Sports Betting Reimagined with a Parimutuel System

If you read beyond the sports outcome headlines, you know that the discussions on the prediction markets are all the rage. If you go to a sports betting conference, the recent SBC in Florida or anywhere internationally the hot top is the prediction markets. ‘Is the alternative to sports books gambling or not?’ So on and so forth. Just for fun, I thought I would shake things up with yet another sports wagering alternative. I am not totally serious about this but it is also not “tongue-in-cheek.” Makes the current narrative a lot more fun though.

Reimagining Sports Betting with a Parimutuel System

The current sports wagering landscape is dominated by fixed-odds betting, with sharp bettors trying to beat the number and sportsbooks defending themselves with complex models, line movement, and aggressive risk management. However, a parimutuel betting model—common in horse racing and poker tournaments—offers a compelling alternative. This white paper outlines a parimutuel-based wagering system for professional sports, its benefits and limitations, and how it compares to decentralized prediction markets like Polymarket.

In a parimutuel system, bettors place wagers into a shared pool on a specific outcome. After a fixed house takeout (e.g., 5%), the pool is divided among the winning participants based on their proportional stake. Importantly, payouts are determined after the pool closes, not at the time of bet placement. This eliminates fixed odds, liability exposure, and the need for sportsbooks to take the opposite side of wagers.

To support sports betting with point spreads, totals, and money lines, each betting option would be set up as a separate pool:

• Moneyline Pool: Bills vs. Eagles ML is one pool.

• Spread Pools: Eagles -1.5 vs. Bills +1.5 is another distinct pool. Additional spread pools could exist for -2.5/+2.5, -3.5/+3.5, etc.

• Total Pools: Over/Under 47.5 is a separate pool from Over/Under 49.5.

Each of these becomes a discrete parimutuel contest. The operator runs the system, takes a fair 5% cut, and distributes the rest to the winners. Bettors are playing against each other, not the house.

Key Advantages

• No Book Risk: The operator has no liability and profits from a consistent takeout.

• Public-Priced Markets: Bettors themselves create the "odds" based on how money is distributed across outcomes.

• Transparent Economics: The house take is clear and fixed.

• Sharps Thrive on Mispricing: With no fixed lines, sharp bettors look for inefficiencies in crowd behavior, not line shading.

• Legal Simplicity: Parimutuel systems often face fewer regulatory barriers than fixed-odds bookmaking.

Comparison to Polymarket and Prediction Markets Polymarket operates on blockchain with peer-to-peer liquidity and AMM (automated market maker) pricing. While powerful for general prediction events, it requires counterparties and sufficient liquidity. Parimutuel betting needs only participants, not matching order books.

Challenges

• Final Odds Unknown at Bet Time: This removes the ability to "lock in" value early.

• Liquidity Risk: In small pools, a single bettor can distort the odds significantly.

• In-Game Betting Complexity: Parimutuel systems are best suited for pregame markets unless micro-pools are introduced.

• No Line Movement to Read: Bettors lose a key source of signal found in traditional markets.

Technical and Operational Needs

• Real-time updating of estimated payouts

• UI that shows implied odds as pools grow

• API integrations for data feeds and user tracking

• Licensing in jurisdictions that allow parimutuel wagering

• Pool governance mechanics (e.g., cutoff times, refund rules)

Use Cases

• NFL Sunday Main Slate: Multiple pools for spreads, totals, and money lines across each game

• NBA Prop Contest Pools: Example: Points Over/Under on Steph Curry – separate pools at 27.5, 29.5, 31.5

• Bracket or Long-Term Futures: Parimutuel pools on who wins the division, MVP, or season win totals

Conclusion: A parimutuel betting system for professional sports isn’t just viable—it’s potentially transformative. It democratizes the market, removes the adversarial relationship between bettors and the house, and introduces a cleaner, more transparent wagering format. While it limits some of the tools professionals use today (like line movement or early value locking), it rewards deep market understanding and psychological edge.

With the right tech infrastructure, legal framework, and user education, parimutuel sports wagering can scale—and offer a refreshing alternative to both legacy sportsbooks and experimental DeFi betting markets.