Parimutuel betting, or pool betting, is a betting system in which all bets of a particular type are placed together in a pool, taxes and the house-take are deducted, and payoff odds are calculated by sharing of the pool among all winning bets. In some countries it is known as the tote, after the totalisator, which calculates and displays bets already made.
The parimutuel system is used in gambling on horse racing, greyhound racing, jai alai, and other sporting events of relatively short duration in which participants finish in a ranked order. A modified parimutuel system is also used in some lottery games.
Parimutuel betting differs from fixed-odds betting in that the final payout is not determined until the pool is closed — in fixed-odds betting, the payout is agreed at the time the bet is made.
Parimutuel gambling is frequently state-regulated, and it is offered in many places where gambling is otherwise illegal. Parimutuel gambling is often also offered at off-track facilities, where players may bet on the events without actually being present to observe them in person.
Example In a hypothetical event that has eight possible outcomes, in a country using a decimal currency such as dollars, each outcome has a certain amount of money wagered:
Outcome Wager 1 60.00 2 140.00 3 24.00 4 110.00 5 220.00 6 94.00 7 300.00 8 80.00 Total 1028.00
Thus, the total pool of money on the event is $1028.00. Following the start of the event, no more wagers are accepted. Then suppose Outcome 4 occurs. The payout is now calculated. First the commission or take for the wagering company is deducted from the pool. For example, with a commission rate of 14.25% the calculation is: $1028 × 0.1425 = $146.49. This leaves a remaining amount of $881.51. This remaining amount in the pool is now distributed to those who wagered on Outcome 4: $881.51 / $110.00 = 8.01 ≈ $8 payout per $1 wagered. This payout includes the $1 wagered plus an additional $7 profit. Thus, the odds on Outcome 4 are 7-to-1 (or, expressed as decimal odds, 8.01).
Prior to the event, betting agencies will often provide an approximate pay-out figure for each given outcome should no more bets be accepted after the current time. Using the wagers and commission rate above (14.25%), an approximates table in decimal odds and fractional odds would be:
OutcomeDecimaloddsApprox.fractionalodds 1 14.69 13–1 2 6.30 5–1 3 36.73 35–1 4 8.01 7–1 5 4.01 3–1 6 9.38 8–1 7 2.94 2–1 8 11.02 10–1
In real-life examples, such as horse racing, the pool size often extends into millions of dollars with many different types of outcomes (winning horses) and complex commission calculations.
Sometimes, the amounts paid out are rounded down to a denomination interval — in California, Australia, and British Columbia, 10¢ intervals are used. The rounding loss is known as breakage and is retained by the betting agency as part of the commission.
In some situations, a negative breakage may occur — for example, in horse racing when an overwhelming favorite wins (or shows or places). The parimutuel calculation results might call for a very small winning payout (say, $1.02 or $1.03 on a dollar bet), but legal regulations might require a larger payout (e.g., minimum $1.10 on a dollar bet). This condition is sometimes referred to as a minus pool.
Algebraic summary In an event with a set of n possible single-winner outcomes, with wagers the total pool of money on the event is
After the wagering company deducts a commission rate of from the pool, the amount remaining to be distributed between the successful bettors is . Those who bet on the successful outcome will receive a payout of for every dollar they bet on it.
When there are possible winners, such as a North American "place" bet which has winners, the total amount to be distributed is first divided into equal shares. If is one of the winners, those who bet on outcome will receive a payout of for every dollar they bet on it.
History The parimutuel system was invented by French-Catalan entrepreneur and showman impresario Joseph Oller in 1867.Ferran Canyameres, L'Homme de la Belle Époque, Éditions Universelles, Paris, 1946.
The large amount of calculation involved in this system led to the invention of a specialized mechanical calculating machine known as a totalisator, "automatic totalisator" or "tote board", invented by the Australian engineer George Alfred Julius. The first was installed at Ellerslie Racecourse, Auckland, New Zealand, in 1913, and they came into widespread use at race courses throughout the world. The U.S. introduction was in 1927, which led to the opening of the suburban Arlington Racetrack in Arlington Park, near Chicago, and Sportsman's Park in Cicero, Illinois, in 1932.Steven A. Riess City Games: The Evolution of American Urban Society and the Rise of Sports pg. 188, University of Illinois Press (1991)
Strategy and comparison with independent bookmakers Unlike many forms of casino gambling, in parimutuel betting the gambler bets against other gamblers, not the house, which necessarily implies that the bank cannot be broken. The science of predicting the outcome of a race is called handicapping.
Independent off-track bookmakers typically have a smaller take and thus offer better payoffs, but they are illegal in some countries. However, the introduction of Internet gambling led to "rebate shops". These off-shore betting shops promise to return some percentage of every bet made to the bettor. They may reduce their take from 15–18% to as little as 1–2%, while still generating a profit by operating with minimal overhead.
