7 Pros & Cons of Parimutuel Betting

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Parimutuel betting, also known as pool betting or tote betting, is a specific way for a betting institution to conduct its wagering operations. It is an alternative to fixed-odds betting sites and betting exchanges.

Instead of deciding on fixed odds, pool betting essentially allows all wagers placed on a specific event to be put in a big mutual pool of money. When the event starts, bets are closed and so is the pool. Once the outcome is known, the operator takes a small percentage of the pot as a fee, and then splits the pool between all the winners. Therefore, the final odds for each outcome are only known once the bets are closed.

1. Online Parimutuel Betting Is Not Very Common

Pool and tote betting are all punters are about in horse racing race tracks, as well as with greyhound racing. Probably because this is where you can trace back its origins. However, online parimutuel betting sites are very few. Perhaps the value proposition isn’t there for bettors when comparing to the ginormous betting exchanges and other fixed-odds operators.

Regardless, with a relaxation of online betting laws everywhere in the world, the money wagered via mobile and online betting platforms has overtaken brick-and-mortar gambling in many cases. And this trend is just going to grow bigger. Online parimutuel operators are just not attracting punters enough to create a network effect.

2. Great Value Bets Available

With parimutuel betting, you don’t need to outsmart the bookmaker because, well, there is no bookmaker! Instead, you need to be smarter than the other punters who are, arguably, less knowledgeable than bookmakers. So you can place incredible value bets if you do your research.

Remember that you aren’t betting against “the house” or the “the bookie” with pool betting. The operator simply takes all wagers, takes a fixed cut, and then redistributes to the winners. With fixed-odds betting as well as exchanges, the bookmakers are generally extremely sophisticated so you have definitely less of an edge. Especially today, with machine learning and data analysis at their peak, your scribbled research won’t stand much of a chance against a good bookie.

3. Too Few Types of Bets

Whether you are a hobby or professional bettor, you do want options. In sports betting, options come as having different types of bets available for a specific event. The more wager types, the more opportunities to find value bets to place.

Parimutuel bet types are generally counted on two hands: win, place, show, each-way, exacta, trifecta, superfecta. There are variations of these in some countries but this is mostly it. Bettors miss other types of wagers such as over/under, arrives ahead of, jockey picks, and more. The choice is simply too restrictive for many punters.

Hopefully, with the growth of online betting and a friendly legislation, tote betting sites will offer more bets, on more events. It seems like it’s a sure way of attracting a new audience.

4. Final Odds Are Not Known At The Time Your Place a Wager

Essentially, parimutuel betting is a big pool of money made up from all the bets wagered for that market (e.g. Winner in Race A). Therefore, you don’t know the exact odds for your pick until betting is closed.

So, what may have looked like great odds when you placed your bet, may turn out to eventually offer a very low return.

Let’s say you placed a “win bet” on a horse with 5/1 odds. But then, the favorite runner got hurt before the race so your pick’s odds, by the time betting is closed, have dropped to 2/1. And you have no way of withdrawing your bet so you are just passively hoping that the odds won’t change until the start of the race, or you can wait until the last few seconds to place your bet.

Human beings, especially gamblers, want to hold on to every bit of certainty they can find. This is where parimutuel just doesn’t stack up to other ways of bookmaking.

5. Tote Betting Is Mostly For Horse & Greyhound Racing

Punters love to bet on a lot of sports, not just horse racing and greyhound racing. Unfortunately, because pool betting originated in racecourses, it has not broken into other sports and disciplines. Whereas it is technically possible to offer tote betting on football, tennis, and other events, it just isn’t common at all.

Parimutuel became so popular because betting initially was mostly on horse races. And with so many races daily, it was just simpler not to take sides and instead let punters bet against each other whilst taking a fee to compensate the operator for running a fair and safe game.

But then, bettors started to bet on all sports, and even politics or financial movements. Parimutuel did not make much sense for these new markets. Additionally, bookmakers realized that provided fixed-odds could net them larger profits as most punters were uneducated.

6. Parimutuel Lost To Betting Exchanges & Fixed-Odds Operators

Whilst for a long time pool betting was the most common betting structure, mostly because it was the only one allowed in some countries (e.g. PMU in France, The Tote in the UK), parimutuel operators did not reinvent themselves in order to compete with betting exchanges and fixed-odds operators.

Look at today’s online and land-based betting landscape. Fixed-odds and exchanges are dominating the space. They have a very aggressive and in-your-face marketing, but it also seems like punters favor these bookmakers over parimutuel.

What will be very interesting to see is how, even in horse racing and greyhound racing where pool betting has reigned for decades, things are going to change.

7. Odds Often Converge Across Platforms

As discussed above, parimutuel doesn’t have a bookmaker to bet against, so you will generally find great value bets on it. However, with technology this gap is narrowing. Indeed, computerized betting algorithms now see what odds are offered on one platform and will generally place bets that will eventually level all platforms. Now more than ever, it has become very difficult to perform arbitrage manually across different betting sites.

As seen in this article, it is undeniable that parimutuel betting has fallen out of fashion. But with a worldwide relaxation of online betting laws and regulations, it is possible for tote operators to reinvent themselves and come back stronger. After all, pool betting has no bookmaker, no house, and is in effect, the fairest way of wagering.

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