Pari-Mutuel Betting is a form of wagering where all bets of a particular type are pooled together, and the winnings are then divided among the bettors after deducting management expenses and taxes. The odds are determined by the total amount wagered on each outcome rather than being set by a bookmaker. Pari-mutuel betting is commonly used in horse racing, greyhound racing, and certain lottery games. The term “pari-mutuel” is of French origin and translates as “mutual betting.”
How are the odds calculated in Pari-Mutuel Betting?
The odds in Pari-Mutuel Betting aren’t fixed in advance. Instead, they change based on the amount wagered on each outcome. The final odds are only determined after the betting pool is closed, and they are calculated by dividing the total amount in the pool (minus the deductions) by the sum wagered on the winning outcome.
Why do the odds in Pari-Mutuel Betting fluctuate up to the start of the event?
Since the odds are determined by the total amount wagered on each outcome, they fluctuate as more bets are placed. If more money is bet on a particular outcome, the potential payout for that outcome will decrease, and vice versa.
What’s the difference between Pari-Mutuel Betting and Fixed-Odds Betting?
In Fixed-Odds Betting, the odds are set by the bookmaker and remain constant, regardless of how much money is wagered on each outcome. In Pari-Mutuel Betting, the odds fluctuate based on the betting patterns of the public, and the final odds are determined only when the betting pool is closed.
How does the house make money in Pari-Mutuel Betting?
Before the winnings are distributed to the successful bettors, a certain percentage (takeout or vigorish) is deducted from the total pool. This percentage covers management expenses, taxes, and the house’s profit.
Can Pari-Mutuel Betting be applied to sports other than horse or greyhound racing?
While Pari-Mutuel Betting is most commonly associated with horse and greyhound racing, it can be applied to other events where the outcome isn’t determined until the event’s conclusion, such as certain lottery games. However, its application in other sports is rare.