Parimutuel betting

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Parimutuel betting (from French Pari Mutuel, "mutual betting") is a betting system in which all bets of a particular type are placed together in a pool; taxes and the "house-take" or "vigorish" are deducted, and payoff odds are calculated by sharing the pool among all winning bets. In some countries it is known as the Tote after the totalisator, which calculates and displays bets already made.

Contents

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.

Betting on the Favorite, an 1870 engraving Betting on the Favorite.jpg
Betting on the Favorite, an 1870 engraving

Definition

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.

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.

Example

In a hypothetical event that has eight possible outcomes, in a country using a decimal currency such as dollars, each outcome has a certain amount of money wagered:

1$60.00
2$140.00
3$24.00
4$110.00
5$220.00
6$94.00
7$300.00
8$80.00

Thus, the total pool of money on the event is $1028.00. 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 $110.00 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: $1028 × 0.1425 = $146.49. This leaves a remaining amount of $881.51. This remaining amount in the pool is now distributed to those who wagered on Outcome 4: $881.51 / $110.00 = 8.01 ≈ $8 per $1 wagered. This payout includes the $1 wagered plus an additional $7 profit. Thus, the odds on Outcome 4 are 7-to-1 (or, expressed as decimal odds, 8.01).

Prior to the event, betting agencies will often provide approximates for what will be paid out for a given outcome should no more bets be accepted at the current time. Using the wagers and commission rate above (14.25%), an approximates table in decimal odds and fractional odds would be:

114.6913:1
26.305:1
336.7335:1
48.017:1
54.013:1
69.388:1
72.942:1
811.0210:1

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[ when? ], the amounts paid out are rounded down to a denomination interval—in the United States and Australia, 10¢ intervals are used[ citation needed ]. The rounding loss is sometimes known as breakage and is retained by the betting agency as part of the commission.

In horse racing, a practical example of this circumstance might be when an overwhelming favorite wins. The parimutuel calculation results might call for a very small winning payout (say, $1.02 or $1.03 on a dollar bet), but the legal regulation would require a larger payout (e.g., $1.10 on a dollar bet). In North America, this condition is usually referred to as a minus pool.

Algebraic summary

In an event with a set of n possible single-winner outcomes, with wagers W1, W2, ..., Wn the total pool of money on the event is

After the wagering company deducts a commission rate of r from the pool, the amount remaining to be distributed between the successful bettors is WR = WT(1 − r). Those who bet on the successful outcome m will receive a payout of WR / Wm for every dollar they bet on it.

When there are k possible winners, such as a North American "place" bet which has k = 2 winners, the total amount to be distributed WR is first divided into k equal shares. If m is one of the k winners, those who bet on outcome m will receive a payout of (WR / k) / Wm for every dollar they bet on it.

History

The parimutuel system was invented by Catalan impresario Joseph Oller in 1867. [1]

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", invented by the Australian engineer George Alfred Julius. 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 1927, which led to the opening of the suburban Arlington Racetrack in Arlington Park, near Chicago and Sportsman's Park in Cicero, Illinois, in 1932. [2]

Strategy and comparison with independent bookmakers

Unlike many forms of casino gambling, in parimutuel betting the gambler bets against other gamblers, not the house, which necessarily implies that the bank cannot be broken. The science of predicting the outcome of a race is called handicapping.

Independent off-track bookmakers typically have a smaller take and thus offer better payoffs, but they are illegal in some countries. However, the introduction of Internet gambling led to "rebate shops". These off-shore betting shops promise to return some percentage of every bet made to the bettor. They may reduce their take from 15-18% to as little as 1 or 2%, while still generating a profit by operating with minimal overhead.

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:

Single race
Multiple races

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 bettors 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.

A parlay, accumulator or roll-up 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/New Zealand

Single race
Multiple races

In Australia, certain exotic bet types can be laid as "flexi" bets. Usually the price of an exotic bet is determined by a set multiple of the outcome, for example $60 for a five horse boxed trifecta at one unit ($1)—or $30 at half unit (50c). If the bet is successful, the bettor will get either the full winning amount shown on the board, or half the winning amount. Under a flexi system the bettor can nominate their desired total wager, and their percentage of payout is determined by this wager's relationship to the full unit price. Using a five horse box trifecta, the bettor may wish to lay only $20 on the outcome. Their percentage of winnings is now calculated as $20/$60 = 33.3%. If the bet is successful, the payout will be 33.3% of the winning amount for a full unit bet.

