(Gambling Basics continued)

Paramutuel Example

     

Other disadvantages are not so easy to spot or to calculate. Take greyhound and horse racing, for example. Bettors get so caught up in trying to predict the winners that they never really consider if they should even bother. What good does it do to pick winners when you still wind up losing money?

In paramutuel betting, the money is pooled and split among the winners according to the final odds at post time. The odds on an entrant are determined by the amount of money bet on that entrant. In other words, if the 2 dog is the best dog and most bettors are picking him to win, the payout on the 2 dog will be low because the money in the pool will be split amongst many bettors. Conversely, if the 2 dog is a poor choice and few people bet on him, the pay out on the 2 dog will be more if it wins because the pool will be split among fewer people. 

However, regardless of how high the payout may be on any given race, it is never as high as it should be. The track takes a significant amount of money from the pool in order to pay the owners and the kennels/stables of the winning dogs/horses. Not to mention the portion they keep for themselves. This is why you can never win long term on horses or greyhounds. So, being able to pick the winners is a waste of time and money. 

Some believe that there is no way to predict the winner of a greyhound race and that all the dogs are the same. Unfortunately, this is not true. If it were true,  all I would have to do is bet on the dog(s) in each race that is paying more than 7 to 1. Since there are typically 8 dogs per race, each dog would have a 7 to 1 chance of winning. Therefore, if you consistently bet on entrants getting better than 7 to 1, you are making a profit. The crux of all of this is that greyhound racing is somewhat predictable, just never profitable. 

Here is a scenario that simulates para-mutuel betting. You and a friend are drawing from a deck of cards for money. Before each turn, you and your friend each lay down $50 on the table for a total of $100 in the pot. I'm standing beside the table watching. Each time before the cards are drawn, I reach in the pot and take $20 for myself leaving only $80. I don't care who wins because, like the track, I'm taking a large percentage off the top. Although you can expect to win once every two hands, thanks to me and my greedy ways,  you will be steadily losing money.