This article first appeared in the Sep/Oct 2010 issue of World Gaming magazine.
‘Parimutuel betting’ may not be a phrase you are familiar with, though you have probably experienced this type of betting in one form or another before. Let’s take some time to explain the pros and cons of such betting.
Parimutuel betting is just ‘pool’ betting. What is meant by this is that all the money wagered on any given event is put into one big pool. The organisation running the pool takes a small commission and the rest of the funds are distributed amongst the winning bets that were placed. The less money invested on any given option means the bigger the dividend.
In places like Singapore, Australia and New Zealand this was once the only form of legal betting open to the public. Australia has moved to a more deregulated market in recent years but parimutuel betting is attractive to governing bodies that hold a monopoly on gaming. The advantage for the operator is that they can’t lose and in that regard it’s like a betting exchange. They simply take a small commission for offering a service. Having said that, they are then constrained in their profit making and must keep any strong opinions they have about the events which are being bet on to themselves.
This style of betting works best on markets that have plenty of betting options, and is particularly suited to horse racing. It works on head-to-head markets as well (as long as there isn’t a very strong favourite) but it has been found that offering fixed prices tends to work better when there are only two or three possible outcomes. Pool betting works on the principle that the market will shape the prices. If a lot of money is invested on any given option, the price to be paid on that option will shorten.
Some punters get frustrated with parimutuel betting as they don’t always know the exact figure they will be paid for a win prior to placing a bet. You can make solid predictions, and often an estimate is displayed, but at the end of the day you are at the mercy of the market. This can certainly work against you but it can just as easily work in your favour if the market moves in the opposite direction and you receive a bigger dividend than expected.
Operators in both the Asia-Pacific and European regions use pool betting as well as fixed odds betting. Pool betting is different to the traditional English or American bookmaking models which rely on bookies carrying short term risk at any given time.
There are some innovative companies that are looking to use the pool style of betting to offer a huge range of different betting markets to players.
One of the big movers and shakers in the industry is ToteDaddy.com who is offering pool betting to their clients. And the markets on offer are much wider than just sport – what about taking a punt on whether Brad Pitt will make a movie about the oil spill in the US, who will be crowned Miss Universe this year, or what the final river card will be in the World Series of Poker main event? ToteDaddy has spent a lot of time and energy getting their software package right and new and seasoned punters will feel right at home betting on this site.
Pool betting definitely works best when the pools are large, so the biggest challenge companies like ToteDaddy face is that they must focus on driving people to their site. Once there the product will speak for itself. If this is managed well and the volume of customers continue to grow then they will have a product that will be of huge interest to both the recreational and professional punter. Other sports bookmakers are watching with bated breath.
Another good thing about pool betting is that if you are smarter than the average, there are often great value bets available. Because the players themselves set the prices, you don’t need to be smarter than the bookie to win, just smarter than the prevailing ‘public opinion’. Check out ToteDaddy.com and pick up some bargain prices. You might be amazed at the range of betting opportunities these new companies are offering right now. As the market embraces this style of pool betting those opportunities can only get bigger.