In recent times the "Roving Banker" variant for Trifecta and First4 betting is now offered. For a Roving Banker First4 the player selects one, two or three runners they believe will definitely finish 1st, 2nd, 3rd or 4th, and up to three selections as Roving Banker(s) with other runners to fill the remaining place(s). A Roving Banker Trifecta is where the player believes that one or two runners will definitely finish 1st, 2nd or 3rd. The bet can be placed by picking the player's favourite runner to finish in any place within the bet and complete the Trifecta with any number of other runners to fill the other placing(s). [4]

United Kingdom

The following pools are operated at meetings in mainland Britain:

Single race
Multiple races

Exotic wagers are usually made on horses running at the same track on the same program. In the United Kingdom, bookmakers also 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. There are also other bets which are large combinations of singles, doubles, trebles and accumulators some of them are called Lucky 15, Lucky 31, Heinz, Super Heinz, Goliath. The term nap identifies the best bet of the day.

Ireland

Tote Ireland operates the following pools

Single race
Multiple races

Sweden

Bet types for harness racing (trotting):

Single race
Multiple races

Hong Kong

The Hong Kong Jockey Club (HKJC) operates the following common bet types and pools for horse racing. [5]

Single race
Multiple races

Japan

In Japan, Keiba (競馬, horse racing), Keirin (競輪, professional cycling), Kyōtei (競艇, hydroplane racing), and Auto Race (オートレース, motorcycle racing) operate the following bet type. [6] [7] [8] [9] Wager must be a multiple of 100 yen except Each-way.

France

The following bet type are offered by the government-controlled betting agency Pari Mutuel Urbain (PMU). [10] [11]

Tiercé, Quarté+ and Quinté+ bets are typically only offered on the largest race of the day.

See also

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Trifecta parimutuel bet

A trifecta is a parimutuel bet placed on a horse race in which the bettor must predict which horses will finish first, second, and third, in the exact order. Known as a trifecta in the US and Australia, this is known as a tricast in the United Kingdom, a tierce in Hong Kong, a triactor in Canada and a tiercé in France. A variation called "trio", where the order of the horses is not relevant, is also offered in Hong Kong and France.

The superfecta is a type of wager in USA and Canada parimutuel betting in which the bettor, in order to win, must pick the first four finishers of a race in the correct sequence. This is even more unlikely than a successful wager in the trifecta, which requires correctly picking the first three finishers in order, and as such will have a correspondingly higher payoff.

The Australian and New Zealand punting glossary explains some of the terms, jargon and slang which are commonly used and heard on Australian and New Zealand racecourses, in TABs, on radio, and in the horse racing media. Some terms are peculiar to Australia, such as references to bookmakers, but most are used in both countries.

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This glossary of bets offered by UK bookmakers is a non-exhaustive list of traditional and popular bets offered by bookmakers in the United Kingdom. The 'multiple-selection' bets in particular are most often associated with horse racing selections but since the advent of fixed-odds betting on football matches some punters use these traditional combination bets for football selections as well.

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Glossary of North American horse racing:

Instant Racing, known generically as historical race wagering, is an electronic gambling system that allows players to bet on replays of horse races or dog races that have already been run. Some Instant Racing terminals resemble slot machines.

Betting on horse racing

Betting on horse racing or horse betting commonly occurs at many horse races. Gamblers can stake money on the final placement of the horses taking part in a race. Gambling on horses is, however, prohibited at some racetracks; one such is Springdale Race Course, home of the nationally renowned Toronto-Dominion Bank Carolina Cup and Colonial Cup Steeplechase in Camden, South Carolina, where, because of a law passed in 1951, betting is illegal.

References

  1. Ferran Canyameres, L'Homme de la Belle Époque, Éditions Universelles, Paris, 1946.
  2. Steven A. Riess City Games: The Evolution of American Urban Society and the Rise of Sports pg. 188 University of Illinois Press (1991) ISBN   0-252-06216-7
  3. "Horse Betting Types". bn.eu. Retrieved 11 July 2018.
  4. "First4". tabinfo.com.
  5. "Pari-Mutuel Pools - Beginners guide - Betting Entertainment". Hong Kong Jockey Club . Retrieved 2016-06-02.
  6. "How to Bet (JRA)". Japan Racing Association . Retrieved 20 May 2014.
  7. "超初心者向けKEIRINナビ". Keirin.jp. Retrieved 2016-06-02.
  8. "Boat Race Official Web Site | Basic Knowledge Of Boat Race". Boatrace.jp. Archived from the original on 2016-05-30. Retrieved 2016-06-02.
  9. "Auto Race Guide - Purchasing a Betting Ticket". Autorace.jp. Retrieved 2016-06-02.
  10. "Translation of the French Betting Rules" (PDF). PMU. Retrieved 18 December 2014.
  11. "List of the French Racing Bets Proposed by Eurotierce". EuroTiercé. Retrieved 18 December 2014.