Science Fair Project Encyclopedia
Parimutuel betting (from the French language: pari mutuel, mutual betting) is a betting system in which 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, rounded down to a denomination interval (in the United States, typically 10 cent intervals are used; the rounding loss is known as breakage). The parimutuel system is used in gambling on horse racing, greyhound racing, and jai alai, all sporting events of relatively short duration in which participants finish in a ranked order.
The parimutuel system was invented by Parisian perfume maker Pierre Oller in 1865 when asked by a bookmaker friend to devise a fair system for bettors which guarantees a fixed profit for the bookmaker.
The large amount of calculation involved in this system led to the invention of a specialized mechanical calculating machine known as a totalisator, "automatic totalisator" or "tote board". The first was installed at Ellerslie Racecouse, Auckland, New Zealand in 1913, and they came into widespread use at race courses throughout the world (the U.S. introduction was 1933 at Arlington Park, Chicago).
Parimutuel gambling 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.
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 place finisher wins the bet (at most tracks the race must have at least four runners in it for place betting to be conducted).
- Show - First, second, or third place finisher wins the bet (at most tracks the race must have at least five runners in it for show betting to be conducted).
- Across the Board: A combination triple-bet of Win, Place, and Show
- Win - Runner must finish first.
- Place - Runner must finish first, second or third.
- Each-way - A combination of Win and Place. A $5 bet Each-way is a $2.50 bet to Win and a $2.50 bet to Place.
In the United Kingdom
- Win - Runner must finish first.
- Place - Runner must finish within the first two places (in a 5-7 runner race), three places (8-15 runners) or four places (16+ runners).
- Each-way - Charged and settled as one bet to win and another bet to place.
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. The chief North American and Australian exotics are:
- Exacta (exactor, perfecta) - Picks the first and second place finishers, in order.
- Quinella - Picks the first and second place finishers, but the order doesn't matter.
- Trifecta (triactor) - Picks the first, second, and third place finishers, in order.
- Superfecta - First four finishers in order.
- Daily Double - Picks the first place finishers in two straight events.
- Pick 6 (jackpot) - Picks the winners in six consecutive events.
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 breakage is difficult to accomplish and few people are successful at it.
Independent off-track bookmakers have a smaller take and thus offer better payoffs, but they are illegal. However, with the introduction of Internet gambling has come "rebate shops". These off-shore betting shops in fact return some percentage of every bet made to the bettor. They are in effect reducing their take from 15-18% to as little as 1 or 2%, still ensuring a profit as they operate with minimal overhead. Rebate shops allow skilled horseplayers to make a steady income.
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