Parimutuel gambling

Parimutuel gambling is a form of gambling frequently offered at certain kinds of sporting events of relatively short duration in which participants finish in a ranked order, notably horse racing, greyhound racing, and jai alai. It 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.

Under parimutuel betting, all bets of a particular type are placed together in a pool; taxes and a house "take" are removed, and payoff odds are calculated by sharing the pool among all placed bets, and rounding down to a denomination interval (in the United States, typically 10 cent intervals are used). The fewer correctly placed bets there are in relation to the entire pool, the greater the payoff. 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:

• Win - A first place finisher wins the bet.
• Place - Either a first or a second placer finish wins the bet.
• Show - First, second, or third place finisher wins the bet.

Depending on the facility rules, which might vary from event to event, other bets may also be offered which allow the user to pick the finish of more than one participant, or more than one event. These are called exotics, and generally have higher payoffs. However, the facility's take is usually higher for these bets as well:

• Exacta - Picks the first and second place finisher, in order.
• Quinella - Picks the first and second place finisher, but the order doesn't matter.
• Trifecta - Picks the first, second, and third place finisher, in order.
• Daily Double - Picks the first place finisher in two straight events.
• Pick 6 - Picks the winner in six consecutive events.

Unlike many forms of casino gambling, in parimutuel betting the gambler bets against other gamblers, not the house. It is possible for a skilled player to win money in the long run at this type of gambling, but overcoming the deficit produced by taxes, the facility's take, and the rounding off of payoffs is difficult to accomplish and few people are successful at it. The science of determining the outcome of a race is called handicapping.

The large amount of calculation involved in this system led to the invention of a specialised mechanical calculating machine known as a totalisator. The first was installed in 1913 and they came into widespread use at race courses throughout the world.

See also Bet exchange, Bookmaker and Spread betting.