Pari-Mutuel Betting Origins
Wagering On the Horses Originated in France, Not England
Although Americans adopted and refined much of its horse racing culture from the English, pari-mutuel betting at the race track is a gift from the French.
Eclipse, imported from England, started American Thoroughbred bloodlines, but the English did not educate American society on the refinements of pari-mutuel betting at the race track. It was the French who schooled the United States populace on pari-mutuel wagering.
Pari-mutuel betting in North American horse racing sprouted in France in the mid-1860s, a system put together faultlessly by Pierre Oller. As is true of other invented facets of the horse racing world, the pari-mutuel betting system was a sideline interest of its founder.
Oller was a Paris perfume merchant.
What Is Pari-Mutuel Betting?
The system of pari-mutuel wagering is simpler than its name indicates. Bettors merely are betting against one another in the pari-mutuel system, as opposed to a casino system in which bettors wager against the house. And the house generally rules.
In race track pari-mutuel betting, all bettors' play is held by the track. Out of this pool, the track takes money for its operation, winning purses of the races, state taxes, and all other mandated funds. Winning bettors are then paid their portion from the pool after each race is completed.
Why Did Oller's System Come About?
Simply, Oller was frustrated by the bookmakers of Paris. Oller's idea was to sell betting interests in each individual horse in a race through an auction pool. Small-time bettors who were not big-time spenders couldn't afford to invest the large sums of money required to buy winning interests in a race favorite within the standard auction pools.
The Oller way was to offer small wagers on each, or any horse in a race, favorites, or not. Perier mutuel means "to wager among ourselves", and that was the first handle of pari-mutuel wagering. In England, which soon adopted the system, it became known as Paris mutuals.
New York Catches On With Colonel Clark
When New York tracks got on the wagering bandwagon in the 1870s, the system was called Paris pools. It was the founder of Churchill Downs (the American Kentucky Derby track), Colonel M. Lewis Clark, who brought pari-mutuel machines to the American race track in 1878, after observing their operation in Europe. In the three previous years, Chruchill Downs used auction pools.
Bookmakers Lose The Action
Bookmakers in New York and in Louisville, where Churchill Downs is located, were not happy with the introduction of the pari-mutuel system at the race tracks. In the beginning, however, betting through bookmakers far outplayed the pari-mutuel system. Clark actually abandoned the pari-mutuel machines in 1889 under pressure from the bookmakers.
The turning point in favor of the pari-mutuel machines came in 1908. At the initiation of Colonel Matt Winn, the new Churchill Downs general manager, several of the machines were refurbished and installed for the running of the 1908 Kentucky Derby. (Stone Street won the Derby.)
That day, $67,570 was machine wagered, with $18,300 on the Derby itself. Another $12,669 was auction pooled. Machines sold only $5 tickets on the Derby day program. Colonel Winn soon lobbied to expand future ticket offerings to $2, $5, and $10 wagers.
There was no stopping the American wagering express after 1908's steaming success. With bookmaking falling out of favor under growing anti-gambling campaigns, the pari-mutuel machines gained ground.
By 1914, they were the American betting way at horse racing tracks. Or, if you will, they were the Winn way.
