Don’t know what parimutuel betting is? Don’t worry. You’re not alone. It’s actually not too hard to understand. If you have ever bet on a horse race, you have engaged in this form of betting. By the time you finish this article, you should understand it fully.
Key Points
– Parimutuel betting is most popular in horse racing.
– Small bettors can benefit greatly from this pool form of betting.
Overview of Parimutuel Betting
Parimutuel betting is a system of betting that is synonymous with horse and dog racing but can also apply to other sports and events. In contrast to traditional betting, parimutuel betting doesn’t have predetermined odds.
Furthermore, the payout is determined by the amount wagered. Each person’s bet is pooled together, and payouts are determined by how much each bet has been placed.
During the 1860s, France introduced this form of betting for horse racing for the first time. After that, the system gained popularity and eventually spread to other parts of the world.
There is no doubt that parimutuel wagering offers a more dynamic and fair way of wagering on races than other forms of betting.
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How It Works
Parimutuel wagering is the most common form of betting at horse tracks in the United States and around the world. It’s a betting system in which all bets are placed together in a pool, and the odds and payouts are determined by how many people are betting on each outcome.
This means that the more people who bet on a certain horse or team, the lower the odds will be and the smaller the payout if that bet wins. When more people bet on Horse A, Horse A’s odds will fall from say +500 to +250. As a result, payouts on Horse A will be lower.
The rewards can be substantial though as this form of betting operates with a sliding scale payout system.
Calculating Odds – Understanding How Payouts Work
If you’re a fan of horse racing (or other sports), you’ve likely come across parimutuel betting. Odds are not fixed In this method of betting. Oddsmakers do not establish pre-race horse track odds.
All of the bets that come in are pooled together. The winnings will be divided among the winners. The amounts wagered on each horse will determine the odds for a given race. This makes calculating odds for a horse race rather difficult.
You should understand payouts. A horse given 3-to-1 odds – written as +300 in American odds – will pay out $40 total on a $10 bet. The payout would include the original stake of $10 plus winnings of $30.
Understanding how the payouts work can help bettors make smart decisions and increase their bankrolls.
Advantages and Disadvantages of Parimutuel Betting
Due to the fact all bets are pooled together, this method of betting is beneficial to those who like to wager on underdogs. Keep in mind that public bettors love to bet on favorites.
As the public hammers a favorite in the Kentucky Derby, for example, the odds on that horse fall. The odds on a longshot will increase. A bettor can place a small wager on an underdog horse and the payout can be huge. Take the following example.
In the Kentucky Derby, a long shot horse has odds of +7800. A typical $2 bet at the track will bring a payout of $158 – the $2 stake plus winnings of $156!
On the other end, calculating odds can be difficult. Consequently, that makes trying to find value difficult when picking a horse. Also, the house takes a cut of every bet, which can eat into any winnings.
An Example of Parimutuel Betting
Let’s say you have a horse race with eight horses. The following table shows the amount of money wagered on each horse.
- Horse 1: $60
- Horse 2: $140
- Horse 3: $24
- Horse 4: $110
- Horse 5: $220
- Horse 6: $94
- Horse 7: $300
- Horse 8: $80
The total pool of money wagered here is $1,028. If Horse 4 won, for example, the payout would be determined by the odds of winning. Those can be calculated as follows. First, the track’s commission, or vig, is taken off the top. A 14.25 percent commission is typical, so $1,028 x 0.1425 equals $146.49. That goes to the track.
What remains is $881.51. If Horse 4 wins the race, the payout is determined by the amount bet on that horse – $110. We take $881.51 and divide it by $110. The result is $8.01. That means for every dollar wagered on Horse 4, a winning bettor receives $8.01.
Of that $8.01, $1 is the stake and $7.01 is the payout. That also tells us that the odds on Horse 4 were 7-to-1, or +700.
Popular Events
The parimutuel form of betting is popular in a variety of events, but horse racing is the big one. When you go to the track or place a horse racing bet online, you are engaging in this form of betting. Greyhound dog races use this pool betting too. Other sports like jai alai and even professional wrestling, at times, will use parimutuel betting.
It is a fascinating and complex form of wagering. The parimutuel system has been used in gambling since ancient Greece. While complex, most bettors understand it after just a few bets. It continues to be an exciting and profitable method of gambling today. This method of betting is perfect for horse racing.
It helps to know as much as possible about this method of betting in order to take advantage of it. Other than that, basic betting strategies and research will help you win more than you lose.
