What is pari-mutuel wagering?

Pari-mutuel wagering is betting that occurs when all the bets on a particular horse race are put together in a pool. The winners then receive a percentage of the pool, less any management fees and taxes.

Instead of performing these calculations by hand, there is an electronic machine called a pari-mutuel machine that is used to register all the bets and is programmed to calculate the final payoffs and changing odds of a particular race. Those who bet are always informed of these changing odds and fluctuating payoffs.

Besides horse racing, this type of betting is often used in greyhound racing and other sporting events of short duration. The final payout for pari-mutuel betting is unknown until the pool closes.

Pari-mutuel betting originated in 1867, developed by Catalan impresario Joseph Oliver. The first pari-mutuel machine, sometimes called a totalisator, came about in 1913 and was invented in New Zealand.

Not every gambler is a fan of pari-mutuel betting because the system pits one gambler against many others, but the system does cut down on management fees.

In the United States, to win a pari-mutuel bet, a bettor must pick the horse that will win the race. To Place, a better must pick a horse that comes in at first or second place. To Show, a bettor must pick a horse that comes in either first, second or third place.