How horse racing odds work
Horse racing odds are not set by anyone. They are worked out from the pool: what the bettors put on each horse, after the track has taken its share. Read 5-2 as "win $5 for every $2 you bet", and remember that the number keeps moving until the gate opens.
Nobody makes the price
At a sportsbook a man sets the number and the book stands behind it. At an American racetrack nobody does. Every win bet on the race goes into one pool, the track takes its percentage off the top (the takeout), and the rest is shared among the tickets on the winner. The odds on the board are just that sum done in advance, as if the betting closed right now.
The sum is simple enough to do yourself. Take the pool after the takeout, subtract the money bet on your horse, and divide what is left by the money bet on your horse. That is the profit for each $1.
Say the win pool is $60,000 and the takeout is 16 percent (an example figure; each track publishes its own, and it differs by bet). The track keeps $9,600 and $50,400 is left to pay out. If $12,000 of the pool is on your horse, the profit is $38,400 divided by $12,000, which is $3.20 for every $1. Your horse is 3.2-1, and a $2 ticket comes back at $8.40, your $2 plus $6.40.
The basics of the pool and the bets on the card are on how to bet on horse racing. This page is about the number itself.
Reading the board
The board shows odds to 1, as fractions: 5-2 means $5 of profit for every $2 bet, and 4-5 means $4 for every $5. Payouts are quoted for a $2 ticket, stake included. To turn any board price into a $2 payout, multiply $2 by the fraction and add the $2 back.
| Board odds | A $2 win ticket pays at least | The horse must win more than |
|---|---|---|
| 1-5 | $2.40 | 83.3% |
| 4-5 | $3.60 | 55.6% |
| 6-5 | $4.40 | 45.5% |
| 8-5 | $5.20 | 38.5% |
| 9-5 | $5.60 | 35.7% |
| 5-2 | $7.00 | 28.6% |
| 7-2 | $9.00 | 22.2% |
| 9-2 | $11.00 | 18.2% |
The last column is the price turned into a chance: divide the $2 stake by the payout. It tells you how often a horse has to win for the bet to pay its way, which is the only question a price ever answers.
I wrote "at least" in that table on purpose. The board usually shows odds rounded down to the nearest step it displays, so the horse at 3.2-1 above shows as 3-1 and pays $8.40, not the $8.00 the board suggests. Then the payout itself is rounded down, usually to the dime, and the track keeps the change (the trade calls that breakage). Had your horse carried $11,500 instead of $12,000, the exact return would be $8.765, the board would still say 3-1, and you would be paid $8.60 or $8.70, depending on how that track rounds.
At the bottom end, most tracks guarantee a small profit even on a horse that takes nearly all the money, usually 10 cents on a $2 ticket. So a $2 ticket on the shortest favorite on the board pays at least $2.10, and the track makes up the difference when the pool can't.
Why the number moves
Because the pool isn't closed. Every new bet changes both sides of the sum. Go back to the race above and say $3,000 more comes in on your horse in the last minute. The pool is now $63,000, the takeout leaves $52,920, your horse carries $15,000, and the profit per $1 drops to $2.53. The board flips from 3-1 to 5-2, and the $8.40 you saw is now $7.00.
You are paid at the final odds, not at the odds when you bet. A lot of the late money comes from big players who bet in the last seconds, and the money from other tracks and betting outlets is added to the pool as the race starts, so it is common to see the odds change once more after the horses are already running. I've heard players swear the track cheated them on that last flash. It didn't. The sum was just finished.
The morning line printed in the program is not part of any of this. It is the track oddsmaker's guess at how the crowd will bet, and nobody pays at it.
Place and show are a different sum
Place and show have their own pools, and their prices depend on which other horses finish with yours. That is why nobody can tell you a place price before the race.
Say the place pool is $50,000 and the takeout leaves $42,000. The winner carried $20,000 of it and the second horse $10,000. First the track hands back the $30,000 bet on those two. The $12,000 left is split in half, $6,000 for each horse. The winner's backers get $6,000 on $20,000, so a $2 place ticket pays $2.60. The second horse's backers get $6,000 on $10,000, so their ticket pays $3.20. Put a heavily bet favorite in second instead and the same ticket on your horse pays less. Show works the same way, split three ways.
Track odds against the book's
A racebook or sportsbook that offers fixed odds on a race gives you a price you keep, the way a sportsbook does on a game. That takes away the late drop and puts a bookmaker's margin in its place. One that pays "track odds" pays the pool's final price, usually up to a cap in its rules. The difference between the two is covered on horse racing betting sites.
Add up the chances in the last column for every horse in a race and you will get more than 100 percent. At a 16 percent takeout it comes to about 119. That extra 19 is the track's share, and you pay it on every ticket. Turning a price into an edge is what horse racing betting strategies is about. I'd learn the sum first, because a price you can't read is a price you can't judge.