When sports betting, there is a specific way to wager that is important to know about: pari-mutuel betting.
Think of pari-mutuel betting as a “pool” party — everyone jumps in together and some people may emerge smiling. In fact, people also call it “pool betting.”
Pari-mutuel betting dominates California horse racing at tracks like Santa Anita, Golden Gate Fields, Del Mar Fairgrounds, and Los Alamitos Race Course.
Getting on track with CA horse racing’s pari-mutuel betting
Any sport in which contestants finish in a ranked order, like golf, can make use of pari-mutuel betting. Here’s how it works.
Instead of bets against the house like in fixed-odds wagering, pari-mutuel wagers go into a pool. After deduction of a share that goes to the track or OTB facility or online site, remaining monies ultimately get divided equally among winners. (And then the government takes its chunk, too, of course.) So, essentially, pari-mutuel wagerers bet against one another.
Pari-mutuel payouts ultimately depend on two factors:
- How many bettors wagered on the sports event
- How many wagerers picked the winner
Similarly to fixed-odds betting, pari-mutuel odds for the favorite to win will be the lowest, and odds for the underdog will come in highest. In California, horse racing tracks use fractional odds rather than American odds, so favorites have low fractions, and long shots have high fractions.
Pari-mutual betting has proven very popular with both recreational and professional gamblers. In fact, it’s the method most favored by people who wager on jai alai.
May the (probable) odds be with you
In the sports betting world, fixed-odds wagering gives bettors predetermined odds before they put any money down. In other words, your odds are locked in at the moment you place your bet. US sportsbooks use this type of wagering.
On the other hand, pari-mutuel betting only offers probable odds. Hosting tracks, OTB, or online sites base those on the breakdown of the wagering pool before the event begins. Then as more bets get placed, the odds can fluctuate right up until post time. So, a wagerer doesn’t know at the time of betting what a potential payout might be. The final odds determine payouts.
So, more uncertainty shadows pari-mutuel betting than fixed-odds betting. But on the plus side, pari-mutuel bettors have a wider spectrum of bets available. A plus for an operator is the ensured profit from taking its cut of the pool.
Because odds aren’t set, users can have difficulty in determining “value.” This is another drawback to the pari-mutuel system. Value occurs when the probability of a successful bet is greater than the suggested odds.
Types of pari-mutuel bets
As mentioned, one of the positives of pari-mutuel betting is the variety of wagers available. Single horse bets include:
- Win: The most popular bet and, obviously, a bet on which horse will come in first.
- Place: A bet on a certain horse either to win or finish second.
- Show: A bet on a certain horse either to win, finish second, or finish third.
- Win/Place/Show (also called “Across the Board”): If your horse comes in first, you win on all three bets. If your horse comes in second, you win on the show and place wagers. If your horse finishes third, you win the show wager.
Multiple horse or “exotic” bets pose a greater degree of difficulty and greater risks. At the same time, they offer greater payouts and include:
- Exacta (or “Perfecta”): A bet on two horses, one to win and one to place in that exact order.
- Quinella: Pretty much two exacta bets in one. A bet on two horses to win and to place, but the order doesn’t matter. Costs twice what the exacta bet does.
- Trifecta: A bet on three horses, one to win, one to place, and one to show in that exact order.
- Superfecta: You bet on four horses, one to win, one to place, one to show, and one to finish fourth in that exact order.
- Double (or “Daily Double”) / Pick 3 / Pick 4 / Pick 5 / Pick 6: A bet on multiple horses to win multiple races.
Modified exotic bets involve a multiple horse bet without requiring a correct order of finish.
Vive le pari-mutuel: A brief history
“Pari-mutuel” is French for “mutual betting.”
Credit for the pari-mutuel wagering system goes to an expatriate Spaniard who lived in France, Joseph Oller. He came up with this kind of wagering in 1867 as a solution to bookmakers profiting greatly — too greatly, he apparently thought — from gullible bettors.
France legalized pari-mutuel betting almost 25 years later. The country banned fixed odds wagering, and pari-mutuel profits went to either the government or horse racing. Today they go to many privately-owned commercial operators.
From France, the pari-mutuel system made its way across the globe. Its spread may have slowed down somewhat at first due to the difficulty of determining payouts, proving that math anxiety (“arithmophobia”) is not bounded by geography or time. Fortunately, in the 1920s an Australian engineer, George Julius, invented the “automatic totalizer” machine, which streamlined the process.
Oller went on to open the Moulin Rouge, made famous by artist Toulouse Lautrec (and eventually actress Nicole Kidman).
Is the future “fixed” against pari-mutuel betting?
Whether pari-mutuel betting will continue as the method of choice for horse racing and some other ranked-order sports events remains to be seen. Sports betting and mobile sportsbooks — currently offering fixed-odds betting only and enormously successful — have really changed the game. Some in the industry have considered changing, too.
A March conference held by the National Horsemen’s Benevolent and Protective Association (HBPA) addressed the possibility of introducing fixed-odds betting as a horse race wagering option. HBPA’s CEO, Eric Hamelback, said at the New Orleans gathering that he believes “fixed odds are in our future.” New Jersey and Colorado already offer fixed-odds horse race wagering.
Scott Daruty, president of Monarch Content Management, would like to see fixed odds introduced without harming pari-mutuel betting. “Fixed-odds wagering should be offered on a win-and-place basis only,” he said at the conference. And at least one panel member brought up adding pari-mutuel betting to sportsbook options where applicable.
Whatever happens with pari-mutuel and fixed-odds betting, of course, will impact California horse racing and the state’s participating bettors.