A Quick Discussion of Aspects Regarding Pari-Mutuel Wagering

Pari-mutuel wagering in its application manifests certain peculiarities associated with the psychology of wagerers.  A quick article on this topic was presented by William Shanklin in BloodHorse.com.  We'll quickly discuss a couple of these peculiarities.

The first is that favorites tend to be bet less than their realistic chance of winning and longshots tend to be be more than their realistic chance of winning.  The reason for this is simple.  A longshot will pay more than what a favorite will pay.  So for a bettor, wagering $2 to win on a favorite at even money is less sexy than wagering $2 to win on a longshot paying 30 to 1.  It is similar to the phenomenon where people tend to buy lottery tickets when the jackpot gets high.  Bigger potential payouts generate more wagering interest.

The other relates to the relationship between field size and overall wagering interest.  Typically when the number of entries in a race falls under 8, the wagering on that race tends to diminish.  That is why racing secretaries try to have races with 8 (or more) entries to maximize wagering handle.  Another related concept is the concept of partition dependence.  This term means that people tend to think some event is more likely to occur if it is partitioned in smaller intervals. 

To describe, let's use an example of how many games the Dallas Cowboys will win this NFL season.  If you had just two intervals, 0 to 7 games and 8 to 16 games, wagering on this offering would be less than if you had the following intervals:  0 to 4 games, 5 to 8 games, 9 to 11 games and 12 to 16 games.  As you can see, this also tends to illuminate the concept that more entries in a wagering offering is better. 

There is a point made in the article that coupled entries attract less wagering interest than if each entry was wagered on separately.  This does not mean that coupled entries don't have utility.  In ProContest.com's pari-mutuel fantasy sports contests, coupled entries are used often as a Field/Other entry, in addition to large fields of players, giving players the ability to select any player, not just those specifically named.  This functionality, even though a coupled entry, does tend to increase field size/more partitions, which is typically a positive with regard to wagering handle per race.