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 Sports Betting Tutorials - Betting on Horses

 

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.

 

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