate how much money you’ll get for every $1 wagered if your selection wins. It also determines the favorite, which is horse #1 in this case.

What are the Pros and Cons?

Like any other betting system, pari-mutuel betting has its own pros and cons. The most obvious benefit for punters is the lack of a bookmaker. This means lower commission fees and more money to be won – the dream of any bettor. Another obvious benefit is the shared pool prize. Especially in cases of popular events, there can be a lot of money in the pool to be won. The wide range of betting options surely makes pari-mutuel betting attractive. Even if you’re not that fond of predicting the winner, double or trifecta bets can still pay good money and are easier to get right.

On the other hand, the biggest problem with tote betting is the uncertainty. Unlike fixed odds betting, there’s just no way of knowing the real value of the odds since they’re constantly changing. Not knowing the value means you can’t tell if the wager is good or really bad, which can lead to huge losses.

Additionally, the odds can get skewed in a weak market with only one large bet. As punters can place any wager they want in this system, a bettor can put several thousand dollars in a particularly weak market, restricting the odds instantly. This will result in a reduced pay out for others who have placed the bet on the same horse or hound.

More Articles about Sports Betting:

Betting on Darts

Betting on Golf

Betting on Tennis

Bankroll Management in Sports Betting

Types of Pari-Mutuel Bets

As we mentioned earlier, there are different types of pari-mutuel wagers you can place. The main ones are win, place or show. The win bet is pretty self-explanatory – you bet on a horse to win and will earn something only if that horse wins the race.

The place bet is a bit different. Placing this wager means you’re betting on a horse to finish first or second. This bet can also be found under the name “the places”. When it comes to the show wager, you’re betting on a horse to finish first, second or third.

Besides the three main pari-mutuel bets, there are other which cover a whole range of outcomes. For example, the across the board bet is a combination of a win, place, and show wagers. If your selection wins the race, all three wagers win. If the horse (or hound) finishes second, only the place and show wagers win. Similarly, when the horse ends on the third spot, only the show wager wins.

The exacta and trifecta bets are especially popular in horse races even today. The exacta means betting on two horses to finish first and second in the exact order, while the trifecta means betting on 3 horses to finish on the 1st, 2nd, and 3rd place. The trifecta bet holds a few records for some of the biggest payouts in horse racing history, bringing a few lucky people cash prizes worth millions.

History of Pari-Mutuel Betting

Invented by Catalan entrepreneur Joseph Oller in the XIX century, pari-mutuel betting was adopted by French racing tracks first at the expense of fixed odds betting. The large amount of calculation in this system led to the invention of the so-called totalisator machine (tote board). The tote board issued and recorded betting tickets, making the process much easier. The same machine is also the reason why pari-mutuel betting is colloquially known as tote betting.

Thanks to the shared pool betting system, pari-mutuel betting stayed legal in many jurisdictions. it was and still is most notably used in the Kentucky Derby. Even with no bookmaker involved, punters are still able to place a wager on either win, place or show. However, paying out the winners from a pool where losers also place wagers has led to the invention of many special bets including the double, exacta, and trifecta bets. Over time, the trend continued, with most of those “exotic” bets being just as popular today as they were in the past.

Pari-Mutuel Betting

How Does Pari-Mutuel Betting Work?

What are the Pros and Cons?

Types of Pari-Mutuel Bets

History of Pari-Mutuel Betting

Online Gambling Trends in 2021: What to Expect?

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