Fans may be drawn to horse racing by the beauty and elegance of the horses, and they may be tantalized by the amazing athletic prowess demonstrated in each competition, but betting is what keeps the sport going.
Private casual bets may, of course, take place between friends (and rivals); someone you know may offer you five dollars if his choice of horse out finishes yours, for instance. Las Vegas and other casinos offer “Future” bets on big races such as the Kentucky Derby, in which a punter can place a bet on a horse months before entries are even drawn. Some bettors, particularly those who participate in other countries, may use private bookmakers, who set their own odds.
None of those, however, are the primary betting systems used at North American racetracks. That system, which involves bets being pooled together by the racetrack, is known as parimutuel betting, and it can be a bit intimidating to a novice.
Parimutuel Betting History
According to this pari-mutuel betting guide by TwinSpires, parimutuel betting is named for the place it originated, that being Paris, France. The system was invented by Joseph Oller, who also co-founded the Moulin Rouge cabaret. In the 1860s, Oller observed Parisian commoners enjoying a game of chance at the racetrack, pooling their bets together and randomly selecting a winner.
Oller retooled the system to involve skill, requiring the winner to select one or more horses, but still keeping the idea of a common betting pool that would increase betting participation while ensuring that the house would not go bankrupt. This system became popular worldwide and was often seen as less corrupt than the use of a private bookmaker.
Use of the parimutuel system involves quite a bit of math calculation in an era where calculators were not yet available. People began to use calculating machines known as totalizers, the most prominent of which was invented by George Julius in 1912. These machines recorded the bets on each horse as well as the total amount of money bet. Eventually, these machines evolved into the modern “tote board,” which is still used at racetracks today.
How It Works
When you place a bet at a casino, you are typically playing against the house. In a parimutuel system, you are primarily competing against other bettors.
When you place a bet on a horse to win, your bet enters a large pool of money with everyone else who bet on that particular horse to win. If that horse does indeed win, the racetrack deducts a small percentage, and then the rest of that pool of money is paid out proportionately to you and the others who bet on that horse. The more popular that horse was among bettors, the less profit stands to be made, because the pool will be split more ways.
One of the key factors to remember when betting using a parimutuel system is that the odds can and do change. Racetracks use oddsmakers to set baseline odds for each horse, referred to as “morning line odds.” These odds, however, change the moment the betting windows open and horseplayers begin to actually put money on horses.
For example, in the 2022 Kentucky Derby, the morning-line favorite was Grade I Blue Grass Stakes winner Zandon, who opened at odds of 3-1. By the time the horses had entered the starting gate, Zandon had floated up to about 6-1 odds and was the second choice behind 4-1 favorite Epicenter, who drew in more bets throughout the day.
In contrast, eight horses officially entered at the time the morning line was created (an important distinction since, at the time, eventual winner Rich Strike was on the also-eligible list) were tied for “longest shot” at 30-1: Happy Jack, Summer is Tomorrow, Pioneer of Medina, Barber Road, Classic Causeway, Tiz the Bomb, Tawny Port, and Ethereal Road. At post time, Ethereal Road had been withdrawn, and the odds for each other horse had changed: Happy Jack was bet down to around 23-1, while the others ranged from approximately 36-1 to 80-1.
For this reason, in a parimutuel betting system a successful bettor not only knows the horses in the race, but knows the betting patterns of their fellow gamblers.
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