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Calculating Payouts

After learning how to read horse racing odds, it is important to then calculate payouts for your bets. Each different type of bet has its own payout potential, but it is often hard to calculate some payouts since odds fluctuate constantly. 

Horse race betting is based on the pari-mutuel betting system, which means you are betting against other bettors. The wagers are gathered in a pool for each bet and are dispersed after the track takes a cut to reinvest in racing. 

You will often see the same odds in every race, and the minimum standard bet is usually $2.00. However, it can be lower depending on the track or online betting platform. Note most results are reported at the $2.00 level, this sometimes confuses new handicappers because they initially think their winnings were larger than they actually were.

By looking at the chart below, you can easily calculate some of the most common payouts for a winning bet:

Odds $2 PayoutOdds $2 Payout
1/2 $3.005/1$12.00
6/5 $4.409/1$20.00

Bets Breakdown

Horse racing payouts depend on which type of bet you place, the amount varies greatly between straight and exotic bets. 

Let’s first take a look at the different types of bets:

Straight bets:

WinThe only thing that matters to you is: Did your horse cross the finish line before all of the other horses?
PlaceMuch like the win bet, everything but first OR second place is irrelevant.  If you make a place bet and your horse is the first or second to cross the finish line, then you cash.
Much like the place bet, your winnings will be the same regardless if your horse finishes first, second, or third.

Combined Straight Bets:

If you bet horse #1 in the 2nd race for $2.00 across the board you would be placing a Win/Place/Show bet of $6.00

Say the 1 horse comes in 2nd. What would happen is you would cash in on your place and show wagers and not your win wager. This is a fairly common betting strategy because it is a way to lower your risk a bit. Since you have an opportunity to recoup your losses on your win or place bets if your horse finishes in 2nd or 3rd.

Exotic bets:

ExactaAn Exacta involves picking two horses that you believe will finish first and second. Because you must select two horses, this wager is generally harder to hit than a straight wager, but usually pays greater dividends when you do hit it. An exacta can be either straight or boxed. straight, the finish order of the horses matters. Boxed, either combination is a winner.
TrifectaTrifectas operate exactly like an Exacta but have 3 horses. A common way to play a Trifecta is to box three horses. A $1 box using #1,#2, and #3 would cost $6. The three horses you selected must finish in the top three spots for you to win. A four-horse $1 box would cost $24.
SuperfectaThe same rules that apply to Exactas and Trifectas govern Superfectas… You guessed it the difference is that in Superfectas you must pick the top 4 finishers.

While Win bets are easy to calculate based on the chart above, exotic bets can be more tricky. Exotic bets do not have exact horse racing odds due to the many variables involved with them. However, most of the top online sportsbooks offer probable payouts for certain wagers like the Exacta. 

Payouts for exotic bets are also calculated in a different way, as 15% of the amount left after the house takes its cut is divided between the winners. The amount of winning dollars is then subtracted from the total pool, and then the remaining pool is divided by the amount of money bet on the winner. The final step is for that amount to be added back into the winning bet amount. 

Here is a breakdown that can make this seemingly complex process more simple:

Winning bet pool : $100,000 House’s cut: $15,000 (15%) = $85,000 left Total winning horse bets: $42,500Your bet: $2 To calculate odds: $85,000/$42,500 – $1 = $1.00 (1 to 1 odds)Payout per dollar: $85,000/$42,500 = $2.00Payout for $2 bet: $4.00Profit: $2.00 on $2.00 bet

In actual horse race betting, payout processes depend on the racetrack and rely on the actual odds. They are rounded down to the nearest nickel or dime, which is called breakage. 

Chances of Hitting Different Bets

Another key aspect of calculating payouts has to do with which type of bet you place. Depending on the wager, you are going to have anywhere from a very good chance of collecting to a highly unlikely chance. The more difficult it becomes to win a certain bet, the higher your payout potential. 

Let’s take a look at some of the most common types of horse racing bets, how hard it is to hit them, and what the payout potential looks like:

Type of betDifficulty to collectPayout potential
SuperfectaOut of all of the most common horse racing bets, the Superfecta is the hardest to hit. The Superfecta often costs a lot to make an effective bet, but if you did, you are likely looking at really big payouts.
TrifectaNot as hard as the Superfecta, but still one of the most difficult bets to hit.Trifectas often offer high payouts, but they are also expensive given the various combinations you can select.
ExactaThe Exacta is a moderately difficult bet to hit but far more achievable than the Trifecta and Superfecta.The Exacta is riskier than straight wagers, and the payout can vary widely depending on the odds of the runners and how much you wager.
WinThe Win bet is your all-around average bet.The payouts are better than the other straight wagers and are easy to calculate by odds.
PlaceThere is a good chance of hitting the Place bet as your horse just has to finish in the top two.Payouts are not often high, but they are still bigger than the Show bet.
ShowThe Show bet is the easiest bet you can place. Show bets offer decent and modest payouts but nowhere near as much as the other options. 

There are many different aspects to horse racing odds, but they are really not as confusing as they appear. Once you learn how the odds work, what they are based on, and how to calculate payouts, you will have no problem placing educated bets while knowing your payout potential.

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