Also known as the sport of kings, horse racing is one of the world’s oldest competitive sports. Historical facts state that this sport has always been intrinsically linked with gambling. In fact, horse race betting is considered one of the significant factors that aided the establishment of the activity as a professional sport.
As much as betting influenced the prominence of horse racing, the sport also significantly influenced the betting sector. Horse racing made an indelible mark in the sports betting industry with its adoption of the totalizator system centuries ago, a system that became common in other betting sectors in later years.
What is the Totalizator System?
The totalizator system, also known as the tote system, is one in which odds are set after all bets on an event has been placed. It is often referred to as pool betting because all bets are collected in a pool, and the total amount is distributed among winners according to the bets placed. Simply put, this system is the opposite of the fixed odds system seen in most sportsbooks today. Sportsbooks set odds in the fixed odds system, but the bettors determine them in the totalizator system.
The totalizator system was primarily adopted for horse race betting, but today, it is widely used in other betting schemes.
Origin of Horse Race Betting
It is difficult to pinpoint the exact origin of horse racing. Certain historians believe that horse racing originated in ancient Greece 2000 years ago when chariots were utilized with horses for entertainment purposes in stadiums. Horse race betting is as old as the sport itself.
Like any other kind of betting, horse racing began with benign peer-to-peer wagers. Over the years, these peer-to-peer bets evolved into bookmaking, also known as “the house,” in which bettors stake games with a bookmaker. The bookmakers had the ability to fix the odds before the start of the game. Therefore, when a bettor loses a bet, he loses against the bookmaker, a scheme which, in most cases, is skewed to favor the bookmakers in the overall betting transaction.
How the Totalizator System Works
When Joseph Oller introduced the pari-mutuel, another name for the totalizator system, in the late 1860s, his principal aim was to create a system that would be fair to the bettor. He accomplished this by developing a mechanism that excludes the bookmaker and his impact on game odds. That is, when a bettor loses in the totalizator system, he loses to his counterparts who win the same wager and not to the bookmaker or the house.
For example, in a hypothetical race with four racers, various bettors will wager different amounts on each racer. Say $200 total bets on racer A, $600 on B, $700 on C, and $1000 on D. After calculating the total amount of bets (bet pool), a percentage is deducted as commission for the betting company. The total amount left in the pool is then distributed among bettors who bet on the winning racer.
Suppose a total of $2000 remaining after the commission has been deducted, and A is the winning bet. In that case, the remaining money pool will be divided by the amount wagered on the winning bet. In this case, $2000 divided by $200 equals ten. This results in a payoff of $10 for every $1 wagered, which makes the odds 10 to 1. This means that the more wagers placed on the winning horse, the smaller the odds and amount each successful bettor will win.
The totalizator culture was appreciated among bettors since it provided much fairness and transparency to horse race betting. Till today, this system is regarded as the most transparent. However, it also has drawbacks, as placing wagers on horses that are favored to win will generate lesser earnings than in a fixed bet system. In fact, when a strong favorite wins, the payoff might be as low as $1.02 to one dollar.
Conclusion
Also known as the parimutuel, the totalizator system is an integral element of horse race betting. The system pits a bettor against his counterparts instead of the bookmaker. This means that the bookmaker has no direct control over the odds, providing a fair and transparent ground for everyone.
The tote system, as it is known today, is still prevalent in racecourses. You can also access tote betting on some online sportsbooks.