> ## Documentation Index
> Fetch the complete documentation index at: https://docs.horse.fun/llms.txt
> Use this file to discover all available pages before exploring further.

# Pari-Mutuel System

> Understanding pooled prize distribution and how payouts work

## What is Pari-Mutuel Pooling?

**Pari-mutuel** (from the French for "mutual stake") is a pooled-prize system where all entries are pooled together, and payouts are distributed among winners proportionally to their entries.

<Info>
  In pari-mutuel, players compete against each other — never against the protocol. The protocol simply facilitates the pool and takes a transparent 5% fee.
</Info>

***

## How It Works

<Steps>
  <Step title="Pool Formation">
    All entries on each horse accumulate into per-horse pools during the entry phase.
  </Step>

  <Step title="Prize Distribution">
    When entries close, the total pool is allocated:

    | Allocation                    | % of Total |
    | ----------------------------- | ---------- |
    | 1st Place Winners             | 60%        |
    | 2nd Place Winners             | 20%        |
    | 3rd Place Winners             | 10%        |
    | Blazing Hoof (Normal Jackpot) | 2%         |
    | King's Run (Super Jackpot)    | 2%         |
    | HORSE Buyback-and-Burn        | 1%         |
    | Protocol Fee                  | 5%         |
  </Step>

  <Step title="Payout Calculation">
    Winners receive payouts proportional to their entry share of the winning horse's pool.
  </Step>
</Steps>

***

## Payout Formula

$$
\text{Your Payout} = \frac{\text{Your Entry}}{\text{Total Entries on Horse}} \times \text{Prize Pool}
$$

Where:

* **Your Entry** = Amount you committed on the winning horse
* **Total Entries on Horse** = Sum of all entries on that horse
* **Prize Pool** = 60% (1st), 20% (2nd), or 10% (3rd) of total volume

***

## Example

**Race scenario:**

* Total entry volume: 10,000 SOL
* You enter 100 SOL on Horse #3
* Total entries on Horse #3: 1,200 SOL
* Horse #3 wins 1st place

**Your payout:**

```
Prize pool for 1st: 10,000 × 0.60 = 6,000 SOL
Your share: 100 / 1,200 = 8.33%
Your payout: 6,000 × 0.0833 = 500 SOL
Net gain: 500 - 100 = 400 SOL
```

***

## Key Dynamics

### Popular vs Unpopular Horses

The pari-mutuel system self-balances payouts:

* **Popular horses** (heavy volume) → Lower payout per SOL entered
* **Unpopular horses** (light volume) → Higher payout per SOL entered

**Example:**

```
Horse A: 40% of total entries → If wins, payout ratio = 60%/40% = 1.5x
Horse B: 3% of total entries → If wins, payout ratio = 60%/3% = 20x
```

This creates opportunities for skilled players who can identify when horses are over- or under-backed relative to their actual winning probability.

***

## Strategy Tips

<CardGroup cols={2}>
  <Card title="Value Entries" icon="search-dollar">
    Look for horses where:

    * Win probability > Pool share
    * Example: 11% chance but only 5% of pool
  </Card>

  <Card title="Pool Timing" icon="clock">
    Wait 60-120 seconds into the entry phase to see pool distribution before submitting entries
  </Card>

  <Card title="Track Selection" icon="road">
    Different tracks offer different opportunities:

    * Doubloon Downs: Clear favorites
    * Synthwave Strip: Chaos, anyone can win
  </Card>

  <Card title="Multiple Positions" icon="trophy">
    You can enter multiple horses to win different positions (1st, 2nd, 3rd)
  </Card>
</CardGroup>

***

## Why Pari-Mutuel?

| Feature           | Pari-Mutuel                                           |
| ----------------- | ----------------------------------------------------- |
| **Payout ratios** | Set by the players' own pool distribution             |
| **Counterparty**  | None — the protocol never takes the other side        |
| **Manipulation**  | Self-balancing: heavy entries reduce their own payout |
| **Transparency**  | Fully verifiable on-chain                             |
| **Skill Factor**  | High — pool analysis rewards informed players         |

<Success>
  In pari-mutuel pools, skilled players can gain an advantage by analyzing pool inefficiencies — probabilities and pool distributions are public to everyone.
</Success>

***

## Multiple Wins

You can win from multiple positions in the same race:

**Example:**

* Enter 50 SOL on Horse #3 → Wins 1st (60% pool)
* Enter 30 SOL on Horse #7 → Wins 2nd (20% pool)
* Enter 20 SOL on Horse #1 → Wins 3rd (10% pool)

You receive payouts from ALL three pools!

***

## Edge Cases

### No Entries on a Placing Horse

If nobody backed a horse finishing in a paid position, that prize has no eligible recipient — it is **routed to the buyback allocation** instead of being kept by the protocol. Before the liquidity pool exists it grows the SOL reserve that seeds it; afterwards it funds extra buy-and-burn. The protocol never captures undistributed player funds.

The one exception: a jackpot that triggers when nobody backed the winning horse is simply not paid and keeps accumulating in its own pool.

### Single Player Wins

If you're the only one who backed the winner, you get 100% of that position's prize pool.

### Your Entry Affects the Pool

Large entries reduce your own payout ratio. This is why whales often spread entries across multiple horses.

***

## Next Steps

<CardGroup cols={2}>
  <Card title="Track Types" icon="road" href="/core-concepts/track-types">
    Understand how different tracks affect pool dynamics
  </Card>

  <Card title="Placing Entries" icon="hand-pointer" href="/entries/placing-entries">
    Learn the entry interface and strategies
  </Card>

  <Card title="Jackpots" icon="trophy" href="/jackpots/jackpots">
    How progressive jackpots accumulate and trigger
  </Card>

  <Card title="Economic Analysis" icon="chart-line" href="/advanced/economic-analysis">
    Advanced strategies and expected value calculations
  </Card>
</CardGroup>