What Is A Pari Mutuel Basis?

Pari mutuel is a term you might come across when betting on a game of some sort. If you thought the term was French, you were correct. In English, it means mutual betting. This also hints at how the process works, but we’ll go into it in more detail below.

How Pari Mutuel Betting Works

The term describes a method for betting on the outcome of a specific event. This could be a horse race or a spin of the wheel in roulette. All the bets go into the same pot and are added together. In some cases, taxes are deducted from the total. The house—usually a casino—then takes its profit share after taxes.

A Simple Example

Let’s suppose the total bets amount to $2,000. For the sake of argument, we’ll say the taxes amount to $50. We’ll also say the house is due $50. Those amounts are withdrawn from the pot, leaving $1,900.

The event then takes place to decide what happens and what the result is. If you were incorrect with your guess, you lose your bet, as you would imagine. If you were correct, you get a slice of the money in the pot. If you were the only person to guess correctly, you would get $1,900. If four people guessed correctly, each person would get $475 in winnings.

In essence, all bets are pooled, taxes and the house cut deducted, and the remainder distributed among the winners.

Common Uses

You only tend to hear about pari mutuel betting in certain circumstances. We gave the example of roulette above, but other games and sporting events can use this system as well.