I don’t believe bookies are legal in the United States (with some exceptions, such as the state of Nevada). They are certainly illegal throughout Canada. So, with most bookmakers in North America operating illegally anyway, it’s a safe bet (pun fully intended) that they pay no attention to the “five cents on the dollar” law that applies to parimutuel pools.
But in short, a parimutuel tote usually balances because it has to–the cost of paying winning wagers is determined by the ratio of wagers on the winning horse to the wagers on the losing horses. This can be determined mathematically, as the players put wagers through the windows. Nobody, except the players, is affecting, much less dictating, the odds. Final odds are determined by what the math says at the time the race begins, not what they were at the time the player made his or her wager. If the math necessitates a negative pool, then there is a negative pool that nobody can do anything about.
A bookmaker, on the other hand, usually balances because he* wants to. It’s a small distinction, but an important one. The bookie has a somewhat more difficult job, since unlike a parimutuel, he doesn’t compute the odds he is offering so much as he sets them. As such, he must be careful to set odds in such a way as to “balance his book” so that he pays winners with the losers’ money, and keeps a profit besides. (A good bookie does a lot of math as he works anyway, but he doesn’t leave everything in the hands of math as a parimutuel does.) But by setting odds himself and changing them as appropriate, rather than letting math do the job automatically, the careful bookmaker should be able to avoid any negative pools.
Now, if the bookie isn’t careful with setting and changing odds as he deems appropriate, he can and will lose money. Most bookmakers are very good at what they do, and they rarely lose money this way. But (and finally, here is the answer to your question) I have found that when they do, they are also very good about keeping to their obligation to pay you what you won, regardless of how it affects their bottom line. If you bought a horse from a bookie at 10-1, and he subsequently shortened that horse to 1-20 (that is, five cents on the dollar), he would pay you at 10-1 if your horse won. He might grumble about it, but he would make good on his obligation to you.
However, it is also important to remember that the bookie expects the same of you–that if you place a wager with him, then you are expected to make good on your obligation to pay him his money if you lose. Because if you don’t, then you may well be visited by a couple of guys who will strongly urge you to fulfil your obligation to the bookie. Maybe not over a $2 wager paying $2.10, but since many wagers placed with bookies are significantly larger, the real question may be moot.
- Bookmakers can also be female, but the masculine pronouns have been used in this post since most bookies are male.
