# Parimutuel mechanism

<figure><img src="/files/ae9gErZAKkvXjx2zd0uS" alt=""><figcaption></figcaption></figure>

### How does it work?

**Parimutuel betting,** in the technical realm, is a peer-to-peer betting system. Each bet goes into a pool, and pay-outs depend on the total pool size and individual bets. No fixed odds, no house edge – just pure player vs. player action. Payoff odds are calculated by sharing the pool among all winning bets.

Most commonly used in horse racing.

**Fixed Odds**, on the other hand, involve odds set by the house. Bets are placed against the house, and your winnings are predetermined by these odds. But here's the difference: no player interaction, no dynamic pay-outs.

Parimutuel betting differs from fixed-odds betting in that the final pay-out is not determined until the pool is closed – in fixed odds betting, the pay-out is agreed at the time the bet is sold.

**Why parimutuel betting:**

🔎 Transparency: You can verify all bets on chain\
😄 Decentralization: No centralized house controlling odds \
🤝 Trust less: Pay-outs are automated via smart contracts \
👥 Community engagement: Competition, interaction and collaboration between players


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