The majority of horse race betting in the United States uses the pari-mutuel betting system. For this reason it is very important to understand how parimutuel betting works so you aren’t blindsided when the odds for a horse you bet on change leading up to the race.
Parimutuel Betting Explained
With the parimutuel betting system it’s important to understand that you are NOT betting against the house like you would be with a typical fixed odds bet.
Instead with parimutuel betting you are betting against the other people who are betting on the race. The odds shown by the racebook are just the current odds, which are subject to change depending on the amount of bets that come in on each horse. The morning line odds set by the racebook to begin race day are simply estimates of what the final odds will be, but in reality the morning line odds have no influence on the true odds of the race.
All bets placed on the race go into various pools of bets. The “win” bets go into their own pool, the “place” bets go into their own pool, the “superfecta” bets go into their own pool, and so on. The odds shown by the racebook indicate the current odds. For example, if a horse has 4/1 odds to win that means that 20% of the money bet taken so far have been placed on that horse. If a big bet comes in on that horse just before post time the odds could be forced down to 3/1, which would indicate 25% of the money bet was wagered on that horse.
Let’s look at an example with real dollar amounts.
Let’s say that “Horse A” has $1000 in total bets placed on them to win the race. The “win” pool has a total of $21,000 bet into it on all horses in the field. If “Horse A” pulled out the win then the $21,000 would be split evenly among the $1,000 of winning bets. In this example every $1 bet on “Horse A” would win $20 ($21 payout). This means “Horse A” had odds of 20/1 when the racebook stopped taking bets.
If say, another big $1000 bet came in on “Horse A” just before the race then there would be $2,000 bet on “Horse A” in a $22,000 pool. The person making this big bet would see odds of 20/1 when placing the wager, but their big bet would push the odds of “Horse A” down to 10/1.
The House’s Take
In the examples above I did not take into account the percentage of the bets that the house takes as commission. The odds for each horse are actually calculated after the house-take is removed. Most tracks typically take around 15% of the betting pool as a commission.
How To Win With Parimutuel Betting
Be contrarian. Because you’re betting against other gamblers it is most profitable to be contrarian when betting using the parimutuel betting system. Stay away from the hyped up horses that the general public is betting on. Instead look for the overlooked horses who still have a reasonable shot at winning, but whose odds indicate they are undervalued.
Not All Horse Race Bets Use Parimutuel
Typically, if you bet on a horse race in the “Racebook” section of a betting site the parimutuel betting system will be used, while if you bet in the “Sportsbook” section of a betting site on “Horse Racing Futures” then fixed odds will be used.
Make sure you know which betting system is being used before placing your bet or you may be in for a surprise after the race.
If you’re still confused check out the Parimutuel betting Wiki page for a different type of explanation. And check out our horse racing section for more information about betting on the ponies.