The pari-mutuel (PARIS MUTUEL) system was invented in Paris, France in 1865 by Pierre Oller. Oller figured out a system whereby the operator would always make money no matter which horse wins. Oller suggested that tickets be sold on each horse and that the pay price of each winning ticket be determined by the amount of money wagered on the winner in relation to the amount wagered on all the other horses in the race. This means that the bettors would be wagering against each other rather than against the operator, thus the winning amount is calculated by dividing the number of winning tickets into the entire pool after the operator retains a percentage as a commission.

The odds represent the public's perception, as measured by the amount they wager, on the likelihood of any horses chances in a race. The more money wagered on a horse reduces the odds and thus the payout price. The 'favorite' is the horse with the most money bet on it. There are multiple wagering opportunities; win, place, show, exacta, etc., but the 'WIN' odds are those most commonly displayed. The 'WIN' odds translate into approximately how much a $2 wager will pay off if the bettor picks the winner. See the following table: