Definition
Pari-Mutuel Betting
Also known as Parimutuel, Pool Betting, Tote Betting
By Abhinav VasudevanReviewed Editorial policy
In short
In pari-mutuel betting all stakes go into a pool, the operator takes a fixed percentage, and the remainder is divided among winners. Odds are not fixed in advance. They depend entirely on how the pool is distributed.
Pari-mutuel betting has no bookmaker. Everyone’s money goes into a pool, the operator deducts its cut, and whatever is left is shared among the people who backed the winner.
The name is French, pari mutuel, mutual betting, and the system was devised by Parisian perfumer Pierre Oller in the 1860s.
How the price is determined
Odds are a consequence, not a quote.
A £10,000 pool with a 15% takeout leaves £8,500 for winners. If £1,000 was staked on the winning horse, each £1 staked returns £8.50.
This means the final price is unknown when you bet. Displayed odds are estimates based on current pool composition, and they move until betting closes. A large late bet on your selection reduces your return.
Takeout is the house edge
The operator’s deduction, the takeout, is the pari-mutuel equivalent of the house edge, and it is high:
| Bet type | Typical takeout |
|---|---|
| Win, place, show | 15–18% |
| Exacta | 18–22% |
| Trifecta, superfecta | 20–25% |
Compare with a sportsbook margin of 4% to 5% on major markets. Pari-mutuel takeout is several times higher, which is why fixed-odds bookmakers took most of the British racing market once they were permitted.
Where it is used
- US horse racing, almost exclusively. Fixed-odds bookmaking is not permitted at most American tracks
- Tote betting in the UK and Ireland, alongside bookmakers
- Lotteries, which are structurally pari-mutuel
- Some jai alai and greyhound markets
The one advantage
Because you are betting against other bettors rather than an operator, a skilled handicapper is competing with the crowd rather than with a professional pricing team. In a pool full of casual money, a good analyst can overcome even a high takeout, which is essentially never true against a modern sportsbook.
There are no restrictions either. The pool does not care who is winning, so successful pari-mutuel bettors are not limited the way sharp fixed-odds bettors are.
Common questions
How are pari-mutuel odds calculated?
All stakes go into a pool, the operator deducts takeout, and the rest is shared among winners. A £10,000 pool with 15% takeout leaves £8,500, so £1,000 staked on the winner returns £8.50 per £1.
Why is pari-mutuel takeout so high?
Because it runs 15% to 25% depending on the bet type, several times a sportsbook margin. The one compensation is that you are competing against other bettors rather than a professional pricing team, and nobody gets restricted for winning.