{"id":405,"date":"2017-07-21T11:08:12","date_gmt":"2017-07-21T11:08:12","guid":{"rendered":"https:\/\/www.ukgamblingsites.com\/?page_id=405"},"modified":"2023-04-25T17:51:26","modified_gmt":"2023-04-25T17:51:26","slug":"parimutuel-betting","status":"publish","type":"page","link":"https:\/\/www.ukgamblingsites.com\/guides\/sports\/parimutuel-betting\/","title":{"rendered":"Parimutuel Betting"},"content":{"rendered":"

\"Pari<\/p>\n

Parimutuel betting is a form of wagering where the exact odds of any selection are not known at the time of placing the bet. In this respect it differs from fixed odds betting – the most common form of wagering in the UK – where you know exactly what return you will get should your bet win. Instead, with parimutuel gambling your return depends on the overall amount staked on the event and the amount wagered on the winner.<\/p>\n

It is commonly used in France, Australia and North America, although the Totepool bets offered by bookmakers in the UK are also an example of parimutuel betting which is also sometimes known as Tote betting (named after the machine which originally calculated the payouts, the totalisator).<\/p>\n

Under such a system the payout is calculated by using the total amount wagered on the entire market, be it a horse race, football match, or anything else. From this, any applicable government taxes or levies are subtracted, as is the margin of the bookmaker or operator and any other further necessary charges. As an example; assuming that leaves exactly \u00a3100 and there was \u00a310 staked on the winning pick, every \u00a31 staked will return \u00a310, giving standard fractional UK odds of 9\/1 or decimal odds of 10.00.<\/p>\n

Prior to an event starting the bookies usually give an indication of what they expect the odds to be and this is invariably expressed in the decimal format \u2013 that is to say the amount you would get back for every one unit of currency staked.<\/p>\n

Parimutuel betting tends to be favoured where gambling is state operated or at least heavily regulated. This is because the company’s returns are not dependent on the outcome and it requires no skill setting odds, controlling liabilities or manipulating the odds. The bookmaker\/operator simply takes a pre-determined cut and unless this is insufficient to cover their marketing and operational costs they are going to end up in the black, irrespective of how many heavily priced favourites Frankie Dettori \u2013 or anyone else \u2013 rides that day.<\/p>\n

The exact bets offered by parimutuel betting vary from country to country but in the UK, Totepool offer a number of jackpot bets that can not only potentially produce huge payouts but also offer odds well beyond the genuine probability of a horse winning. This is possible when accumulator-style Tote bets rollover and the overall pool thus becomes so large that the odds are actually in favour of the punter.<\/p>\n

Many people dislike parimutuel betting because they like to know what their return will be \u2013 the risk\/reward ratio being a key factor in making a bet. Moreover, despite claims to the contrary, the odds can fall short of what you would get at a traditional bookmaker or betting exchange<\/a>. That said, parimutuel betting remains hugely popular via the Totepool bets and is an interesting option that is popular with many people.<\/p>\n

Parimutuel Betting: Example\/Case Study<\/h2>\n

\"Boxing<\/p>\n

To better understand how all this works it might be better if we look at some examples. We will start with a very simple one. Make that very, very simple. This is not something that is realistic in terms of the market, certainly in the UK; or indeed the numbers, but it gives a good idea of the principle of the system.<\/p>\n

Let us imagine a very even boxing match, where both fighters are believed to have a very similar chance of success. A fixed-odds bookie might price the fight as such:<\/p>\n

    \n
  1. Favourite @ 4\/5<\/strong><\/li>\n
  2. Slight outsider @ 11\/10<\/strong><\/li>\n
  3. Draw @ 10\/1<\/strong><\/li>\n<\/ol>\n

    Bet with a normal bookie and you know that a \u00a310 bet on the favourite will return \u00a318 including your stake. Bet \u00a310 with a pool-based betting site, however, and you will not know your return at that stage. Many bookies that use this system may give you some form of indication of expected returns but this is only a guide. Equally, you can be reasonably confident that returns will not vary all that much from what a fixed-odds site offers \u2013 though occasionally they might.<\/p>\n

    In our example let us imagine that the bookie takes exactly \u00a3100 in bets on the fight. From this they will deduct a set amount to cover all their expenses, including taxes, as well as some for them to generate a profit. The level of this will depend on several factors and is often published by the betting company so you know exactly what proportion of the overall stake, or pool, is paid out as winnings, or dividends. You can usually assume the take will be somewhere between around 15% and 30%.<\/p>\n

    Once again, to keep things simple, let us assume that the take here is 20%, leaving \u00a380 in the pool to pay those who backed the winner. If we then work on the basis that \u00a350 was wagered on the favourite, \u00a340 on the underdog and \u00a310 on the draw, we can see what payouts would result.<\/p>\n

    Once again, we will keep things simple and say that the favourite did the business and won the fight. So the post-take pool of \u00a380 is to be shared among \u00a350 of \u201cstakers\u201d. 80 divided by 50 gives us 1.6 and this is the return from a bet of \u00a31 \u2013 in other words, a \u00a31 bet returns \u00a31.60 including the stake. As such, returning to a \u00a310 bet on the favourite, returns would be \u00a316, or some way shy of the \u00a318 they would have got with a traditional betting site.<\/p>\n

    Had the underdog won instead, the equation would be 80\/40, meaning a return of \u00a32 per pound staked and effective odds of evens. In the unlikely event of a draw, it would have been 80\/10, or \u00a38, so odds of 7\/1.<\/p>\n

    Low Returns?<\/h2>\n

    \"Low<\/p>\n

    Looking at our example one may well wonder why anyone would bother with parimutuel betting. These example returns are low across the board, the fixed odds of 4\/5 beating the 3\/5 on the favourite, 11\/10 better than evens on the underdog, and 10\/1 better than 7\/1 for the draw. The reason for this is that the 20% take concerning the pool bet is far higher than the take with the fixed odds option.<\/p>\n

    The overround is the term used to describe (again, in simple terms) the bookie\u2019s profit margin when it comes to the fixed odds system. This does not include their costs, tax or anything else, but just what profit the odds would typically deliver. The overround on the odds we used as our example is 12.27%. Translating the effective odds of the pool with a 20% deduction into fixed odds as above would give an overround of 25%.<\/p>\n

    However, this is not to say that fixed odds will always beat the returns of bets made with a parimutuel betting site. Let us look at another example, where we have altered both of the crucial factors: the overround with the fixed odds bookie and take of the parimutuel, and the split of the cash with the parimutuel betting site.<\/p>\n

    Returns Can Vary<\/h3>\n

    \"Man<\/p>\n

    Let us now look at a different market, though once again we will keep things simple. If Man City are hosting Liverpool in the Premier League we might see odds of:<\/p>\n