pool betting explained: mutuel wagering, tote odds, and payouts
pool betting is the simplest “fair” betting mechanic: everyone contributes to a shared pot, a transparent fee is taken, and winners split what remains. it’s called mutuel wagering (or pari-mutuel) in horse racing, and it maps cleanly to prediction markets: the crowd prices reality with money.
what “pool betting” actually means
pool betting
all bets go into a shared pool. payouts come from the pool, not a bookmaker’s balance sheet.
mutuel wagering / pari-mutuel
alternate names for pool betting. “mutuel” emphasizes that bettors on the same outcome share the result together.
tote / totalizator
the system that records bets, totals the pools, applies the takeout, and publishes the live odds (“tote odds”).
how pool betting works (the mechanics)
pool betting doesn’t try to guess the “right” price. it simply measures where money is going and uses that to determine payouts. the system is transparent: if the crowd piles into one side, that side’s payout drops and the other side becomes more attractive.
pool betting in 5 steps
- bets enter the pool (each outcome has its own pool total).
- a fee is applied (takeout / platform fee).
- a winner is determined by the event result or oracle.
- winners share the pool proportional to stake size.
- payouts are paid automatically from the pool.
the core formula
payout = (your stake / winning pool) × total pool × (1 − fee)
important: your “odds” are a function of where other people bet and when they bet.
worked example: a two-outcome pool
YES pool: 70 SOL
NO pool: 30 SOL
total: 100 SOL
you bet 10 SOL on NO
if NO wins, your share = 10/30 = 33.33% → payout ≈ 33.33% × 100 = 33.33 SOL (before fee)
a key difference vs fixed odds
in fixed odds, you lock the price at bet time. in pool betting, the price can move after you bet because the pool can change. this is why “late money” matters.
pari-mutuel vs fixed oddscommon pool types (win/place/show → prediction markets)
pool betting started in horse racing, where you can bet into different kinds of pools. the same idea generalizes: define an outcome set, accept stakes into each bucket, then split the pool among winners.
simple pools
- win: bet on the winner.
- place/show: bet on finishing positions (market-specific rules).
exotic pools (combinatorics)
- exacta/trifecta: pick top finishers in order.
- quinella: pick top two finishers (any order).
prediction market pools (baozi)
- YES/NO: two-outcome pool where winners split total.
- race markets: many outcomes; the winning outcome pool splits the total.
if you want the full mechanics, start here:what is pari-mutuel betting?
tote odds, implied probability, and “late money”
“tote odds” are not an oracle. they’re a live snapshot of money distribution. the pool is a voting machine where votes cost money. the practical way to read it is as implied probability: if the crowd allocates most money to one outcome, that outcome is treated as more likely.
why odds move in pool betting
tooling helps
if you want to compare pool odds to probabilities and other formats, use:
takeout vs sportsbook vig (why fees feel different)
fixed odds sportsbooks charge you through the price (vig/overround). pool betting usually charges you with an explicit fee (takeout). both reduce expected value, but the pool model makes the cost easier to see and reason about.
sportsbook: hidden in the odds
odds imply probabilities. when implied probabilities sum above 100%, the extra is margin.
pool: explicit fee
fee is applied directly to the pool before payouts. your main “execution risk” is timing and pool depth.
strategy: how to find value in pool betting
because your price comes from the crowd, the edge usually comes from crowd mistakes: overreaction, narrative bias, and late money. the playbook is execution-focused: timing, bankroll, and reading pool imbalances.
bet late when pools are volatile
late money can swing payouts. waiting reduces uncertainty about your final odds.
look for “crowd piles”
when everyone crowds one side without new info, the other side can become better value.
respect your own impact
if your stake is large relative to the pool, you’re paying slippage by moving the odds.
size bets conservatively
pool systems can be high-variance. fractional sizing beats all-in hero bets.
why pool betting fits prediction markets (baozi)
prediction markets need a pricing mechanism that’s robust, transparent, and hard to censor. pools are an elegant solution: you don’t need a bookmaker to quote prices and you don’t need market makers to hold inventory. the crowd becomes the market maker.
baozi in one sentence
baozi is a pari-mutuel prediction market on solana: stake on outcomes, watch pools update in real time, and claim on-chain payouts when markets resolve.
faq
is pool betting “better” than sportsbooks?
it depends. pool betting is transparent and often has an explicit fee, but you accept payout uncertainty and execution risk. sportsbooks offer price certainty but often embed margin and may limit winners.
can i lock my odds in a pool?
not in the classic model. your final odds are the closing pool. your best control lever is timing (betting closer to close) and avoiding thin pools.
what does “mutuel” mean?
it means bettors are pooled together. if you bet an outcome, you’re effectively on a team with everyone else on that outcome, splitting the pool if it wins.
how do i estimate implied probability from a pool?
in a two-outcome pool, a rough heuristic is: implied probability ≈ opposite pool share (after fee). better: compute expected payout from pool sizes and compare to your own probability.
why do prediction markets use pools?
pools give transparent, rule-based payouts without needing a bookmaker to quote and honor fixed prices. it’s a clean mechanism for “crowd belief → odds”.