Parimutuel Betting - What is Parimutuel Betting & How It Works

Q: What is parimutuel betting?

Parimutuel betting describes a system in which bettors wager against one another in a pool. It’s synonymous with horse and greyhound racing and golf wagering.

Q: How does parimutuel betting work?

The money staked in a parimutuel betting system is gathered in a pool. Before the event, the total amount wagered is divided by the cash staked on each runner or competitor. This creates final odds and a prospective payout on each outcome.

Q: Is parimutuel betting legal?

Parimutuel betting tends to be state-regulated in the US. Some 43 jurisdictions have legalized this practice in one form or another. Available both off and online in many states, you can engage in parimutuel betting without being at a track.

Q: What is an example of parimutuel betting?

Let’s say that you bet on Sierra Leone to win the 2024 Kentucky Derby in a parimutuel pool. In total, $50,000 was staked on this outcome from a total pool of $90,000. This creates odds of 1.80 (-125) in the process. So, you’ll need to wager $125 to win $100, winning $1.80 for every $1 wagered successfully.

Q: Is parimutuel betting better than fixed-odds betting?

There are pros and cons to this question. On the upside, you can often get much better value for your wager. You are also at no risk of having your account restricted/closed by the operator. The obvious downside is that you don’t know the final dividend of your wager.

Parimutuel betting is one of those terms everyone seems to have heard of, but very few people understand. Also known as tote betting in the UK, pari-mutuel betting is synonymous with wagering on greyhound and horse racing.

In simple terms, this type of betting describes a pool wagering system. Payouts are determined by the amount of money staked on each potential outcome. But how exactly does this system work? What are the pros and cons of this system?

What is Parimutuel Betting?

Parimutuel betting is a pool betting system most commonly associated with horse racing and greyhound racing. The key difference from fixed-odds betting is that odds are not set when the bet is placed. With Parimutuel bets, the payouts are determined by how much is wagered on each outcome.

Once all bets have been placed, taxes and the sportsbook’s commission (or vigorish) are deducted from the pool. The final odds and payouts are then determined by dividing the total value of the pool by the amount staked on each horse. We’ll explore this in a little more detail below.

Parimutuel Betting Definition – How Does it Work?

As parimutuel odds aren’t fixed, you’ll have no idea about your potential payout until the event has finished. But how exactly are dividends worked out, and how do sportsbooks arrive at the eventual odds?

Let’s say that you bet on a popular horse race, such as the Kentucky Derby. In this case, a parimutuel pool collects a total of $100,000 across the five favorite runners, while the total stake on each horse to win equates to $20,000. In this example, the pool is completely even and creates an equal payout.

Payouts are subsequently calculated by dividing the total value of the pool by the amount wagered on each runner (or outcome). In this case, we’ll divide $100,000 by $20,000, creating an odds value of 5.00 (or +400 when using the American format) that’s applied to each horse.

This means you’ll bank a return of $5.00 for every $1 wagered successfully, inclusive of your stake amount. So, if you wager $100 on the winning runner, you’ll receive $500 in total and $400 in pure profit. As usual, you won’t receive any kind of payout if you pick the wrong horse.

Gavin Beech
iGaming Expert

Attention Value Seekers!

There is no doubt that there is value to be had by betting on the Parimutuel. Typically, you will find that payouts on outsiders are bigger on the Parimutuel than the fixed odds providers. However, it is also possible to get huge value on horses that sit nearer the top of the market. For example, the fixed odds win payout on Sovereignty in the 2025 Kentucky Derby was 5/1. However, his Parimutuel backers were rewarded with a win payout of $17.96 (to a $2 stake). This was more than twice his fixed odds return.

How are Parimutuel Odds Calculated?

Not seeing the odds before an event starts means that pari mutuel wagering is not for the faint-hearted. However, the practice presents a clear deviation from fixed odds wagering. If you see betting lines ahead of an event (Morning Line odds), these provide a basic guide price based on expected wagering volumes.

