In pari-mutuel betting you bet against the other bettors, not against a bookmaker. Every dollar on a bet type goes into one pool, the track takes its cut, called the takeout, and the rest is shared among the winning tickets, which is why the odds keep moving until the race starts.
How a pari-mutuel pool works
America’s Best Racing defines pari-mutuel as a system in which all the money is returned to the bettors after the track and state percentages are taken out. That cut pays for purses, track operations and other costs, and it generally runs from 12% to 25% depending on the bet type. Racetracks and online horse racing betting in North America both use it.
The odds come from the money. The more the public bets on a horse, the lower its odds; the horse with the most win money is the favorite. The morning line in the program is only the starting odds set by the track handicapper; the live odds come from the pool. Much of the money arrives late, so a price can move a long way in the final minute or two.
That is the main difference from fixed-odds betting. At a sportsbook your price is locked when you bet. In a pool, you learn your price when the gates open.
A worked example
Here is a simplified pool with made-up numbers, a $150 win pool on a five-horse race, using Santa Anita Park’s published win takeout of 15.43%:
| Horse | Win money | Share of pool |
|---|---|---|
| 1 | $25 | 16.7% |
| 2 | $40 | 26.7% |
| 3 | $5 | 3.3% |
| 4 | $50 | 33.3% |
| 5 | $30 | 20.0% |
| Total | $150 | 100% |
The takeout removes about $23.15, leaving $126.86 to pay the winners. If horse 5 wins, the $30 bet on it shares that $126.86, so each $1 is worth $4.23, about 3.2-1 on the board. If horse 3 wins, only $5 shares it and each $1 is worth $25.37.
One more deduction comes before the payout. Payouts are rounded down to set intervals, 10 cents in California, and the rounding loss is called breakage, which the betting agency keeps. In this example, $4.23 per dollar would be paid at $4.20, so a $2 ticket on horse 5 returns $8.40.
Takeout is different for every bet
The takeout is not one number, even at one track. Santa Anita’s wagering menu, last updated September 13, 2024, lists:
| Bet at Santa Anita | Takeout |
|---|---|
| Win, place, show | 15.43% |
| Late Double, Late Pick 3 | 15.00% |
| Early Pick 5 | 14.00% |
| Daily Double | 20.00% |
| Exacta | 22.68% |
| Trifecta, superfecta, Pick 3, Pick 4, Late Pick 5, Pick 6 | 23.68% |
A 23.68% takeout returns $76.32 of every $100 in the pool to the winners; a 14% takeout returns $86. Over a season of bets that gap is large, and the track publishes it before you bet. The Early Pick 5 is the cheapest bet on that menu, and it carries a multi-race bet’s difficulty.
The bet types in a pari-mutuel pool
Each bet type has its own pool, so the win pool and the exacta pool on the same race pay out separately.
- Win, place, show: your horse finishes first; first or second; first, second or third. Santa Anita’s minimum is $2.
- Across the board: a win, place and show bet on one horse, which is three bets. $2 across the board costs $6.
- Exacta: the first two finishers in exact order.
- Quinella: the first two finishers in either order.
- Trifecta, superfecta: the first three or four finishers in exact order. Santa Anita’s superfecta minimum is 10 cents.
- Daily Double, Pick 3 to Pick 6: the winners of two to six consecutive races.
At Churchill Downs, the exacta minimum is $2, the trifecta $0.50 and the superfecta $0.10, rising to $1 on Kentucky Oaks and Kentucky Derby days. The Pick 3, Pick 4 and Pick 5 start at $0.50.
Carryovers: when a pool rolls forward
Multi-race pools can carry over when nobody hits. At Santa Anita, the Early and Late Pick 5 pay 100% of the pool to tickets with all five winners, and if no ticket has five, the whole pool carries over to the next day’s Pick 5. The Pick 6 carries part of its pool forward until a ticket hits all six or the meet reaches a mandatory payout day.
A carryover is money in the pool that none of that day’s bettors put in. So on a carryover day, the pool you are betting into is bigger than the new bets alone, which can make a Pick 5 or Pick 6 worth a look it would not get on an ordinary day.
Where pari-mutuel betting came from
Joseph Oller, a French-Catalan impresario, invented the system in 1867. The arithmetic was the problem: working out every payout by hand was slow, which led to the automatic totalisator, or tote board, built by the Australian engineer George Alfred Julius. The first was installed at Ellerslie Racecourse in Auckland, New Zealand, in 1913. The United States brought it in during 1927.
In France, the government-controlled Pari Mutuel Urbain, or PMU is the betting agency. In North America, racetracks and online horse racing accounts use the same pools.
Using this when you bet
Three things follow from how the pool works. Check the takeout on the bet you plan to make, because the 8-point gap between a 15% and a 23% pool comes out of your return. Bet as close to post time as you can if you want to know your price, since late money moves it. And look for overlays, which America’s Best Racing defines as a horse whose odds are greater than its chance of winning: our view is that in a pool, that is the only kind of bet worth making over time.
For the full guide to placing a bet at the window or online, and to boxes, keys and wheels, see our guide to betting on horse racing. For the fixed-odds side, see our guides to straight bets, sportsbook betting markets and how bookies calculate odds. To run a pool of your own among friends, see how to create a betting pool.