Facts and History of Pari-mutuel Betting

When gambling on most casino games, you are betting against the house edge. However, when you place a bet on horses or dogs, you are not betting against the house. This is what you call a pari-mutuel betting which is essentially a bet placed against the other players betting on a similar event.

The total bet on the event is placed into a large pool. The carriers of the winning tickets split the entire amount of money placed on the race, upon deductions of taxes and expenses of the racetrack. The money is paid out in a similar manner with the rake paid out by the pot in a game of poker in the card room. But, compared to the minimal rake in the poker, pari-mutuel bets can range from fifteen to twenty five percent of the total pool amount. Most players monitoring the track or off track wagering parlors have minimal understanding of the beginnings of pari-mutuel betting.

Pierre Oller, a French perfume shop attendant, was credited for originating pari-mutuel betting. In 1865, he had the idea of retailing tickets on a horse race and maintains all the proceeds in a general prize pool to be divided among the winners. (Pari-mutuel is a term which is defined as betting between ourselves). At the end of the race, Pierre deducted five percent handling fee and then split the remaining to bettors depending on the percentages created by the wagers on the bets placed on individual horses. Pierre organized his betting scheme in the racing parks and in 1887, it became the legitimate form of betting in France.

Nearly forty years after in 1927 after Around 40 years later in 1927 after suggestions initiated by Sir Winston Churchill, the Parliament of England passed a statute which made pari-mutuel betting as the legal betting scheme at every track in the United States. Nearly the same period, pari-mutuel betting was accepted at race tracks across the United States.

Electronic Calculations

At the same time, Henry Straus, a young engineer, left s racetrack in Maryland furious over the amount he received. He placed his bet on a horse with a winning ratio of 12-1 but only received 4-1 on his ticket. Also, corruption around the track was very rampant as hands were used in the computation of the odds.

Straus together with other engineers founded the American Totalisator company (Am Tote) and devised an electro-mechanical equipment which would provide accurate calculations on the race odds shown on the race board thus secure an equal payment while flaunting the odds on a bigger electronic board. In 1930, the initial machine was put-up at a race track in Pimlico.

Currently, faster computers are computing the odds and the tracks may provide a minimally higher percentage of the pot but pari-mutuel wagering has not wavered since its introduction 100 years ago.


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