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EspañolPARIMUTUEL BETTING
'Parimutuel betting' (from the French language: ''pari mutuel'', mutual betting) is a betting system in which all bets of a particular type are placed together in a pool; taxes and a house take are removed, and payoff odds are calculated by sharing the pool among all placed bets.
The parimutuel system is used in gambling on horse racing, greyhound racing, jai alai, and all 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 gambling is frequently state-regulated, and 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.
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 sold.
Consider a hypothetical event which has 8 possible outcomes, in a country using a decimal currency such as dollars . Each outcome has a certain amount of money wagered:
Outcome 1 – $30.00
Outcome 2 – $70.00
Outcome 3 – $12.00
Outcome 4 – $55.00
Outcome 5 – $110.00
Outcome 6 – $47.00
Outcome 7 – $150.00
Outcome 8 – $40.00
Thus the total ''pool'' of money on the event is $514.00. Following the start of the event, no more wagers are accepted. The event is decided and the winning outcome is determined to be Outcome 4 with $55.00 wagered. 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: $514 - 0.1425
★ $514 = $440.76. The remaining amount in the pool is now distributed to those who wagered on Outcome 4: $440.76 / $55 = $8.00 per $1.00 wagered. Thus, in decimal odds, outcome 4 is said to pay out $8.00.
Often at certain times prior to the event, betting agencies will provide ''approximates'' for what should be paid out for a given outcome should no more bets be accepted at the current time. Using the example above, an approximates table using the same commission rate in decimal odds would be:
Outcome 1 – $14.69
Outcome 2 – $6.30
Outcome 3 – $36.73
Outcome 4 – $8.00
Outcome 5 – $4.00
Outcome 6 – $9.38
Outcome 7 – $2.94
Outcome 8 – $11.02
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 the United States and Australia, 10 cent intervals are used. The rounding loss is sometimes known as ''breakage'' and is retained by the betting agency as part of the commission.
The parimutuel system was invented by Parisian perfume maker Joseph Oller in 1865 when asked by a bookmaker friend to devise a fair system for bettors which guarantees a fixed profit for the bookmaker.
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". 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 1933 at Arlington Park, near Chicago, Illinois).
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:
In Canada and the United States, the most common types of bet on horse races include:
★ 'win' – to succeed the bettor must pick the horse which wins the race.
★ 'place' – the bettor must pick a horse which finishes either first, second or sometimes third (depending if there is a third dividend).
★ 'show' – the bettor must pick a horse which finishes first, second, or third.
★ exacta, perfecta, or 'exactor' –the bettor must pick the two horses which finish first and second, in the right order.
★ 'quinella' or 'quiniela' – the bettor must pick the two horses which finish first and second, but need not specify which will finish first.
★ trifecta or 'triactor' – the bettor must pick the three horses which finish first, second, and third, in the right order.
★ superfecta – the bettor must pick the four horses which finish first, second, third and fourth, in the right order.
★ 'box' – a box can be placed around exotic betting types such as exacta, trifecta or superfecta bets. This places a bet for all combinations of the numbers in the box. A trifecta box with 3 numbers has 6 possible combinations and costs 6 times the betting base amount. A trifecta box with 5 numbers has 120 possible combinations and costs 120 times the betting base amount. In France, a 'box' gives only the ordered permutations going along an ordered list of numbers such that a trifecta box with 6 numbers would cost 20 times the base amount.
★ 'double' – the bettor must pick the winners of two successive races; most race tracks in Canada and the United States take double wagers on the first two races on the program (the 'daily double') and on the last two (the 'late double').
★ 'triple' – the bettor must pick the winners of three successive races; many tracks offer 'rolling triples', or triples on any three successive races on the program. Also called 'pick three' or more commonly, a 'treble'
★ 'sweep' – the bettor must pick the winners of four or more successive races. In the US, this is usually called 'pick four' and 'pick six,' with the latter paying out a consolation return to bettors correctly selecting five winners out of six races, and with "rollover" jackpots accumulating each day until one or more bettors correctly picks all six winners.
