Victor Arum is a seasoned sports betting writer who currently contributes to SportsTalkPhilly. He creates insightful guides and how-tos to help sports bettors formulate winning strategies and make informed wagers. Victor also reviews and rates sportsbooks, deeming them a SMASH or PASS. When not analysing sports betting patterns or writing, he's probably stretching at the gym or (re)watching a sitcom
All posts by Victor ArumParimutuel betting is a popular wagering system in horse racing. It involves pooling bets for a particular race, deducting a commission fee, and dividing the remaining pool among everyone with winning bets. It differs from the traditional fixed-odds betting.
Read on to find out more about this unique wagering system; what it means, its origins, and how it works. Also, we’ll explore the pros and cons of parimutuel betting and strategies to improve your chances of success. In addition, we talked about the differences between pool bets and the standard fixed odds wagers.
What is Parimutuel Betting?
Also called pool betting, parimutuel betting is a popular system for placing wagers, especially in horse racing. However, it can be applied to other sports and events as well.
Unlike traditional betting, where odds are fixed by US sportsbooks, in parimutuel betting, all bets of a particular type go into a common pool. The total pool is then divided among the winners after deducting a small fee for the organizers.
Parimutuel betting originated in Spain in the 19th century by a businessman named Joseph Oller. It was adopted in France in 1867 and quickly grew in popularity because it was seen as fair and transparent. In 1891, the French government legalized parimutuel betting and banned fixed-odds bookmaking, helping to cement its place in horse racing.
Over the years, many other countries have incorporated parimutuel betting into horse racing, including the United States, the United Kingdom, Japan, France, Ireland, Australia, and Hong Kong. In the US, this wagering system is mainly used for horse racing, especially in major events like the Kentucky Derby and the Belmont Stakes. Each state has its own pools, so the odds and payouts may vary from state to state.
How Does Parimutuel Pool Betting Work?
Familiar with the wagering style in the lottery? That’s just how it works in parimutuel betting as well. It involves putting all the bets for a race into one big pool. The final payouts are based on the total amount of money in the pool and how much was bet on the winning horse.
In simpler terms, when people place bets on a race, all wagers of a certain type (like bets for a horse to win) go into a common pool. The pool contains all the money that everyone has wagered.
Then, after the race, the total pool of money is divided among the people who placed winning bets. First, a small fee is taken out for the organizers, and the rest of the money is divided among the winners. Therefore, it follows that the more the winning bets, the smaller the individual payout.
How the Number of Bets Affects Payouts
The payout each individual with a winning bet receives depends largely on the number of people who bet on the winning horse.
- More Bets on a Horse: If many people bet on a particular horse, the pool is divided among the more winning tickets. This means each winner gets a smaller payout.
- Fewer Bets on a Horse: If only a few people bet on the winning horse, the pool is divided among fewer winning tickets. This means each winner gets a bigger payout.
Parimutuel Betting Example
To further explain how parimutuel betting on horse racing works, we’ll use this detailed example.
The table shows how much was wagered on different horses during an event.
Horse Number Bet Amount 1 $100.00 2 $250.00 3 $50.00 4 $200.00 5 $400.00 6 $150.00 7 $500.00 8 $100.00 Calculating the Total Bets and Commission
Total Bets: Sum up all the amount of money bet to get the total pool.
100 + 250 + 50 + 200 + 400 + 150 + 500 + 100 = $1,750.00
Commission: Find out the commission deducted by the parimutuel company; let’s assume 15%.
Commission = 0.15 x 1750
= $262.50
Remaining Pool: Deduct the commission from the total pool.
Remaining Pool = 1750 – 262.50
= $1,487.50
Calculating the Dividend
Let’s say horse number 4 wins the race, the total amount bet on the horse is $200.00. To get the dividend per $1 bet, divide the remaining pool by the total amount bet on the winning horse.
Dividend = Remaining Pool / Total Bet on Winning Horse
= 1487.50/200
= 7.44
Therefore, the dividend is approximately $7.44. This means for every $1 bet on horse number 4, the payout will be about $7.44.
The table below shows a summary of the parimutuel wagering calculations:
Total Bets Commission (15%) Remaining Pool Total Bet on Winning Horse Dividend for every $1 Bet $1,750.00 $262.50 $1,487.50 $200.00 $7.44 Essentially, the total bet of $1,750 is reduced by a 15% commission, leaving $1,487.50. If a total of $200 was bet on the winning horse, the dividend is approximately $7.44. This means for every $1 bet on that horse, the bettor would win $7.44.
Parimutuel Betting vs Bookmaker Fixed Odds – What Is The Difference?
In sports betting, wagering is usually done using two major systems – parimutuel betting and bookmaker fixed odds. Let’s explore the differences between these two systems to help you choose the best one for your wagering needs.
In fixed-odds betting, you place a bet with a sports betting app at predetermined odds. The odds, set by the bookmaker, tell the probability of an outcome and the potential payout if it happens. Meanwhile, parimutuel betting works differently. Rather than fixed odds, the payout is determined by the total bets collected in the pool after deducting the bookmaker’s commission.