When you place fixed odds bets at horse racing betting sites, you’ll be able to analyze the odds and calculate the implied probability of outcomes. This can help to inform your stake and estimate your return. But you’re afforded no such advantages when engaging in parimutuel betting.

Remember, two primary factors help sportsbooks calculate parimutuel odds. These include:

The total amount of money staked within the pool and the pool size
The total amount of money staked by people betting on each potential outcome

Parimutuel Odds Calculation Example

Now, let’s look at how odds are calculated using the practical example of the 2025 Belmont Stakes. Let’s say that $100,000 is wagered on the win market in this race, with the sportsbook in question applying a 10% vigorish to leave a total pool of $90,000. All bets are placed on the five ante-post favorites to win as follows, minus the deducted juice and taxes.

Sovereignty – $24,000
Journalism – $27,000
Baeza – $11,000
Rodriguez – $10,000
Hill Road – $7,000
Heart of Honor – $3,000
Uncaged – $3,000
Crudo – $5,000

Knowing the cumulative size of the pool and the amount staked on each runner, we simply need to divide these numbers to create odds and potential payouts. These calculations will yield the following results:

Sovereignty – $90.000/$24,000 = 3.75 (+275)
Journalism – $90.000/$27,000 = 3.33 (+233)
Baeza – $90.000/$11,000 = 8.18 (approx +700)
Rodriguez – $90.000/$10,000 = 9.00 (+800)
Hill Road – $90.000/$7,000 = 12.8 (approx +1100)
Heart of Honor – $90.000/$3,000 = 30.0 (+2900)
Uncaged – $90.000/$3,000 = 30.0 (+2900)
Crudo – $90.000/$5,000 = 18.0 (+1700)

Based on the above betting volumes, Journalism would have been sent off favorite ahead of the race, and that is indeed what happened. The eventual winner of this race was Sovereignty, who would have earned his backers a profit of $275 for a $100 wager based on the above numbers.

The History of Parimutuel Betting

The history of parimutuel betting can be traced back to France in 1870. Local entrepreneur Pierre Oller introduced a new and collaborative method of wagering that changed everything. The world’s first parimutuel betting systems were launched at French racetracks in 1891 before crossing over the Atlantic to the US towards the end of the 19th century. New York state then legalized parimutuel betting in 1913.

In the 1920s, a device called the ‘totalizator’ was designed to help issue and record parimutuel bet slips in New Zealand. This helped to encourage a broader array of exotic parimutuel bets to be placed, including daily doubles, exactas, and quinellas (but we’ll discuss these in more detail below).

By 1940, the ‘Parimutuel Revenue Law’ was enacted in NYC, while the State Racing Commission was subsequently empowered to license parimutuel betting on horse races. This created a template for other jurisdictions to follow, with a number of US states having now made modern-day parimutuel betting a key feature of their online offerings.

Types of Parimutuel Bets

As we’ve touched on, Parimutuel betting has grown in popularity over the years, introducing a growing number of exotic bets since the development of mechanical and computerized machines. Here’s a summary of the most popular parimutuel bets and wager types you’ll see on a tote board at the racetrack.

Straight Parimutuel Bets

Win Bets – Win bets are the most popular type of parimutuel wager, as they enable you to back the winner of a particular race or event. This type of bet can unlock variable returns depending on the size of your pool and the amount staked on each runner. If you think you know which horse is going to win the Kentucky Derby, then you would place a bet in the win pool.
Place Bets – With a place bet, you’ll wager on a runner or participant to finish within a certain number of places. In US horse racing, this will be the top two. This also depends on the number of runners. You can also engage in each-way parimutuel wagering, which sees you split your stake amount between win and place bets and potentially receive a payout that’s around a quarter of the final odds.
Show Wagers – The show betting market is also synonymous with horse racing, and requires you to back a runner to finish either first, second, or third. It’s a less-risky wager than the place bet, so it’s ideal if you think you’ve found a ‘banker’ that will finish in the first three places, maybe in a race where more than half the field are no-hopers.
Across the Board – This slightly more complex wager type features three bet types: namely, win, place, and show. If your pick wins, you’ll claim all three payouts from the relevant pools in the classic parimutuel system. If your selection places second, it will win the place and show wagers, while a third-place finish will trigger a share of the show bet payout.

