All of the inside scoop on Virginia's biggest day of Steeplechase racing -- the Virginia Gold Cup. Hey, 50,000 of your closest friends can't be wrong! Do you have your tickets yet?

Friday, April 12, 2013

What The Heck Is Pari-Mutuel Wagering And How Does It Work?

Don’t panic, it’s easy.

Pari-mutuel wagering is the kind of wagering you will find at any racetrack in America.  The easiest way to explain is that the wagers are place in a pool and the winning bettors receive the winnings.  The difference between pari-mutuel wagering and casino wagering is when you lose a bet in pari-mutuel your buddy who backed the right horse gets your money (along with everybody else who backed the winner). When you lose a wager at a casino your money goes in the casino operator’s pocket.

Here’s how it works technically speaking.  You place a $2 wager on Old Rosebud (not his real name) to win the second race. That money goes into a pool exclusively for all the “win” wagers placed on that race.  The odds (which will be shown on the Gold Cup’s jumbotron) are calculated based on how much money is bet to win on each horse in the race.

If Old Rosebud is popular and a lot folks wager on him, his odds will be low and he will be considered one of the “favorites.”  If few wagers are placed on him, his odds will be high, and he is considered a “longshot.”

Just before the race ends, the wagering is stopped and the final odds calculation is made – thankfully by a computer and not some guy in a truck wearing a visor using an abacus. The final odds will determine the payouts.

So for the purpose of this discourse, lets’ say Old Rosebud wins and he was a popular choice with final odds of 4 to 1.  All the money bet to win (less a modest commission for various expenses) is paid out to the winners.  So all the folks that bet on Old Rosebud get a payout based on 4 to 1 odds and all the losers get the satisfaction of knowing that they contributed to the economic well-being of the winners.

Each 4 to 1 winning wager will pay $10 for a two dollar bet.  Here’s how that works: The odds tell you how much has been bet on each horse relative to all the horses and how much your payout will be.

The first number, the 4 in this case, tells you the multiplier of your wager, and the 1 in all cases simply means you get your wager back.  So if you wagered $2 to win on our now dear friend Old Rosebud, you win $2 x 4 plus your original wager (1) = $8 + your original $2 bet = $10.  If O.R. had gone off at 10-1, you would have received $2 times 10 plus your original $2 bet = $22.

If you had bet $5 to win on Rosie, as we now call him, at 4 to 1, the formula is the same but the original wager is $5 not $2, so it’s 4 x $5 plus your original $5 bet = $25 payout.

See, it’s not complicated at all.  It’s just math.

The wagers on place and show betting are similar, but harder to figure out since the odds board doesn’t show these wagers.  However, they will be less and will follow the pattern of the win wagers.

The same is true of the exotic wagers – the daily double, exacta, quinella and trifecta. Each of these wagers is kept in their own separate pools. 

Q: Speaking of Old Rosebud, will you be able to bet on the Kentucky Derby?  

A: No, not through the Gold Cup's wagering pools. Hopefully, next year you will be able to wager on the Derby. We're working on it...

No comments: