Parimutuel Betting Explained

Most people have seen parimutuel betting, used it, or ignored it without ever really knowing what it is. It shows up in racing, jackpots, tournaments—and it works differently to what most bettors are used to.

It’s a system that  doesn’t involve fixed odds, and it doesn’t work like your standard sportsbook bet. It’s built around a shared prize pool for one event that is divided among the people who wagered on the winning result. You’ll hear this called pool betting, mutuel betting, or tote betting. It’s all the same thing.

In this guide, we’ll walk through how parimutuel betting works, where you’ll run into it, how to spot it, and whether it’s a smart choice for the way you like to bet.

What is parimutuel betting?

Parimutuel betting is a system where everyone betting on the same event contributes to a shared pool. Once the event is over, that pool (minus a cut for the operator) is divided among the people who backed the winning outcome.

There are no fixed odds. No bookmaker setting prices. Instead, you’re betting against other punters. If lots of people back the same outcome, the payout drops. If hardly anyone does, the payout shoots up. Simple enough.

Let’s say 10 people each bet $10 on a horse race. That’s $100 in the pot. Two people bet on the winner. The operator takes 10%, leaving $90. That $90 is split between the two winning bets—$45 each. Everyone else gets nothing. The more people bet on the same pick, the smaller the slice.

Where is parimutuel betting used?

Parimutuel betting is most common in events and sports betting with lots of people betting on the same outcome—races, tournaments, or anything where prize money needs to scale with participation. But it’s not used everywhere, and it’s not the only option even where it is available.

Horse racing

At a racetrack, parimutuel is the default. When you bet through the tote system (short for totalisator), your money goes into a pool with everyone else backing that race. The final odds are calculated once betting closes, and the winners split the pot.

But if you’re betting online through a sportsbook, those odds are usually fixed. You’re offered a set price when you place the bet, and it doesn’t change—no pool involved.

So how do you know which one you’re using?

• At the track or using a racing-specific app = usually parimutuel
• On most sportsbooks = fixed odds

If the odds keep shifting and your payout isn’t locked in until the race starts, it’s probably parimutuel.

Greyhound racing

Like horse racing, greyhound betting can go either way. If you’re at a dog track or using the venue’s betting system, it’s usually parimutuel. The betting pool opens for each race, people pile in, and the prize pool is split among winners after the track takes its cut.

But again—many online sportsbooks offer fixed odds instead. So unless it specifically says it’s a tote or pool market, assume it’s fixed.

Lotteries and shared jackpots

Most national and state lotteries are parimutuel by design. Everyone buying a ticket contributes to a prize pool. If more people win, they all split the money. There’s no fixed payout here—only a fixed method for splitting the pot.

You’ll also see the same thing in:

• Charity raffles
• Progressive jackpots
• Pooled prize draws

The operator keeps a portion, and the rest goes to the winners. The more players, the bigger the pot. The more winners, the smaller the slice.

Fantasy sports tournaments

Daily fantasy contests—like those on DraftKings or FanDuel—use a similar structure. Everyone pays an entry fee, and the combined money becomes the prize pool. The top performers split that pot based on ranking.

There are no odds or house bets, instead it’s a system where the size of the pool depends on how many people joined. And, first place doesn’t get a fixed payout, it gets a percentage of the pool, just like in parimutuel betting.

Esports prediction pools

Parimutuel isn’t standard in esports betting, but it shows up in some community-run tournaments and crypto-based platforms. These systems let users place predictions on things like tournament winners or match outcomes. All bets go into a shared pool. Once the event ends, the people who predicted correctly split the winnings.

It’s not as common as racing or fantasy, but when it appears, it works the same way.

How do I know if my event is parimutuel or not?

The easiest way to tell if you’re betting into a parimutuel pool is to check whether the odds are fixed or fluctuating. In parimutuel systems, your potential payout changes right up until the event starts—because the final return depends on how much money gets wagered on each outcome. If you place a bet and the payout estimate keeps shifting, that’s a strong indicator it’s parimutuel.

Look for keywords like “tote,” “pool,” or “mutuel” on the betting interface—these usually signal that you’re not betting against a bookmaker, but into a collective pot with other players. 

How do parimutuel payouts work?

As we know, in parimutuel betting, everyone’s money goes into one pot. After the event finishes, the people who bet on the winning outcome split that pot. But it’s not quite as simple as divide and conquer because not everyone bets the same amount.

Step 1. Everyone bets into the same pool

It doesn’t matter who or what you bet on—every dollar ends up in the same pool. So if five people bet on Horse A, four on Horse B, and one on Horse C, the total pot is made up of all those bets combined.

For example:

$500 is bet in total:

• $250 on Horse A
• $150 on Horse B
• $100 on Horse C

Step 2. The operator takes a cut

Before anyone gets paid, the operator removes a percentage—usually around 10–20%. This is how they make money and cover costs.

If the total pool is $500 and the operator takes 15%, they keep $75. That leaves $425 for the winners.

Step 3. The remaining pot is split among winners

Let’s say Horse B wins. Only $150 was bet on that horse. The $425 leftover is split only between those who bet on Horse B, and each person gets paid based on how much they staked.

Everyone who backed Horse B wins the same amount per dollar bet. The more you staked, the bigger your payout—but the rate is the same for everyone.

To work out the return per dollar:

$425 ÷ $150 = $2.83 per $1 bet

So:

• A $10 bet gets you $28.33
• A $50 bet gets you $141.66

If you notice your payout is lower than you expected, don’t panic. The bookmaker hasn’t pulled a fast one. In real-world racing, final payouts are often rounded down due to rules like breakage, so actual returns may be slightly lower than the math suggests.

Why don’t you know your payout upfront?

Until betting closes, you won’t know the final total in the pool or how many people backed the same outcome as you. If lots of bettors jump on your pick at the last minute, your payout drops. If hardly anyone joins you, your payout goes up.

That’s why the odds aren’t fixed—they’re constantly adjusting based on how money is spread across the outcomes.

You can usually see estimated returns before betting closes, but those numbers change with every new bet placed.

Reasons why some bettors actually prefer parimutuel betting

You’re not stuck with a bookmaker’s odds

In fixed odds betting, the prices are already set. The margin is baked in. You’re just choosing whether to take what the bookmaker is offering.

Parimutuel doesn’t work like that. The odds aren’t fixed by anyone—they shift based on where the money is going. If you spot something early that the crowd hasn’t clocked yet, you get rewarded for it. The payout isn’t limited by what the bookie’s willing to offer—it’s based on how unpopular your pick is.

The fewer people on your pick, the more you get

This is what draws a lot of value hunters in. If you and ten thousand others all back the same favourite, your share is going to be tiny. But if you back something that barely anyone touches and it comes in, you’re splitting the pool with a much smaller group.

A big thing with parimutuel betting is it rewards being right when nobody else is—and who doesn’t love being right?

It’s one of the few betting systems with zero mystery

There is no hidden edge, no complicated odds system, and no quiet terms and conditions buried in the small print. You can see how the payout is calculated—what’s in the pot, what cut the operator takes, and what’s left to be split between the winners.

Everything’s on the table, even if the final numbers keep shifting until the cut-off. You might not know your return until the event starts, but you do know exactly how the system works.

Bigger pools = better opportunities

Another reason people sway towards parimutuel betting is because it scales. The more people betting, the more money in the pot. And that opens up more potential for spotting good value. Especially when the crowd piles into obvious favourites and ignores everything else.

That’s where the sharp bettors tend to look. Rather than following the crowd and jumping on every favorite, they look at who’s being underpriced by the crowd.

It turns betting into a people problem, not just a stats problem

In fixed odds betting, your job is to beat the bookmaker’s maths. In parimutuel, your job is to beat the herd. It’s not just about probabilities, psychology matters.

Form and stats take a backseat, and you’re challenged with figuring out how the crowd thinks, then going where they won’t. Sometimes it works. Sometimes you crash and burn. But when you do get it right, the payoff feels earned.

The downsides of parimutuel betting

You won’t know what you’ll win until it’s too late

With fixed odds, you place your bet and know exactly what you’ll get if it lands. In parimutuel, the payout depends on how many people backed the same thing—and that number keeps changing until betting closes.

So you could place a bet expecting a decent return, only to watch the odds collapse when everyone else jumps on the same pick. The payout drops, and you’re stuck with it. If you’re the type who likes certainty, this setup will drive you up the wall.

It’s brutal in small pools

Parimutuel only really works when there’s enough money in the pot to make it worth winning. In a low-volume event, even if you back the winner, your return might be barely more than your stake—especially if a few others backed it too.

There’s no magic floor protecting your payout. If the pool’s small, the payout is small. Doesn’t matter how clever your pick was.

Favorites get punished

If you like backing short-priced favorites, parimutuel betting can be painful. When the crowd piles in on the obvious pick, your share of the pot gets sliced thin.

Yes, the horse might win—but with everyone else on it too, the payout can be embarrassingly low. Sometimes you’re better off not betting at all.

Big players can shift the pool

Because the odds are shaped by the pool, a few high-stake bets at the last minute can completely change the payout. One big bettor drops $5,000 on the same pick you took, and suddenly your expected return tanks.

There’s no limit to how much someone can bet—or when—so sharp players or syndicates can swing the numbers without much effort.

It’s not great for new bettors

If you’re new to betting and just want to know what you’re getting into, parimutuel doesn’t exactly make life easy. The shifting payouts, the constant recalculations, the mystery until the event starts—it can all feel a bit vague compared to the simplicity of fixed odds.

That doesn’t make it bad, but it does make it harder to manage your bankroll or stick to a plan—especially if you’re used to betting where $10 means $90 back, full stop.

You can’t use it for live betting

Parimutuel betting only works before an event starts. Once betting closes, the pool is locked and the payouts are set. There’s no way to react mid-game or place a last-minute bet during the action. If you’re into live betting, this format won’t work for you—fixed odds is the only option.

When to use parimutuel betting and when to avoid it

Parimutuel betting works when:

• The pool’s big because more people betting means there’s more money to win.
• You’re on an underdog and not splitting the payout with half the crowd.
• You get in early and grab better value before the late money shows up.
• You understand the system and know your payout isn’t final until betting closes.
• You’re betting for upside, not predictability.
• You enjoy outsmarting the crowd more than beating a bookmaker.

Parimutuel betting doesn’t work when:

• The pool’s tiny and there’s barely anything to win, even if you’re right.
• You’re backing the favorite and sharing the pot with everyone else.
• You want fixed returns and need to know what you’ll win before you bet.
• You hate last-minute swings that tank your payout with no warning.
• You’re betting on obscure events with no volume in the pool.
• You’re playing for consistency and need stable returns to manage your bankroll.

FAQs about parimutuel betting

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