Exotic Parimutuel Bets

Exacta Bets – Exacta bets carry increased complexity and risk, as you’ll have to select two runners that will finish first and second in a single race. Interestingly, you’ll also have to predict the correct order that they finish, otherwise you won’t be able to claim any kind of return.
Quinella Bets – These wagers are similar to an exacta bet, but while you’ll still pick two runners to finish first and second, there’s no requirement to get the order exactly right. This equates to a single wager with two potentially different payouts, while a winning quinella can pay more than an exacta in a parimutuel system (depending on your picks).
Trifecta Bets – As the name suggests, this parimutuel bet asks you to pick three horses that will place first, second, and third in a single race. You’ll also have to predict the exact order in which they finish, while it’s one of the most difficult bets to place successfully, either on or offline. These bets are popular in big-field races like Breeders’ Cup races because they can pay huge money, especially if the top of the market bombs.
Superfecta Bets – We’ll close with the most complex and difficult wager type, as a superfecta bet requires you to correctly predict the identity of the first, second, third, and fourth finishers in a race. Once again, you’ll have to correctly predict the order in which they’ll finish, which is a considerably difficult task. These are the most speculative of all parimutuel wagers.

Pros & Cons of Parimutuel Betting

While we’ve described the functionality of the parimutuel betting system and how parimutuel payouts are structured, you may still be unsure as to whether this type of wagering is right for you. So, we’ve prepared some detailed pros and cons to help you make an informed decision!

What we like

Access longer prices when compared to fixed odds (especially when backing outside picks)
Benefit from enhanced betting lines as you’re not placing a traditional ‘back’ wager or competing directly against sportsbooks
Suits experienced high rollers who can wager higher stakes in pursuit of sizeable returns

What we dislike

The vigorish applied by operators and sportsbooks can sometimes exceed 15% and is often higher when compared with fixed odds wagering.
You won’t be able to compare odds or use this data to inform your selections with parimutuel betting, making it hard to create value with specific bet types, too.

Parimutuel Betting Strategy

If you’re going to make a successful fist of parimutuel betting, you’ll need to get strategic and embrace different techniques that may improve your chances of winning. So, here are some tips to help you create a parimutuel betting strategy.

Track Takeout Rates: One of the most important factors around parimutuel betting pools is the amount the operator takes out as a rake. The lower the takeout, the better value available to bettors, so look for pools with low takeout rates. Keeneland and Tampa Bay Downs are two tracks known for bettor-friendly rates.
Use Fixed Odds Betting Markets to Inform Your Selections: While you won’t be able to view the odds before the start of a parimutuel betting event, you can still use fixed odds sites to gauge value and calculate the implied probability of each runner winning. This means that you can tailor your selections to suit the size of your bankroll and appetite for risk, while relying on informative datasets. In general terms, prioritizing short-priced favorites may unlock slightly higher value than you would find at fixed-odds sportsbooks.
Focus on Win, Show, and Place Wagers: It’s important to simplify your strategy and use exotic wager types sparingly. Instead, prioritize win, show, and place wagers where possible, which can contribute to a balanced approach that helps optimize returns and minimize your risk of loss. Inform your selections based on factors such as form and fixed odds market analysis. Remember that win bets deliver bigger payouts, and show or place wagers increases your chances of securing a return.
Track Pool Boards: If you spot that a horse’s odds are dropping quickly, it could indicate smart money is getting involved. If the odds are drifting (increasing), then it could signal that someone knows something that isn’t in the public domain.
Look for Overlays: If your analysis leads you to believe a horse’s odds are higher than they should be, then that should indicate it’s time to place a bet. So, if you believe a horse has around a 20% chance of winning and the boards are showing odds of greater than +500, then that represents value odds.

