Parimutuel Betting

Author:

Paul R

Updated:

Oct 24, 2023

Big sports enthusiast, long-time Seahawks fan who loves betting on major pro and college sports.

Parimutuel Betting Guide

Horse racing, while technically a competitive sport, has always stood in a class of its own. For centuries, horse races have brought together ardent spectators and bettors alike. And while not every spectator is a bettor, a large section of the horse racing community cherishes the excitement of in-race betting.

The nature of horse racing betting, like the sport itself, is idiosyncratic, and some betting systems, like the pari-mutuel system, deviate from the standard concept of fixed odds betting.

What is pari-mutuel betting, the general concept of the parimutuel betting system, and how the system differs from fixed odds betting are the chief focuses of this guide.

What is Parimutuel Betting

Pari-mutuel wagering is a form of pool betting. While it has all the hallmarks of traditional sports betting, pari-mutuel wagers are inherently different.

Plainly said, the way pari-mutuel wagering works โ€“ both at the race track and at betting sites โ€“ is by creating a betting pool. The pool comprises all the money wagered in a horse race, whereby the winning tickets are divided among a handful of horseplayers.

Parimutuel betting is essentially betting against other gamblers who have staked money in the same race. The horseplayers who have staked their money on the winning horse (considering there is more than one winner) collect the largest portions of the purse. The other bars that won are paid out to the remaining winners proportionately relevant to the amount of money wagered. All parimutuel bets, results and calculations are often presented on the tote board at the racetrack.

Considering horse racing betting can be traced back to the Jacobean era in England, it is a relatively new method of horse racing betting, having emerged in the mid-19th century at French race tracks. Today, more than 30 states allow parimutuel betting, whether at a licensed betting site or at a racetrack.

Parimutuel Betting Example

If you’re unfamiliar with parimutuel betting, generic explanations will only get you so far in understanding the pari-mutuel system. To better understand, we will give you an example and compare it to traditional fixed odds wagering to illustrate the differences.

The way pari-mutuel betting works is the house creates a pool of bets on potential winners on racing day, takes its cut (vigorish, which is usually between 10% and 20%), then divides the remaining pool among those who wagered on the winner. With fixed odds betting, the operator locks in your bet on the given odds for a particular event at the time of betting and calculates your potential payout relevant to the amount of money wagered.

For example, say we have a six-horse race with the following wagers collected on each horse.

๐Ÿ‡Parimutuel Betting Example
Horse No.1$200
Horse No.2$300
Horse No.3$100
Horse No.4$400
Horse No.5$100
Horse No.6$200

The pool totals $1,300. If we deduct, say, a 20% house vigorish ($260), that leaves $1,040 in the pool. Depending on the winning outcome, those who wagered on the winning horse split the total amount of money.

Let’s say 8 players wagered $50 each on horse No.4 to win, which it does. The 8 horseplayers will divide all pari-mutuel bets collected on that race (minus the operator’s takeout) relevant to their staked amount of money on the winner. The horse’s odds can be calculated by dividing the vigorish-minus pool by the total amount wagered on the horse. By extension, below, we will explain exactly how pari-mutuel odds work. But first, to go over the types of parimutuel bets you can place.

Parimutuel Bet Types

Regardless of whether you’re betting on the Kentucky Derby, Preakness Stakes, or other horse racing events, online or in-person, you will come across the same types of horse racing bets.

In parimutuel betting, you can place straight bets, such as win, place, and show, or choose from a set of exotic wagers. Examples of exotic bets include exacta, quinella, trifecta, etc. We composed a list of the most common types of pari-mutuel markets alongside a short explanation of how each bet works.

  • Win – You place a bet on a horse to win the race.
  • Place – To win, your selection has to finish first or second.
  • Show – You get paid out if your horse finishes in any of the initial three positions.
  • Each way – You combine two wagers into one, where you get paid at longer odds if your selection wins and at lower if it comes in second.
  • Across the board – You place three separate bets, each an equal amount, on your selection to win, place, and show. The operator pays out on all three wagers if your horse finishes first, on two if it comes in second, and only on one if it finishes third.
  • Exacta – An exotic bet, the exacta pays out when you correctly predict which horse will finish first and which second.
  • Quinella – An exotic wager that pays out when you pick the two horses that will win and place, regardless of the order in which they finish.
  • Trifecta – You pick three horses to finish in the first three places in the correct order of finish.
  • Superfecta – With Superfecta bets, you pick the first four horses in the exact order.
  • Running Double – With this bet, you predict the winners of two consecutive races on the same track.
  • Pick 3 – Similarly to running double, the only difference is that you pick the winner of three consecutive races on the same racecourse.
  • Pick 6 – A parimutuel bet type where you pick the winner of six consecutive races on the same racetrack.

Parimutuel Betting Odds Explained

With fixed odds markets, you can calculate your potential winning bets with exact precision before the race starts. In contrast, with parimutuel betting, the odds are fluid up until the race starts depending on how many horseplayers back a specific horse in a given race.

Other variables that affect the odds include the total amount of money staked on the winner and the total betting pool. In other terms, the odds can shift until the race kicks off and are displayed on a tote board or on a relevant graph at an online sportsbook. We will follow through with an example similar to the one above to better demonstrate how parimutuel odds are calculated.

If we have a 5-horse event where the operator has collected the following amounts for each horse:

๐Ÿ‡Parimutuel Betting Odds Explained
Horse No.1$1,000
Horse No.2$600
Horse No.3$800
Horse No.4$1,200
Horse No.5$400

For some unspecified reason, Horse No.4 is the favorite and ultimately wins the race. To calculate the odds, you divide the total amount of money in the pool by the total amount of money staked on the horse that wins.