Win, place and show wagers class as 'straight bets', and the remaining wagers as 'exotic bets'. Bettors usually make multiple wagers on exotic bets. A 'box' consists of a multiple wager in which punters bet all possible combinations of a group of horses in the same race. A 'key' involves making a multiple wager with a single horse in one race bet in one position with all possible combinations of other selected horses in a single race. A 'wheel' consists of betting all horses in one race of a bet involving two or more races. For example a 1-all daily double wheel bets the 1-horse in the first race with every horse in the second.
People making straight bets commonly employ the strategy of an 'each way' bet. Here the bettor picks a horse and bets it will win, and makes an additional bet that it will show, so that theoretically if the horse runs third it will at least pay back the two bets. The Canadian and American equivalent is the bet across (short for ''across the board''): the bettor bets equal sums on the horse to win, place, and show.
In Canada and the United States punters make exotic wagers on horses running at the same track on the same program. In the United Kingdom bookmakers offer exotic wagers on horses at different tracks. Probably the 'Yankee' occurs most commonly: in this the bettor tries to pick the winner of four races. This bet also includes subsidiary wagers on smaller combinations of the chosen horses; for example, if only two of the four horses win, the bettor still collects for their double. A 'Trixie' requires trying to pick three winners, and a 'Canadian' or 'Super Yankee' trying to pick five; these also include subsidiary bets. The term 'nap' identifies the best bet of the day.
A 'parlay' or 'accumulator' consists of a series of bets in which bettors stake the winnings from one race on the next in order until either the bettor loses or the series completes successfully.
★ '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 ("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 pick the two horses which finish first and second and specify which will finish first
★ 'Quinella' – the bettor must pick the two horses which finish first and second, but need not specify which will finish first.
★ 'Trifecta' the bettor must pick the three horses which finish first, second, and third and specify which will finish first, second and third.
★ 'First4' – the bettor must pick the four horses which finish first, second, third and fourth, and specify which will finish first, second, third and fourth.
★ '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.
★ 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) or four places (16+ runners).
★ Each-way - Charged and settled as one bet to win and another bet to place (if asking for a bet of "five pounds each way" you will be expected to pay ten pounds).
Depending on the facility rules, which might vary from event to event, other bets may also be offered which allow the user to pick the finish of more than one participant, or more than one event. These are called 'exotics', and generally pay higher dividends. However, the facility's take is usually higher for these bets as well. The major exotics (in North America and Australia) are:
★ Exacta (exactor, perfecta) - Picks the first and second place finishers, in order.
★ Quinella - Picks the first and second place finishers, in either order.
★ Trifecta (triactor) - Picks the first, second, and third place finishers, in order.
★ Superfecta (First Four in Australia) - Picks the first four finishers in order.
★ Daily/Extra/Rolling Double - Picks the first place finishers in two different events.
★ Quadrella - Picks the first in four consecutive races.
★ Pick 3 and pick 4 - Picks the first in three or four consecutive races, not necessarily the first three or four races of the day. Some tracks offer a "rolling pick 3," on the first three races, the second through fourth, third through fifth, and so on.
★ Pick 6 (jackpot) - Picks the winners in six consecutive events.
Unlike many forms of casino gambling, in parimutuel betting the gambler bets against other gamblers, not the house. The science of determining the outcome of a race is called handicapping.
It is possible for a skilled player to win money in the long run at this type of gambling, but overcoming the deficit produced by taxes, the facility's take, and the breakage is difficult to accomplish and few people are successful at it.
Independent off-track bookmakers have a smaller take and thus offer better payoffs, but they are illegal in some countries. However, with the introduction of Internet gambling has come "rebate shops". These off-shore betting shops in fact return some percentage of every bet made to the bettor. They are in effect reducing their take from 15-18% to as little as 1 or 2%, still ensuring a profit as they operate with minimal overhead. Rebate shops allow skilled horse players to make a steady income.
The recent WTO decision against the United States of America by the small island nation of Antigua opens the possibility for offshore horse betting groups to compete legally with parimutuel betting groups.
