Parimutuel betting is a form of wagering where the exact odds of any selection are not known at the time of placing the bet. In this respect it differs from fixed odds betting, the most common form of wagering in the UK where you know exactly what return you will get should your bet win. Instead, with parimutuel gambling your return depends on the overall amount staked on the event and the amount wagered on the winner.

It is commonly used in France, Australia and North America, although the Totepool bets offered by bookmakers in the UK are also an example of parimutuel betting which is also sometimes known as Tote betting (named after the machine which originally calculated the payouts, the totalisator).

Under such a system the payout is calculated by using the total amount wagered on the entire market, be it a horse race, football match, or anything else. From this any applicable government taxes or levies are subtracted, as is the profit margin of the bookmaker or operator and any other further necessary charges. Assuming that leaves exactly £100 and there was £10 staked on the winning pick, every £1 staked will return £10, giving standard fractional UK odds of 9/1 or decimal odds of 10.00.

Prior to an event starting the bookies usually give an indication of what they expect the odds to be and this is invariably expressed in the decimal format – that is to say the amount you would get back for every one unit of currency staked.

Parimutuel betting tends to be favoured where gambling is state operated or at least heavily regulated. This is because it is theoretically impossible to lose money as a parimutuel operator given your profit is not dependent on the outcome and requires no skill in setting odds, controlling liabilities or manipulating the odds. The bookmaker/operator simply takes a pre-determined cut and unless this is insufficient to cover their marketing and operational costs they are assured a profit, irrespective of how many heavily priced favourites Frankie Dettori – or anyone else – rides that day.

The exact bets offered by parimutuel betting vary from country to country but in the UK, Totepool offer a number of jackpot bets that can not only produce life-changing payouts but also offer odds well beyond the genuine probability of a horse winning. This is possible when accumulator-style Tote bets rollover and the overall pool thus becomes so large that the odds are actually in favour of the punter.

Many people dislike parimutuel betting because they like to know what their return will be – the risk/reward ratio being a key factor in making a bet. Moreover, despite claims to the contrary, the odds often fall short of what you would get at a traditional bookmaker or betting exchange. That said, parimutuel betting remains hugely popular via the Totepool bets and is an interesting option that is popular with many people.