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What is Parimutuel Betting?

Parimutuel betting is a form of betting in which bets are pooled together before an event and distributed amongst those who managed to bet correctly once the outcome has been determined.
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  • Written By: Mary McMahon
  • Edited By: Bronwyn Harris
  • Last Modified Date: 08 October 2014
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Parimutuel betting is a form of betting in which bets are pooled together before an event and distributed amongst those who managed to bet correctly once the outcome has been determined. It is a common form of betting for sports events such as horse racing, and the practice is widespread throughout the world. In some cases, parimutuel betting may be the only legal form of betting available.

The parimutuel betting system was developed in France in the late 1800s, and the system has changed little since. Essentially, the participants in the system pool their funds in the hope of getting a larger return. Odds and potential returns are continuously calculated so that bettors can have an idea of how much money they stand to win; the amount of money is dependent on how much money is bet in total.

Once an event begins, no more bets are taken. The house typically takes a cut of the funds, and another percentage may be removed for purposes of taxation. The remainder of the pool is paid out at the close of the event. Bettors may stand to make a large sum of money, especially if they bet against long odds which turn out to win, but they can also lose their bet entirely by failing to predict the outcome of the race correctly.

Supposedly, parimutuel betting reduces illegal betting, since it can be easily regulated and bettors can have confidence in bookies who use the system. The system is set up to work both on and off the track, with some people placing bets from the convenience of their own homes, without actually witnessing the event in question. However, the possibility for illegal betting still exists; people who are unfamiliar with wagering may want to consider carefully investigating the qualifications of their bookmaker, to ensure that their bet is being placed legally.

The French term translates as “group betting,” a reference to the fact that parimutuel betting relies on the cooperation of a group, with the benefits being much higher when more people bet. The system also works to the advantage of the house, by ensuring a set cut of the funds which are bet. The house cut is used for things like track maintenance, ensuring that the facility is clean and pleasant to visit.

Gambling and betting can be hazardous pastimes. Inexperienced gamblers may lose large sums of money very rapidly, and it can be difficult to find out where one goes wrong. It's important to remember that a large part of gambling is skill, with professional gamblers being extremely well versed in the event which they are betting on. While luck can certainly help, one should not rely on it.

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