You might see the word “pari-mutuel” when you purchase a lottery ticket. But what do these words mean and how do they affect the lottery?
What does Pari-Mutuel mean?
Pari-mutuel betting translates from French to mean “mutual betting.” In classic use, it is used for betting with horse races, gambling, jai alai, and other sporting events. Bets calculate betting pools and odds based on the number of bets for against a certain outcome. This type of betting pools all the bets and then calculates the odds. After the race or game, the pool is divided equally among the winners. Odds are based on participation and the awarded money is not fixed.
Pari-Mutuel wagers are legal in all states except Alaska, Georgia, Hawaii, Mississippi, North Carolina, South Carolina, and Utah.
How does it affect lotteries?
Lotteries with a Pari-Mutuel system work similar to most lotteries, but with a different payout. States with pari-mutuel betting pay prizes based on the number of winners. This means if there are 3 $1 million Powerball winners within a state, then the winners would not receive $1 million. Instead, each winner’s prize would be determined by ticket sales and number of winners. This can cause the overall payout to end up more than the advertised prize in some cases, and lower than the advertised amount in others. In simplest terms, it is a system of gaming in which wagered funds are pooled and then paid, in equal shares.
What states have a pari-mutuel system?
California practices pari-mutuel payouts, based on a California Supreme Court ruling from 1996. The California Lottery had planned to implement keno games, but had to change plans after local natives tribes attempted to sue the lottery stating that keno games were house-banked games and not lottery games. At the time, this was illegal in California. To maintain a level playing field, the California Lottery made a pari-mutuel payout format for games that would alter payout sizes for various games. To see how pari-mutuel gaming affects California Lottery payouts, check out the California Lottery Regulations.
If your state has pari-mutuel betting but isn’t listed above, feel free to add a comment and we will let you know how this payout system affects your winnings.