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Similarly, unpopular horses offer higher payouts because there are fewer winning tickets to pay. Pari-mutuel wagering odds are determined entirely by the public as explained in the answer to the above question.
In contrast, fixed-odds wagers are determined by an oddsmaker. As a result, pari-mutuel wagers fluctuate until post-time, even after bettors place their wagers. In comparison, the payouts on fixed-odds wagers remain fixed in place after bettors submit their bets.
How do pari-mutuel wagering odds work? Racetracks post pari-mutuel wagering odds as fractions that represent the ratio of the amount the bettor stands to win versus how much they must risk. Bettors can read more about horse racing odds here: Horse Racing Odds Explained How much commission do tracks keep from pari-mutuel wagering pools? The track take-out varies by track, type of wager, and location of the originating bet.
Typically, straight bets involve less take-out than exotics. With fixed odds betting the oddsmaker sets the odds for a particular outcome and if this outcome occurs you are paid out based on the odds you bet at, regardless of what every other individual betting on the event wagered on.
With fixed odds betting you are wagering against the sportsbook at the odds given. In contrast parimutuel betting basically involves betting against other gamblers who are betting on the same event. The potential payout for each outcome changes as more bets are placed, so the odds that you see when you place your bet, may not be the same odds that you are paid out at if more bets are placed after your wager.
Example Here is an example to show how your payout can change even after you placed your bet at certain odds. Consider a horse race with 8 runners.