In this case, the total pool comes to $4,000. Minus, for instance, a 10% vigorish, the pool totals $3,600, which is split among the winners. If we divide $3,600 (the remaining pool) by the amount wagered on the winner ($1,200), the odds for that horse come to 3.00 in decimal odds or +200 in American odds.

The final payouts are calculated according to the size of your wager, where for every $1 wagered, you collect $3. If, for example, four horseplayers wagered an average of $300 each on Horse No.4, you multiply $300 by 3, which gives you a payout of $900.

Professional Sports for Parimutuel Betting

The parimutuel betting system is associated both with traditional thoroughbred racing and harness racing. However, the pool-based betting concept has found applications in other related and unrelated sports.

With regard to horse racing, many Grade I races apply the parimutuel system rather than providing fixed odds betting. Some operators allow parimutuel greyhound betting – another racing sport where the dividends paid from the pool are shared between the winning bettors. The winning bets are calculated proportional to the size of the pool and how much each bettor had staked on the winning greyhound. Pointsbet is one example of a sportsbook that provides greyhound and harness racing odds.

Pointsbet Sportsbook Lobby

Golf is yet another professional sport where you can stake parimutual bets. The method of pool betting in golf is similar to that in horse racing and greyhound racing, but the nature of the sport is different and comes with somewhat greater risk.

For instance, since the majority of parimutuel golf bets are placed at online sportsbooks, there could be major odds fluctuations depending on the number of bettors that join the pool and how many people bet on a certain golfer. This, in turn, can and will affect how much the winners are paid out, as even a small amount of wagers on longshot golfers to win in a long lineup of players will greatly affect the distribution of winnings.

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Most major racecourses in the US settle bets based on the parimutuel betting system. However, if you want to avoid the legwork of going to a racetrack to place a bet, you can bet via a mobile app. Any licensed sportsbook in the US can take a parimutuel wager via a native app, but it ultimately depends on the provider.

The obvious question you may ask yourself before betting online is, is parimutuel betting legal in the US? Yes and no. While pool betting on horse racing hasn’t always been recognized as a legal tender in North America, many states have slowly been embracing the system.

But since every state is, in a way, an entity of itself, it is solely responsible for determining its gambling laws. In that spirit, states have prohibited or legalized pari-mutuel wagering or are in the process of determining its status. You can find a handful of horse racing betting apps that may accept parimutuel bets. They are as follows:

  • Caesars Sportsbook – available on Android and iOS
  • BetMGM– Available on Android & iOS
  • PointsBet – Available on iOS
  • FanDuel – Available on iOS and Android
  • TwinSpires – Available on iOS and Android

Note, to be able to download a racing app from a certain horse racing betting provider and place parimutuel bets, you have to be in a state that allows this form of betting. Moreover, the online sportsbook must be licensed to provide mobile racing odds from the relevant state regulator.

Tips and Strategies for Parimutuel Betting

The nature of horse racing allows for both parimutuel betting and fixed odds betting. The main difference is with parimutuel wagering, you can’t tell how much (or if) you will win until after the race commences or shortly before it starts. This makes implementing a parimutuel betting strategy more challenging.

  1. Pick low-takeout sportsbooks – The house take on the total betting pool is a major factor in the final distribution of the pool. It would be a wise move to pick a sportsbook with a low take of the betting pool.
  2. Wait out the odds – If you’re betting online (desktop or mobile), the sportsbook should provide a live odds update to show odds fluctuations in real time. Waiting till the last moment, in this case, would be the smart move considering you can place bets based on the most relevant and recent information.
  3. Use a bonus – You can claim a welcome bonus or another promotion targeting parimutuel markets to boost your betting fund. Parimutuel and other racing-related bonuses can be seen as exclusive sports promotions and may only be available ahead of major racing events.
  4. Avoid exotic bets – Exotic bets have potentially lucrative payouts, but in reality, they represent a long shot. Predicting correct outcomes on multiple races as part of the same ticket has extremely long odds of turning out.

Parimutuel Betting Pros & Cons

Like any form of gambling, parimutuel betting has calculated and unexpected risks but also various benefits for those willing to take a risk.

โœ…Pros

  • The odds โ€“ in parimutuel betting, the odds and the potential payout can be a hit or miss as you don’t know for sure how the odds may change ahead of the race. On the upside, under the right circumstances, you can cash out on higher-than-expected odds and, subsequently, take a bigger payout.
  • Information can be vital โ€“ Veteran horse racing bettors understand the value of good information. Since parimutuel betting is betting against other horseplayers rather than against the house, correct information on form, injuries, and other recent updates can add value when picking potentially winning horses.
  • Check fixed odds betting markets โ€“ You can cross-reference and compare fixed odds horse racing markets for specific races on two or more betting sites to get a rough idea of where the odds are heading. You can then go to a parimutuel betting site and take your pick based on that information and on your judgment.

โŒCons

  • High house take โ€“ The operator’s cut is a major factor in the distribution of payouts among the winning tickets. After all, the higher the vig, the smaller the pool, which ultimately reduces each winner’s cut.
  • Unknown odds โ€“ while some horseplayers relish the excitement of not knowing their odds, many prefer to know if the bet is worth the risk, which, with parimutuel betting, you cannot know for sure until shortly before the race or immediately after it starts.

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