★ Bet exchange
★ Bookmaker
★ Spread betting
★ Tote Ireland
Tote Ireland
Horse Betting
Parimutuel applications in finance
The parimutuel system is used in gambling on horse racing, greyhound racing, jai alai, and all 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 gambling is frequently state-regulated, and 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.
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 sold.
Example of parimutuel betting
Consider a hypothetical event which has 8 possible outcomes, in a country using a decimal currency such as dollars . Each outcome has a certain amount of money wagered:
Outcome 1 – $30.00
Outcome 2 – $70.00
Outcome 3 – $12.00
Outcome 4 – $55.00
Outcome 5 – $110.00
Outcome 6 – $47.00
Outcome 7 – $150.00
Outcome 8 – $40.00
Thus the total ''pool'' of money on the event is $514.00. Following the start of the event, no more wagers are accepted. The event is decided and the winning outcome is determined to be Outcome 4 with $55.00 wagered. 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: $514 - 0.1425
★ $514 = $440.76. The remaining amount in the pool is now distributed to those who wagered on Outcome 4: $440.76 / $55 = $8.00 per $1.00 wagered. Thus, in decimal odds, outcome 4 is said to pay out $8.00.
Often at certain times prior to the event, betting agencies will provide ''approximates'' for what should be paid out for a given outcome should no more bets be accepted at the current time. Using the example above, an approximates table using the same commission rate in decimal odds would be:
Outcome 1 – $14.69
Outcome 2 – $6.30
Outcome 3 – $36.73
Outcome 4 – $8.00
Outcome 5 – $4.00
Outcome 6 – $9.38
Outcome 7 – $2.94
Outcome 8 – $11.02
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 the United States and Australia, 10 cent intervals are used. The rounding loss is sometimes known as ''breakage'' and is retained by the betting agency as part of the commission.
History of parimutuel betting
The parimutuel system was invented by Parisian perfume maker Joseph Oller in 1865 when asked by a bookmaker friend to devise a fair system for bettors which guarantees a fixed profit for the bookmaker.
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". 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 1933 at Arlington Park, near Chicago, Illinois).
Parimutuel bet types
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:
★ 'win' – to succeed the bettor must pick the horse which wins the race.
★ 'place' – the bettor must pick a horse which finishes either first, second or sometimes third (depending if there is a third dividend).
★ 'show' – the bettor must pick a horse which finishes first, second, or third.
★ exacta, perfecta, or 'exactor' –the bettor must pick the two horses which finish first and second, in the right order.
★ 'quinella' or 'quiniela' – the bettor must pick the two horses which finish first and second, but need not specify which will finish first.
★ trifecta or 'triactor' – the bettor must pick the three horses which finish first, second, and third, in the right order.
★ superfecta – the bettor must pick the four horses which finish first, second, third and fourth, in the right order.
★ 'box' – a box can be placed around exotic betting types such as exacta, trifecta or superfecta bets. This places a bet for all combinations of the numbers in the box. A trifecta box with 3 numbers has 6 possible combinations and costs 6 times the betting base amount. A trifecta box with 5 numbers has 120 possible combinations and costs 120 times the betting base amount. In France, a 'box' gives only the ordered permutations going along an ordered list of numbers such that a trifecta box with 6 numbers would cost 20 times the base amount.
★ 'double' – the bettor must pick the winners of two successive races; most race tracks in Canada and the United States take double wagers on the first two races on the program (the 'daily double') and on the last two (the 'late double').
★ 'triple' – the bettor must pick the winners of three successive races; many tracks offer 'rolling triples', or triples on any three successive races on the program. Also called 'pick three' or more commonly, a 'treble'
★ 'sweep' – the bettor must pick the winners of four or more successive races. In the US, this is usually called 'pick four' and 'pick six,' with the latter paying out a consolation return to bettors correctly selecting five winners out of six races, and with "rollover" jackpots accumulating each day until one or more bettors correctly picks all six winners.