By region
There may be several different types of bets, in which case each type of bet has its own pool. The basic bets involve predicting the order of finish for a single participant, as follows:
North America
In Canada and the United States, the most common types of bet on horse races include:
Single race
Win: to succeed the bettor must pick the horse that wins the race. Place: the bettor must pick a horse that finishes either first or second. Show: the bettor must pick a horse that finishes first, second or third. Across the board: the bettor places three separate bets to win, place or show. Exacta, perfecta, or exactor: the bettor must pick the two horses that finish first and second, in the exact order. Trifecta or triactor: the bettor must pick the three horses that finish first, second, and third, in the exact order. Superfecta: the bettor must pick the four horses that finish first, second, third and fourth, in the exact order. Quinella or Quiniela: the bettor must pick the two horses that finish first and second, in any order. Any2 or Duet: The bettor must pick two horses who will place first, second or third but can finish in any order. This could be thought of as a double horse show key (see below). Hi 5 or Super 5: The bettor must pick five horses finishing in the exact order. Typically does not occur unless there are 8 or more horses in a race.
Multiple races
Double: the bettor must pick the winners of two successive races Triple, Pick3 or Treble: the bettor must pick the winners of three successive races Quadrella or Quaddie: The bettor must pick the winners of four nominated races at the same track. Pick six or Sweep six: the bettor must pick the winners of six consecutive races.
Australia/New Zealand
Source:
Single race
Win: Runner must finish first. Place: Runner must finish first, second or third place. In events with five to seven runners, no dividends are payable on third place (signified by "NTD" or No Third Dividend) and in events with 4 or fewer runners, only Win betting is allowed. Each-way: A combination of Win and Place. A $5 bet Each-way is a $5.00 bet to Win and a $5.00 bet to Place, for a total bet cost of $10. Exacta: The bettor must correctly pick the two runners which finish first and second. Quinella: The bettor must pick the two runners which finish first and second, but need not specify which will finish first. Trifecta: The bettor must correctly pick the three runners which finish first, second, and third. First4: The bettor must correctly pick the four runners which finish first, second, third and fourth. Duet: The bettor must pick two horses who will place first, second or third but can finish in any order.
Multiple races
Running double: The bettor must pick the winners of two consecutive races at same track. Daily double: The bettor must pick the winners of two nominated races at the same track. Treble: The bettor must pick the winners of three nominated races at the same track. This bet type is only available in the states of Queensland and South Australia. Quadrella or Quaddie: The bettor must pick the winners of four nominated races at the same track.
United Kingdom
The following pools are operated at meetings in mainland Britain:
Single race
Win: Runner must finish first. Place: Runner must finish within the first two places (in a 5–7 runner race), three places (8–15 runners and non-handicaps with 16+ runners) or four places (handicaps with 16+ runners). Each-way: Charged and settled as one bet to win and another bet to place (for example, a punter asking for a bet of "five pounds each way" will be expected to pay ten pounds). Exacta: The bettor must correctly pick the two runners which finish first and second, in the correct order. Trifecta: The bettor must correctly pick the three runners which finish first, second, and third, in the correct order. Swinger: The bettor must correctly pick two runners to finish in the places, both runners must place, in any order.
Multiple races
Jackpot: Pick the winner from each of the first six races of the advertised Jackpot meeting of the day. Placepot: Pick a placed horse from each of the first six races from any British race meeting. Quadpot: Pick a placed horse from the third, fourth, fifth and sixth race from any British race meeting. Scoop6: Pick the winner (for the win fund) or a placed horse (for the place fund) from the six advertised Scoop6 races. Saturdays only. Super7: Pick the winner from seven races. This bet ceased being offered by totepool from January 2012.
Ireland Tote Ireland operates the following pools
Single race
Win: Runner must finish first Place: Runner must finish within the first two places (in a 5–7 runner race), three places (8–15 runners and non-handicaps with 16+ runners) or four places (handicaps with 16+ runners). (From 23 April 2000 to 23 May 2010, Tote Ireland operated 4-place betting on all races with 16 or more runners.) Each-way: Charged and settled as one bet to win and another bet to place (for example, a punter asking for a bet of "five euro each way" will be expected to pay ten euro). Exacta: The bettor must correctly pick the two runners which finish first and second, in the correct order (replaced Forecast which allowed any order). Trifecta: The bettor must correctly pick the three runners which finish first, second, and third, in the correct order (introduced on 26 May 2010, replacing Trio which allowed any order).
Multiple races
Jackpot: A Pick 4 bet on races 3–6 at every meeting. Pick Six: On races 1–6 at one meeting on all Sundays and occasionally on other days (introduced on 9 January 2011). Placepot: The better must correctly pick one horse to place in each of the races 2–7.
Sweden Source:
Bet types for harness racing (trotting):
Single race
Vinnare (winner): Runner must finish first. Plats (place): Runner must finish within the first two places (up to five runners) or first three places (six runners or more). Vinnare & Plats: Two bets, one on "vinnare" and one on "plats" for the same runner. Asking for a bet of "50 SEK vinnare och plats" costs 100 SEK Tvilling (twin): The bettor must pick the runners that finish first and second, but need not specify which will finish first.