Horse racing odds are determined by the amount of money wagered on each horse and the percentage kept by the track. Pari-mutuel betting means all punters compete for the same amount of money, with the company taking a percentage. Odds are calculated by subtracting the amount wagered on a horse from the available winnings and dividing by the amount wagered. Other types of bets include place and show bets, and exotic bets. Odds for these bets are calculated based on the same factors, and the jackpot must be divided if multiple bettors win.
Horse racing odds are determined using a formula that takes into account the total amount of money wagered on a race, the amount wagered on each horse, and the percentage of money the track or off-track betting site keeps. Before any bets have been placed, the odds are based on the oddsmaker’s estimate of the percentage of the total prize pool that will be wagered on each horse; these odds are often referred to as the morning line. When bets are placed and calculations are made, the odds may change if the oddsmaker’s estimates were not accurate. Unlike many other forms of betting, horse racing odds payouts are usually based on the final odds for each horse, rather than the odds a bettor received when placing the bet. For example, someone might bet on a horse when the odds are 4-1, but if that horse’s odds are 2-1 at the start of the race, the bettor will only win half the money they would have if the odds were unchanged .
The type of betting that is made on most horse racing is called pari-mutuel betting. The name comes from the French words for “mutual stake” and reflects the fact that all punters in a race are competing against each other for the same amount of money. In pari-mutuel betting, the odds are determined by the bets that have been placed. The company that accepted the bets keeps a portion of the money, often called a “take” or “rake” and usually 10 to 20%, so that it can pay its expenses and taxes and still make a profit. The rest of the money is then paid out to the winning punters.
Example of a race of the five horses
Calculating horse racing odds is pretty straightforward. An example would be a five-horse race where a racer won a total of $1,000 United States Dollars (USD) in bets to win: $300 USD on one horse, $250 USD on another, $200 USD on third, $150 USD on the fourth, and $100 USD on the last. If the runway take is 15%, all bettors are competing for the remaining $850 USD. The odds for each horse are calculated by subtracting the amount wagered on that horse from the available winnings – $850 USD, in this case – and dividing that number by the amount wagered on that horse. The result is then rounded down if necessary.
In this example, the horse with the most money bet on – the “favourite” – would have odds of 9-5. Starting with the $850 USD prize pool and subtracting the $300 USD wagered on the horse, there is $550 USD left in potential winnings for the people who wagered on that horse. Dividing $550 USD by $300 USD is 1.83, rounded down to 1.8. Horse racing odds are in whole numbers, so 1.8 converts to odds 9-5. This means that a bettor would win $9 USD for every $5 USD they wager. The punter will also get the amount or their original bet back, so the total payout for a winning bet of $5 USD, in this case, would be $14 USD.
The same math is used to calculate the odds for the other horses. The second favorite would have odds of 12-5: $850 USD minus $250 USD is $600 USD, divided by $250 USD is 2.4. The bottom three horses would have odds of 13-4, 14-3 and 15-2, respectively, based on the same calculations.
It doesn’t matter which horse wins, the track will pay out roughly the same amount. Rounding the odds down when necessary could result in a slightly lower payout, depending on which horse wins. In this example, only $840 USD will be paid if the favorite wins and $850 USD if another horse wins. If the 15-2 long shot in this example ends up winning the race, the track would give those punters back the $100 USD wagered on that horse and give them a total of $750 USD in winnings: $15 USD for every $2 USD who bet.
Place, show and other bets
In horse racing, in addition to betting on a horse to win, many types of bets can be placed. For example, in North America, people may also bet on horses to “place” or “show”. A place bet wins when the horse finishes first or second, and a show bet wins when he finishes first, second or third. Furthermore, it is possible to bet on various combinations of horses and their order of arrival. These are called exotic bets.
Like bets to win, the odds for other types of bets are calculated based on the same factors: the total amount wagered, the cash out and the amount wagered on each horse. When the payout for a specific type of bet is divided among multiple bettors of a horse, such as the top three horse bettors for show bets, the jackpot must be divided by that number. So, for example, the jackpot for show betting, also called jackpot, must be divided by three before the odds for each horse are calculated. Calculating odds for other exotic bets can be quite complicated and involve combining various odds.