Feature Parimutuel Betting Bookmaker Fixed Odds Odds Determined by the total amount wagered and how the bets are distributed. Set by the sportsbook based on their analysis. Payout You don’t know the payout until after the race. It depends on the amount bet overall and the number of people who bet on the winning horse. You know exactly how much you’ll potentially win when you place the bet, a fixed amount. Dividend The total pool, after deducting commission, is shared among all winners. Your payout is based on the fixed odds you got when placing your bet. Flexibility Payouts can change until the race starts. If fewer people bet on the winning outcome, the rewards could be higher. Odds are locked in as soon as you place your bet, so your payout doesn’t change. Commission Deducted from the total pool before payout. Included in the odds set by the bookmaker. Example You bet $10, and the final payout depends on the total bets placed. It may be different each time. You bet $10 at 5/1 odds. If you win, you get $50 plus your $10 back. Parimutuel Betting Seen at the Tracks
Although pool betting is available at the best offshore sportsbooks in the US, it’s more commonly done at racetracks, right at the betting counters. When you go to a racetrack, you’ll likely see many betting counters where you can place your bets.
Parimutuel betting in person adds excitement and a social element to your wagering experience. The racetrack often provides a thrilling atmosphere where you can watch horses live and cheer them on as you bet. If you win, you can collect your winnings in cash right away. You also get to interact with other fans, share tips, and enjoy the races together.
Can Parimutuel Betting Be Done Online?
Yes, pool betting is now available online. It used to be limited to the racetrack only, but with the rise of technology, you can place these bets anytime and anywhere. Many betting apps and sites provide the option to bet into the pool directly on their websites.
With online parimutuel betting, you get to enjoy wagering on horse racing without having to go to the track. Whether at home or on the go, online platforms make it easy to place your bets, watch the races, and withdraw your winnings.
Pros and Cons of Parimutuel Betting
Pool betting is a unique way of betting on sports, especially horse racing. It offers many benefits to bettors but also has its fair share of drawbacks. Let’s explore the advantages and disadvantages of this system of betting.
Pros:- Big Returns: Pool betting can sometimes produce bigger profits, especially on unlikely winners. Since fewer people will likely bet on underdogs, your payout will be massive if the less-fancied horse wins.
- Simplicity: Placing a bet using the parimutuel wagering system is simple. All you need is the horse number and the type of bet you want to place.
- Betting against the Market: You’re betting against other bettors, not an individual bookmaker, so you enjoy a unique and interesting experience.
- Excitement: The drama of not knowing your final winnings until after the race is over is thrilling and unmatched.
Cons:- Commission: The operator deducts a percentage of the pool and takes it as their commission, reducing the total payout.
- Lower Odds on Favorites: Favored and popular horses often provide lower payouts because many bettors place wagers on them, reducing your potential winnings.
- Uncertain Winnings: Finding value or plotting a strategy can be challenging as you don’t know the exact payout until after the race.
Parimutuel Betting Lends Itself to Novice Horse Racing Fans
Pool wagering is particularly well-suited for novice horse racing fans for the following reasons.
Easy to Place a Bet
One of the best things about parimutuel betting is how easy it is to place a bet. When at a racetrack, simply go to the betting counter and say something like, “I want to bet $5 on horse number 4.” You don’t have to worry about complicated betting terms or types of wagers. It’s so straightforward and user-friendly.
No Need to Calculate Winnings
Novices will probably enjoy reading that pool betting doesn’t require understanding the odds or calculating your winnings in advance. You simply choose your horse and place your bet. The system automatically calculates the payouts after the race based on the total pool and number of winning bets. Therefore, you can enjoy the race without worrying about the math.
Helpful Staff
Finally, racetrack staff are usually helpful and can guide you through the betting process. This makes it easier for beginners to place their first bets without hassles.
Parimutuel Betting Most Common in Horse Racing
Parimutuel betting is most common in horse racing. One reason is that it ensures a fair distribution of winnings. All bets are pooled together, and after the race, the total pool is divided equally among everyone who placed winning bets. This makes sure that the payout is fair and based on how much everyone wagers.
Another reason is the extra excitement it adds to horse races. Since you don’t know your exact winnings until after the race, you stay engaged until the very end. This unpredictability makes watching the race even more thrilling.
In addition, parimutuel betting on horse racing is simple to set up for race organizers. They don’t need to set and adjust odds since the payouts depend on the total amount of money bet.
Parimutuel Betting in Golf is Also Popular
Pool betting is not just for horse racing; it’s also becoming popular in golf. This type of bet lends itself to golf as the sport involves a large number of participants, like horse racing events. This makes the betting pool big and diverse, offering potentially bigger payouts for winners.
In parimutuel betting for golf, all bets are pooled together, and after the event, the total pool (after the organizers’ commission is deducted) is divided among the winners. The only difference between pool betting in horse racing and golf betting is that instead of betting on a horse, you’re wagering on a golfer.
