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Betting on Horses - Odds &
Winnings
Winnings:
Betting on the outcome of horse races is different from betting at a
casino, where the payout odds are set in advance. Payout odds (or
"Payoffs") are a ratio that show how much money you will
get back per wagered dollar if you win. Payoffs at the race track
are based on what is called the "Pari-Mutuel System" which
determines the payoffs by how much is bet on each horse. It works
like this:
The "house" - the track operation and state and local
governments - take a fixed percentage (the "take") of the
"betting action" (total money wagered) and the winners
split what's left. The take at US racetracks is typically 17%. That
is, for every $100,000 wagered the house takes $17,000; the
remaining $83,000 is divided among winning bettors. Prize monies for
the owners of horses that finish first, second and third (sometimes
even forth) - called "purses" - are independent of the
betting action.
Let's take a closer look now at the three main types
of bets and how your winnings are calculated on each.
-
Win (bet on horse to come in first):
Example: Five horses.
|
Win Pool |
|
Horse |
Money Wagered |
| Black Beauty |
$35,000 |
| White Stud |
$25,000 |
| Marlboro Man |
$20,000 |
| Mr. Ed |
$19,000 |
| Lumpy |
$1,000 |
The total amount bet on these horses to win is $100,000. This
is called the "win pool". The most money is bet on
Black Beauty: he is called the "favorite". The least
money is bet on Lumpy: he is called the "longshot".
These numbers are posted on a large computerized display in the
track infield, called the "totalizator" or
"tote". Between races the tote board is frequently
updated, so you can see how much has been bet on each horse and
how the payoffs have changed.
Okay, the win pool is $100,000, the windows are closed, the
race starts.
Let's say you picked Black Beauty to win the race. How much $
will you get per dollar you bet if you win?
First, the track takes out his 17%, or $17,000. This leaves $83,000
for the winning bettors to divide. Then you divide this number
by the amount bet on Black Beauty. That's it and that's all.
That's $83,000 / $35,000
(win bets on Black Beauty) = $2.37 to pay back for each
dollar you bet on Black Beauty. Actually, you won't get quite as
much. Payoffs are rounded down to the next 10 cent
increment. So if you bet $2 on Black Beauty instead of being
paid $2.37 x $2 = $4.47, the $2.37 would be
rounded down to $2.30 x $2 = $4.60. Rounding down
to the next 10 cent increment is called "dime
breakage" and gives the track (and state) additional
revenue, and the winners less profit.
It works the same with all other horses:
Let's say you picked Lumpy to win the race. If Lumpy wins the
race you'll get $83,000 / $1,000
(win bets on Lumpy) = $83 per dollar bet. For a $2 bet
you'd get $83 x $2 = $166.
-
Place (bet on horse to come in
first or second): Example: Five horses.
|
Place Pool |
|
Horse |
Money Wagered |
| Black Beauty |
$30,000 |
| White Stud |
$22,500 |
| Marlboro Man |
$20,000 |
| Mr. Ed |
$19,500 |
| Lumpy |
$1,000 |
The total amount bet on these horses to place is $93,000.
This is called the "place pool". Let's say Black
Beauty comes in first and White Stud comes in second.
First, the track takes 17%, or $15,810. This leaves $77,190.
From this you subtract the monies that were bet on the two
winning horses since these monies have to be given back to the
winners anyway. That's $77,190 - $30,000
(place bets on Black Beauty) - $22,500
(place bets on White Stud) = $24,690.
This money is the money of all bettors that have lost and that
now can be shared among the winning place bettors. That's $24,690
/ 2 = $12,345 for each ($12,345
for the ones that bet on Black Beauty to place and $12,345
for the ones that bet on White Stud to place). That's the number
you need.
- Black Beauty bettors get back $12,345
/ $30,000 = $0.41 per
dollar which after breakage becomes $0.40 per dollar
(plus the money originally deposited). So if you put $2 on
Black Beauty you'd get back $2 (your original bet) plus $0.4
x $2 (your winnings) = $2.80.
- White Stud bettors get back $12,345
/ $22,500 = $0.55 per
dollar which after breakage becomes $0.50 per dollar
(plus the money originally deposited). So if you put $2 on
White Stud you'd get back $2 (your original bet) plus $0.5
x $2 (your winnings) = $3.00.
-----------------------------------
Suppose Lumpy comes in second. You calculate your winnings
the same way:
$77,190 (place pool after track
take) - $30,000 (place bets on
Black Beauty) - $1,000 (place bets
on Lumpy) = $46,190. $46,190 /
2 = $23,095
goes to Black Beauty bettors and $46,190
/ 2 = $23,095
goes to Lumpy bettors.
- Black Beauty bettors get back $23,095
/ $30,000 (place bets on Black
Beauty) = $0.77 per dollar which after breakage
becomes $0.70 per dollar (plus the money originally
deposited). So if you put $2 on Black Beauty you'd get back
$2 (your original bet) plus $0.7 x $2 (your winnings)
= $3.40.
- Lumpy bettors get back $23,095
/ $1,000 (place bets on Lumpy)
= $23.1 per dollar (plus the money originally
deposited). So if you put $2 on Lumpy you'd get back $2
(your original bet) plus $23.1 x $2 (your winnings) =
$28.20.
-
Show (bet on horse to come in first or
second or third): Example: Five horses.
|
Show Pool |
|
Horse |
Money Wagered |
| Black Beauty |
$35,000 |
| White Stud |
$32,500 |
| Marlboro Man |
$25,000 |
| Mr. Ed |
$15,500 |
| Lumpy |
$2,000 |
The total amount bet on these horses to show is $110,000.
This is called the "show pool". Let's say Black Beauty
comes in first, Marlboro Man comes in second and Mr. Ed comes in
third. You calculate your winnings like this:
First, the track takes 17%, or $18,700. This leaves $91,300.
And this leaves
$91,300 (show pool after track
take) - $35,000 (show bets on Black
Beauty) - $32,500 (show bets on
Marlboro Man) - $15,500 (show bets
on Mr. Ed) = $15,800 to
be split between the winners. That's $15,800
/ 3 = $5,266.67 for each. That's
the number you need.
- Black Beauty bettors get back $5,266.67
/ $35,000 (show bets on Black
Beauty) = $0.15 per dollar which after breakage
becomes $0.1 per dollar (plus the money originally
deposited). So if you put $2 on Black Beauty you'd get back
$2 (your original bet) plus $0.1 x $2 (your winnings)
= $2.20.
- Marlboro Man bettors get back $5,266.67
/ $25,000 (show bets on
Marlboro Man) = $0.21 per dollar which after breakage
becomes $0.20 per dollar (plus the money originally
deposited). So if you put $2 on Marlboro Man you'd get back
$2 (your original bet) plus $0.2 x $2 (your winnings)
= $2.40.
- Mr. Ed bettors get back $5,266.67
/ $15,500 (show bets on Mr. Ed)
= $0.34 per dollar which after breakage becomes $0.30
per dollar (plus the money originally deposited). So if you
put $2 on Mr. Ed you'd get back $2 (your original bet) plus $0.3
x $2 (your winnings) = $2.60.
The exotic bets payoffs are a bit more difficult to calculate.
You will be able to read about them in our more advanced betting
sections.
Have fun betting. |
