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In a hypothetical event that has eight possible outcomes, in a country using a decimal currency such as dollars , each outcome has a certain amount of money wagered:. Following the start of the event, no more wagers are accepted. The payout is now calculated. First the commission or take for the wagering company is deducted from the pool. For example, with a commission rate of Thus, the odds on Outcome 4 are 7-to-1 or, expressed as decimal odds , 8.

Prior to the event, betting agencies will often provide approximates for what will be paid out for a given outcome should no more bets be accepted at the current time. Using the wagers and commission rate above In real-life examples, such as horse racing , the pool size often extends into millions of dollars with many different types of outcomes winning horses and complex commission calculations. Sometimes, [ when?

In horse racing, a practical example of this circumstance might be when an overwhelming favorite wins. In North America, this condition is usually referred to as a minus pool. In an event with a set of n possible single-winner outcomes, with wagers W 1 , W 2 , The parimutuel system was invented by Catalan impresario Joseph Oller in The large amount of calculation involved in this system led to the invention of a specialized mechanical calculating machine known as a totalisator , "automatic totalisator" or "tote board", invented by the Australian engineer George Alfred Julius.

The first was installed at Ellerslie Racecourse , Auckland , New Zealand in , and they came into widespread use at race courses throughout the world. The U. Unlike many forms of casino gambling, in parimutuel betting the gambler bets against other gamblers, not the house, which necessarily implies that the bank cannot be broken.

The science of predicting the outcome of a race is called handicapping. Independent off-track bookmakers typically have a smaller take and thus offer better payoffs, but they are illegal in some countries. However, the introduction of Internet gambling led to "rebate shops". These off-shore betting shops promise to return some percentage of every bet made to the bettor. There may be several different types of bets, in which case each type of bet has its own pool.

The basic bets involve predicting the order of finish for a single participant, as follows:. In Canada and the United States , the most common types of bet on horse races include:. Win, place and show wagers class as straight bets , and the remaining wagers as exotic bets. Bettors usually make multiple wagers on exotic bets. A box consists of a multiple wager in which bettors bet all possible combinations of a group of horses in the same race. A key involves making a multiple wager with a single horse in one race bet in one position with all possible combinations of other selected horses in a single race.

A wheel consists of betting all horses in one race of a bet involving two or more races. For example, a 1-all daily double wheel bets the 1-horse in the first race with every horse in the second. People making straight bets commonly employ the strategy of an "each way" bet. Here the bettor picks a horse and bets it will win, and makes an additional bet that it will show, so that theoretically if the horse runs third it will at least pay back the two bets.

The Canadian and American equivalent is the bet across short for across the board : the bettor bets equal sums on the horse to win, place, and show. A parlay , accumulator or roll-up consists of a series of bets in which bettors stake the winnings from one race on the next in order until either the bettor loses or the series completes successfully.

In Australia, certain exotic bet types can be laid as "flexi" bets. If the bet is successful, the bettor will get either the full winning amount shown on the board, or half the winning amount. The most popular horse race in the US has a lot of bets made all over the world. The variety of wagers is large and can be complicated for new bettors.

The Kentucky Derby has a larger than normal pool of money from bettors. A lot of the money in the pool for bettors to win is made by casual bettors that have little chance to win. This leaves money available to bettors that even do a little research to cash in with. The best way to take advantage of the Run for the Roses might be to add some exotic bets to the mix.

These wagers are a bit more complicated than the traditional Win 1st place , Place 2nd place , and show 3rd place bets. There are exotics available for single races and multiple races. These exotic are similar to parlays for horse racing. They involve more horses than a Win, Place, Show bet on a single horse. These bets pay more but may cost more to bet. Some bettors play straight exotic bets where each horse must finish in the selected place. For example, a bettor can place an exacta for the 1 and 3 horses to finish first and second, respectively.

Each horse must finish in the specific position for the bet to win. If unsure, the bettor can place a second exacta on the 3 and 1 to finish first and second, respectively. An easier way to do this would be to box the exacta with the 1 and 3 horse. The two horse exacta bets cost the same regardless of how the example wager is placed. The process of boxing horses is simple with a two-horse example.

The more horses involved with each exotic boxed bet will make each wager more expensive to place. Payouts for exotic bets can be huge for the Kentucky Derby. Each exotic betting pool pays out differently based on how much money was bet. The payouts are made by taking the total money wagered in the exacta, trifecta, superfecta pool and subtracting the track takeout, then dividing the remainder of the money by the number of winning tickets.

The exact winning price is almost impossible to predict. The higher the longer odds horses finish the greater the payout tends to be. This makes sense since fewer people are wagering on these horses.

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