Win, place and show wagers class as 'straight bets', and the remaining wagers as 'exotic bets'. Bettors usually make multiple wagers on exotic bets. A 'box' consists of a multiple wager in which punters bet all possible combinations of a group of horses in the same race. A 'key' involves making a multiple wager with a single horse in one race bet in one position with all possible combinations of other selected horses in a single race. A 'wheel' consists of betting all horses in one race of a bet involving two or more races. For example a 1-all daily double wheel bets the 1-horse in the first race with every horse in the second.
People making straight bets commonly employ the strategy of an 'each way' bet. Here the bettor picks a horse and bets it will win, and makes an additional bet that it will show, so that theoretically if the horse runs third it will at least pay back the two bets. The Canadian and American equivalent is the bet across (short for ''across the board''): the bettor bets equal sums on the horse to win, place, and show.
In Canada and the United States punters make exotic wagers on horses running at the same track on the same program. In the United Kingdom bookmakers offer exotic wagers on horses at different tracks. Probably the 'Yankee' occurs most commonly: in this the bettor tries to pick the winner of four races. This bet also includes subsidiary wagers on smaller combinations of the chosen horses; for example, if only two of the four horses win, the bettor still collects for their double. A 'Trixie' requires trying to pick three winners, and a 'Canadian' or 'Super Yankee' trying to pick five; these also include subsidiary bets. The term 'nap' identifies the best bet of the day.
A 'parlay' or 'accumulator' consists of a series of bets in which bettors stake the winnings from one race on the next in order until either the bettor loses or the series completes successfully.
Australia
★ '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 ("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 pick the two horses which finish first and second and specify which will finish first
★ 'Quinella' – the bettor must pick the two horses which finish first and second, but need not specify which will finish first.
★ 'Trifecta' the bettor must pick the three horses which finish first, second, and third and specify which will finish first, second and third.
★ 'First4' – the bettor must pick the four horses which finish first, second, third and fourth, and specify which will finish first, second, third and fourth.
★ '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.
Ireland and the United Kingdom
★ 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) or four places (16+ runners).
★ Each-way - Charged and settled as one bet to win and another bet to place (if asking for a bet of "five pounds each way" you will be expected to pay ten pounds).
Depending on the facility rules, which might vary from event to event, other bets may also be offered which allow the user to pick the finish of more than one participant, or more than one event. These are called 'exotics', and generally pay higher dividends. However, the facility's take is usually higher for these bets as well. The major exotics (in North America and Australia) are:
★ Exacta (exactor, perfecta) - Picks the first and second place finishers, in order.
★ Quinella - Picks the first and second place finishers, in either order.
★ Trifecta (triactor) - Picks the first, second, and third place finishers, in order.
★ Superfecta (First Four in Australia) - Picks the first four finishers in order.
★ Daily/Extra/Rolling Double - Picks the first place finishers in two different events.
★ Quadrella - Picks the first in four consecutive races.
★ Pick 3 and pick 4 - Picks the first in three or four consecutive races, not necessarily the first three or four races of the day. Some tracks offer a "rolling pick 3," on the first three races, the second through fourth, third through fifth, and so on.
★ Pick 6 (jackpot) - Picks the winners in six consecutive events.
Strategy and comparison with independent bookmakers
Unlike many forms of casino gambling, in parimutuel betting the gambler bets against other gamblers, not the house. The science of determining the outcome of a race is called handicapping.
It is possible for a skilled player to win money in the long run at this type of gambling, but overcoming the deficit produced by taxes, the facility's take, and the breakage is difficult to accomplish and few people are successful at it.
Independent off-track bookmakers have a smaller take and thus offer better payoffs, but they are illegal in some countries. However, with the introduction of Internet gambling has come "rebate shops". These off-shore betting shops in fact return some percentage of every bet made to the bettor. They are in effect reducing their take from 15-18% to as little as 1 or 2%, still ensuring a profit as they operate with minimal overhead. Rebate shops allow skilled horse players to make a steady income.
The recent WTO decision against the United States of America by the small island nation of Antigua opens the possibility for offshore horse betting groups to compete legally with parimutuel betting groups.
See also
★ Bet exchange
★ Bookmaker
★ Spread betting
★ Tote Ireland
External Links
Tote Ireland
Horse Betting
Parimutuel applications in finance
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psst.. try this: add to faves