Parimutuel Betting by Sport

Another key aspect of your parimutuel betting strategy will be the sport that you intend to wager on. While this type of betting is synonymous with horse and greyhound racing, it can also be used when wagering on golf. Here’s a breakdown of how it works in relation to different sports.

Horse Racing

Parimutuel betting is legal in 43 US states in one form or another, while it’s most commonly used to wager on horse racing. Most US-based sportsbooks feature dedicated racebook verticals, which often prioritize parimutuel betting and structures over fixed-odds markets.

Pools will be established about specific events, with so-called “morning lines” published by operators. These lines share typical racecard information and an estimated guide price for each runner. Key and familiar datasets here will include the trainer and jockey combination (as some pairs perform better at specific tracks), recent form, and any weight that will be carried by a runner in a handicap race.

Parimutuel pools are at their most fervent in the build-up to the biggest races in the calendar, like Triple Crown races or races at the Breeders’ Cup. These races are contested by the most famous racehorses in the land, so they draw in bets from casual observers as well as racing’s most fanatical fans.

You can then compare the fixed odds market for the event using comparison sites such as Oddschecker. Do this before completing your analysis and picking your preferred runners and wagers. You’ll then place your bets and commit your stake money to the pool, contributing to a total amount that will dictate your final odds and payout.

Parimutuel odds are constantly changing as the volume bet into the pool increases. The 10-minute period before a race is typically when most bets are placed into the pool, so during this period, odds will change every few seconds. The closer to the off you place your bet, the closer the displayed odds will be to the official dividends.

Greyhound Racing

Greyhound racing in America is not as popular as it once was, but fans of the sport can still bet into parimutuel pools for international greyhound races. The UK and Australia still provide a strong greyhound product, with races taking place almost every day of the year.

These races are shown across US sportsbooks and casinos via simulcast. This means there is still plenty of action for US-based greyhound fans to bet on.

Harness/Trotting Racing

Parimutuel betting on harness/trotting racing is legal in many US states and is especially popular in states like New York, New Jersey, Ohio, Pennsylvania, and Illinois.

In harness/trotting, horses pull a two-wheeled cart (sulky) and race at a trot or pace. Because of this, driver ability and decisions can have a bigger impact than in thoroughbred races. It’s also a sport where there is a strong bias towards inside-drawn (low numbers) contenders, given the sharp, left-handed nature of the circuits.

Parimutuel betting is available live at tracks and across most sportsbooks. Betting options include Win, Place, Show, Exacta, Trifecta, and Superfecta. You can also find a Daily Double, Pick 3, and Pick 4 pool.

Final Thoughts on Parimutuel Betting

So, there you have it: our comprehensive guide to parimutuel betting in the US. This is one of the oldest and most popular betting systems in the world. It remains synonymous with horse racing and unlocks a huge range of wager types.

It’s also relatively easy to understand. Odds and payouts are calculated simply by dividing the total amount staked in a pool by the amount bet on each outcome. There are even some strategies to help you get the most out of parimutuel betting. Such strategies include the analysis of fixed odds markets!

Responsible Betting

However, you choose to engage in parimutuel betting, you’ll need to ensure that you wager responsibly at all times. Remember, no form of wagering isn’t risky, and parimutuel betting is no exception.

The first step to responsible betting is setting a conservative bankroll. Your bankroll should consist of an amount of money that you can comfortably afford to lose. This should ideally cover a specific period, event, or race meeting. You can also use customizable deposit limits to help manage your bankroll’s deployment.

Of course, you may still struggle with your betting activity on occasions or find yourself wagering outside of your means. In this instance, we recommend that you reach out to the National Problem Gambling Helpline. Help is available through their website or by calling 1-800-GAMBLER.

This will provide you with practical support and help you to curtail any compulsive behavior before it becomes too problematic.