To explain better, let’s consider an example of a major golf tournament with 100 golfers. Assuming the total amount of money bet is $100,000, and the organizers take a 10% commission, that leaves $90,000 in the pool. If $10,000 was wagered on the winning golfer, the payout is calculated by dividing the remaining pool by the amount bet on the winning golfer.
Dividend = Remaining Pool / Total Bet on Winning Golfer
= 90,000 / 10,000
= 9
This means that for every $1 you bet on the winning golfer, you would win $9.
Do You Get Your Stake Back With Winning Parimutuel Betting?
No, you do not get your stake back separately when you win in parimutuel betting. This is because your stake is part of the final payout in this type of wager.
Take this as an example. If the final dividend from pool betting on a horse race is $5 for every $1 bet and you wager $10 on the winning horse, you will win $50. This $50 profit includes both your original stake and your winnings. Therefore, you don’t get your stake back separately, as it’s already included in the $5 payout.
Parimutuel Betting Around the World
Parimutuel betting is a popular form of wagering in horse racing. It is used worldwide, and many countries even have their own version and unique name for the wager type. Below, we’ll look at what pool betting is called in some major countries.
- United States: If you hear the word ‘Tote betting’ in the United States, they are most likely referring to parimutuel betting. This form of wagering is used in horse racing, with each state having their own pools.
- United Kingdom: In the UK, “The Tote” is the system of pool betting used. It’s available at racetracks and provides many betting options.
- Ireland: Tote Ireland operates and manages parimutuel betting in Ireland. It offers betting services for all big Irish racing events.
- France: France birthed the concept of parimutuel betting. So, it’s no surprise that the country’s Pari Mutuel Urbain (PMU) is one of the leading operators in Europe.
- Hong Kong: The Hong Kong Jockey Club (HKJC) is in charge of running pool betting in Hong Kong. The organization is one of the largest and most reputed worldwide.
- Japan: Japan uses the term ‘Tote betting’ to refer to the parimutuel system. The organization responsible for running Tote betting in the country is the Japan Racing Association. They manage pool bets, realizing big revenue from horse racing.
- Australia: The Totalisator Agency Board (TAB) oversees parimutuel betting in Australia.
Are There Any Parimutuel Betting Strategies?
Strategizing when parimutuel betting on horse racing can be challenging. This is because you cannot know the final odds until after the race. That said, you can still explore the following tips to increase your chances of success.
1. Use Betting Exchanges
In a case where you have multiple parimutuel bets and only need one more winner, it may be a good idea to use betting exchanges to trade out and earn some profit.
2. Claim Sign-Up Bonuses
Most online sportsbooks offer welcome bonuses to help new customers get up and running quickly. You can take advantage of the bonus funds and free bets to wager without risking too much of your own money.
3. Watch the Money Flow
At some pools, the bookmaker displays the weight of money bettors wager on each horse in real-time. You can use this information to get an idea of which horses the public is backing and even draw up a rough estimate of the potential dividend.
Can You Bet Across Two Or More Races With Parimutuel Betting?
Yes, you can bet across two or more races when parimutuel betting on horse racing. Double, triple, quadrella, pick six, and jackpot bet types, for instance, are very popular.
These pool bets are also parlay or accumulator-type bets that require all picks to win for the wager to payout. While these bets usually provide massive returns, they can be difficult to win.
Parimutuel Betting Types
When parimutuel betting on horse racing, you don’t always have to wager on a horse to win. There are several other wagers you can explore. They include:
- Win: A wager on a horse to win the race.
- Place: A wager on a horse to finish in either first or second place.
- Show: A wager on a horse to secure a top 3 finish.
- Exacta (Perfecta or Exactor): A wager on the exact order of the first two finishers.
- Trifecta: A wager on the exact order of the first three finishers.
- Across the Board: A bet that combines win, place, and show wagers on the same horse. It’s a low-risk bet but often comes with a relatively low payout.
- Each-Way: A bet that combines win and place wagers.
- Placepot: A wager on a horse to place in each of the first six races at a meeting. It’s common in the UK and Ireland.
- Quadpot: Also popular in the UK and Ireland, Placepot involves betting on a horse to place in each of the last four races of a meeting.
- Jackpot: A wager on the winners of a set number of races, usually four to six.
The Last Word
Parimutuel betting is a popular wager among horse racing fans, and we now know why. It is easy for organizers to set up and guarantees a fair share of profit among winners. In addition, it offers an element of unpredictability and excitement, making your wagering experience more thrilling.
You can indulge in pool betting at a racetrack or sign up to an online sportsbook to wager on your favorite races. Remember to take advantage of promotions when betting online so you can wager without risking much of your own money. Also, ensure you use betting exchanges when you have multiple bets and need only one winner.
FAQs
How does parimutuel betting work?
How to calculate parimutuel betting?
What is the payout for parimutuel betting?
What is the difference between parimutuel and fixed odds?
Is it better to bet fixed or Tote?
Expert Guides
More
