How does horse racing wagering work?

Betting in horse racing is called pari-mutuel wagering. What is pari-mutuel wagering? Well, it's French in origin, meaning "to wager amongst ourselves." Fans wagering in a pari-mutuel system are wagering against one another, not against the racetrack.

Here's how it works:
 When a patron places a wager at the track, that money goes into a betting pool. Each type of wager has its own betting pool. The track, serving as an agent or broker, receives a commission or "takeout" for handling the wagers. This takeout is generally divided among the state of Texas, purses for horsemen and owners competing at the track, and Lone Star Park at Grand Prairie. The money remaining in each pool is returned to the fans in the form of winnings, which is 82 percent of all win, place or show wagers.