Bookmaking and parimutuel betting are the most prosperous areas in gambling. According to 2017 research of H2 Gambling Capital, betting brings 50% of the total online gambling revenue. However, choosing between bookmaking and tote, what should you give preference to? How are they different? Which is more popular and profitable?

To create a holistic view of these two concepts, let's consider each of them.

Bookmaker's shop

Bookmaker's office is a gambling establishment that accepts bets on various sports events. Bookmakers assess the probability of possible outcomes of a sports event offering corresponding odds.

The bookmaker accepts bets on the outcome of a sports event according to those odds. Outcomes vary: win of the 1st team, draw, win of the 2nd team, etc. Each event has its odds, which vary depending on many technical and marketing factors: injury to a key player, changes in the position of team members, weather conditions, reduced motivation of players, etc.

What bookmaker does:

  • counts odds;
  • sets the lines;
  • accepts bets and pays out prize money;
  • registers coupons.

If the player correctly predicted the outcome of the match, the office pays him out the winning amount. Otherwise, all funds go to the bookmaker. The bookmakers earn not only due to losses, but also due to the correctly set odds. Regardless of the results, the bookmaker's will stay in the black.

Betting office has to have registration and operate under a license. Local commissions issue the corresponding licenses.

What are odds and how to calculate the winnings?

Odds represent the perceived frequency of an event derived from the underlying probability, which enables betting.

Note also that the win and the actual payout are not the same.

You can calculate the amount of payment by the formula:

ratio x sum of bet = payout

The net profit is calculated as follows:

payout amount - sum of bet

E.g.: for the upcoming football match Chelsea – Arsenal, the office offers the following odds: 1.75 (W1) – 5.55 (D) – 7.77 (W2). If you stake on Arsenal $200, the potential net profit will be:

$200 x 1.75 - 200 = $150

Parimutuel betting

Sweepstakes appeared in the days of ancient Rome. Back then, betting on gladiator games were in great demand. After a while, they were applied to horse racing and other sports. The modern version of the parimutuel betting belongs to Joseph Oller.

The parimutuel betting is a type of betting, where you have to stake on the outcomes of several events at the same time.

The main thing that distinguishes the tote from a bookmaker is the lack of odds. Moreover, the bettors have to stake on several sports events at the same time.

The win depends on the number of correctly named outcomes (W1, Draw, W2) or if you guess the exact score. Bettor's tasks: in the column next to each game, indicate one of the three possible outcomes of the match.

The prize pool consists of the total sum of bets with the 10% deduction to the organiser, which is then divided between all the winners. The odds in the tote are calculated for each particular draw. It means that the more winners, the smaller the prize. E.g.: the totalizer consists of 14 sports events. The draw involves 100 people, each betting $20. Consequently, the total sum will be $2 000.

Deduce $200 commission fee to the organiser (10%), and $1 800 will be distributed among the winners. The minimum number of correctly guessed outcomes required to win is 10. In this case, money will be distributed as follows:

Number of correctly predicted outcomes Win
10+ 35% ($630)
11+ 25% ($450)
12+ 20% ($360)
13+ 10% ($180)
14+ 10% ($180)

Totalizer is a kind of betting, however, you can hardly find the online resource or gambling house that would be focused only on parimutuel. Here are the examples of online betting shops with totes:

  • Betcity;
  • 1xBet;
  • Fonbet;
  • Sportingbet;

Offices that offer only parimutuel betting are available in such gambling cities as Las Vegas, Monte Carlo and other gambling cities.

What is the main difference between fixed odds and parimutuel betting?

The answer is in the way prize pools are formed, and money is paid.

Bookmaker. The process of bookmaking is quite simple. The gambler bets on the outcome of a sports event and waits for the results. If the outcome is correct, he/she wins. The prize sum depends on the previously fixed odds. Let's consider the match Liverpool – Tottenham. The player stakes $100 on win of the first team with 1.5 odds and takes the prize. As a result, the amount of his winning would be $150 in case there is no commission fee.

Parimutuel betting. The algorithm for calculating the winnings in tote is much more complicated. It depends on:

  • the total number of participants;
  • the number of bettors who correctly determined the outcomes;
  • the sum of all bets accepted.

The prize pool in parimutuel includes the amount of all bets made deducing the 10% commission fee.

Win only those players, who correctly guessed the least number of outcomes (it is specified in advance in the rules of the draw). It means that the player has to name as more as possible correct outcomes. The size of the bet also affects the prize sum.

To sum up

The main difference between parimutuel and fixed odds betting is that in the first case, the participants play against each other. While in the bookmaker's they play against the bookmaker.

Today, the tote is less popular than regular betting. The lack of odds, strong dependence on other participants repels experienced bettors. However, if you choose between parimutuel and fixed odds betting, you have to focus on your target audience: how much casino customers are interested in betting at all, and how many of them would play tote, and what profit do you expect in the future. Once you analysed your TA, you will be able to make the right decision and not go into the red.