Pari-Mutuel Wagering 101: What is it, How is it Different, Types of Bets, Origins

If you’ve heard the term ‘pari-mutuel wagering’ but aren’t exactly sure what it means, you’ve found yourself in the right place.

This guide is designed to educate and enlighten you on all things pari-mutuel wagering, and equip you with the knowledge and tools to explore this time-tested wagering method confidently and comfortably.

After all, the pari-mutuel system has been employed at horse racing tracks around the world for over 100 years. To this day, it remains the go-to model for Thoroughbred tracks across North America.

So, without any further ado, allow us to answer all your pari-mutuel related inquiries.

Jump ahead to each section here:

• What is pari-mutuel wagering?
• Differences between pari-mutuel and fixed odds
• Types of pari-mutuel wagers
• Origins of pari-mutuel wagering

What is pari-mutuel wagering?

Simply put, pari-mutuel wagering is any type of wagering where all the bets on an event form a pool, the taxes and house share are removed, and the winners divide the remainder.

As such, pari-mutuel wagering is also often referred to as “pool wagering.” In horse racing, for example, the racetrack holding the event(s) will take a certain percentage off the top before paying out funds to the winning public.

The common track takeout on win wagers is 16 percent. Other larger wagers such as trifectas (explained further below) tend to absorb a takeout north of 20 percent.

As alluded to thoroughly thus far, the pari-mutuel system has become synonymous with horse racing and remains the standard at tracks around North America. However, this particular handicapping model is not exclusive to horse racing and does appear in other forms of gambling.

Differences between pari-mutuel wagering and fixed odds wagering

When it comes to pari-mutuel wagering and fixed odds wagering, there are several key distinctions between the two models for prospective horseplayers (people who bet on horse racing) to understand.

It has already been established that the pari-mutuel system follows a pool-like structure. Under this format, players are, in essence, wagering against fellow bettors. This contrasts the fixed odds model where players are effectively betting against the bookmaker.

Odds are at the core of the contrast between the pari-mutuel and fixed odds systems.

On the pari-mutuel side, odds are determined by the amount of wagers placed on a horse (or combination of horses) by the betting public, minus the track takeout (see section above).

Perhaps the most notable difference between pari-mutuel and fixed odds wagering is the way odds move or fluctuate.

As the term ‘fixed’ in fixed odds would suggest, the odds don’t move the moment your bet is locked into place. For example, if you bet the money line at -200 two hours before the game but movement in the market pushes it to -250 at gametime, your bet remains locked in at -200.

In the pari-mutuel sphere, odds are not set in stone and can noticeably fluctuate before a horse race begins. This tends to occur more frequently when pool sizes are small, given that it won’t take as large a wager or wagers to influence the odds dramatically.

Because of this, horseplayers don’t know exactly what odds their selection will receive until the start of a race. Fluctuation, in this instance, works both ways. For example, if the horse you side with is 3-1 20 minutes before the race but at post time closes at 5-1, and wins, you receive a payout at the closing odds of 5-1.

However, the same 3-1 horse may also close at 9-5, and shrink your total payout.

Read our horse betting 101 guide for more information on how fractional odds and payouts work.

Types of pari-mutuel wagers

Like traditional sports betting, the pari-mutuel model offers a multitude of bets – some more involved than others – for players to engage with. The most effective way to break down the horse betting gamut is to split it into two categories: straight wagers and exotic bets.

The difference between the two categories is quite simple.

A straight wager is a horse bet that involves a single horse in a single race. Anytime you put additional horses, additional races or both into the bet, it becomes an exotic bet.

The only other bit of information to realize is that exotic bets almost invariably pay better and are more difficult to win than straight wagers (no different than straight wagers and parlays in sports betting).

So, if it helps, you can think of straight wagers as simple bets, and exotic wagers as more complex ones.

Straight bets

Win – A win bet simply means that your chosen horse must win the race.

Place – Your chosen horse must win the race or finish second.

Show – Your chosen horse must win the race, finish second or finish third.

Combinations – You can combine these three bets and get paid for any result that your horse can secure. This includes win/place, place/show and win/place/show.

Exotic bets

Exacta – You must pick the first and second-place finishers in a race in the correct order for the bet to pay.

Quinella – A quinella is an exacta bet, but without the order requirement. You must pick two horses to win and place, but the order does not matter.

Trifecta – You must select the first, second, and third-place finishers in a race in the correct order.

Superfecta – Choose the first, second, third, and fourth-place finishers in a race in the correct order.

Double/Pick 3/Pick 4/ Pick 6 – With this family of wagers, you must pick the winning horse in multiple races. The only difference between these types of bets is the number of races that you must pick. The Daily Double, for example, requires you to select the winner of two straight races. The Pick 3 is three straight, the Pick 4 is four, and so forth.

Omni - An Omni bet (also known as Swinger) requires you to select at least two of the top three finishers in a single race.

Hi-5 - To win a Hi-5, you must select the first, second, third, fourth, and fifth place finishers in a single race in the correct order.

In addition to those types of wagers, there are also several exotic bet modifiers that you can put into action. Choosing these elements will increase the price you must pay to place a wager, but they can also increase your chances of winning. They are:

Box – A box bet allows you to cover all the combinations of horses with one wager. So, for instance, in a trifecta box, it does not matter which order your three horses finish the race, so long as they are still first, second and third. A quinella, as it is, is an exacta box bet.

Be aware, however, that you will have to pay for each possible combination to make this bet. As an example, a trifecta box bet is six times more expensive than a standard trifecta because there are six possible combinations of horses.

Key – A key bet calls for you to designate one horse as the winner of your exotic bet, then you pick multiple possibilities for the rest of the places. This bet typically comes into play if there is one overwhelming favourite to win the race, but you want to bet multiple horses.

Wheel – A wheel means that you are taking the entire field for one place in your exotic wager. For example, you might choose the win and place horses for a trifecta, but let the show position be a wheel.

Partial – A partial, also known as a partial wheel, is any combination of horses in one of the above categories. The bottom line is that you can bet on any race any way you like, even if it is complex and has many moving parts. You might pick two horses to win, three to place and four to show in a partial trifecta.

Origins of Pari-Mutuel Wagering

As mentioned earlier, the pari-mutuel method has a long-standing history in the wagering world. Its ties extend all the way back to 1867, the year it was first developed by French-Catalan entrepreneur Joseph Oller.

In 1891, 24 years after its inception, the pari-mutuel system became the go-to wagering method at French racetracks.

Its rise in popularity in the years that followed ultimately gave way to the development of the “totalizator” or “tote board,” as its better known today.

The first tote board was installed at Ellerslie Racecourse in Auckland, New Zealand, in 1913.

Read the latest horse racing news on site.

This article was written by a partner sports writer via Woodbine Entertainment Group.