The ethics of parimutuel systems.

This research article discusses the ethical aspects of parimutuel betting systems and suggests that several deviations from the system’s pure principles make it akin to regressive taxation, disproportionately impacting lower income bettors.

Understanding Parimutuel Betting Systems

• Parimutuel wagering is a betting system in which all bets of a particular type are placed together in a pool, the payoff odds are calculated by sharing the pool among all winning bets.
• One of the moral arguments for parimutuel wagering as an effective and fair betting system is that it is non-discriminatory. Everyone has equal opportunity to win regardless of their wealth or position, and the bettors are essentially betting among themselves rather than against a bookmaker.

Ethical Concerns and Deviations in Parimutuel Systems

• The research points out three major deviations from the parimutuel principles that bring its ethical superiority into question. Firstly, there are higher deductions from long odds or “exotic” pools. Secondly, higher deductions occur from pools when longer odds horses win. Lastly, the minimum dividends are paid. These deviations are perceived as a departure from the system’s ideal fair and equitable conduct.
• These deviations, according to the researcher, move the parimutuel system towards a form of regressive taxation, which ethically is not considered fair.

Parimutuel Systems and Regressive Taxation

• Regressive taxation places a higher burden on those with less income or wealth, whereas a progressive taxation system would tax the wealthy at higher rates. Regressive taxation is generally viewed as unfair because it disproportionately affects those with lower income.
• Given the close inverse relationship identified in the research between the income or wealth of bettors and the average odds of the bets they place, it is suggested that parimutuel systems, with the deviations outlined, are skewing towards such regressive taxation mechanisms.
• The system, by disproportionately penalising those that statistically tend to place bets with longer odds due to their lower income and wealth, is behaving unethically according to the researcher.