Kentucky Derby History,Are you reading about the odds and betting schemes for the 2012 Kentucky Derby and are curious about the history behind this mysterious facet of horse racing?
Working for KentuckyDerby.org as a writer for their betting and odds section has revealed a strange chain of historic facts about the gambling system we see at Churchill Downs today. Although some boring things have changed in the past 138 years, the history of Kentucky Derby gambling will intrigue most horse racing fans.
What betting was like at the first Kentucky Derby
We always think of people in the late 1800s and early 1900s as being Victorian Era prudes. In spite of this, books of the past like the 1863, "Horse-racing: its history, and early records of the principal and other races," show that horse racing and gambling were more akin to the Wild Wild West when Churchill Downs was founded. Before television and radio, people in cities were always on the prowl for entertainment.

At the time of the first Kentucky Derby in 1875, people in Louisville were betting on baseball, boxing, and fights between animals. In this climate, building Churchill Downs (then called the Louisville Jockey Club until 1886) must have seemed like a profitable investment to founder Meriwether Lewis Clark. Sadly, during these times, the odds provided for betting did not have regulation. This was to the detriment of the gambler and the advantage went to the bookie.
First bet placed at Churchill Downs likely had bad odds
Unfortunately, for the first 15 years of Churchill Downs operation, no government agency in the U.S. regulated the gambling industry. In their book, "Betting the Line: Sports Wagering in American Life," by Richard O. Davies and Richard G. Abram, they discuss a style of gambling that would have been popular in 1875 for the first Kentucky Derby. Called "auction pools," stalls at racetracks were rented to bookies. Each bookie conducted their own odds and bettors could choose which betting lines they thought were fair.
Today, we are spoiled with online betting options that only take about 2-7% of our winnings. We also have a variety of odds to choose from that are regulated (like the morning line tote board compiled by the racetrack's handicappers). Regulation also means that the institution sponsoring the bets cannot pay off a team or horse to lose (giving the house a chance to take all of the bettors money). In short, regulating gambling in the past 100 years has led up to giving a fairer advantage to the bettor.
Troubles for betting lead to improved odds
According to, "Legalized Gambling: For and Against", by Rod L. Evans and Mark Hanc, fairer oddsmakers and betting schemes started to develop in the early 1900s. The discussions of that time revolved around betting schemes that could not be fixed or thrown by bookies. To ameliorate gambling issues, New York was the first to license jockeys and trainers in 1906. This way, if a jockey or trainer was paid off to fix the race, they could be banned from the sport.
Evans and Hanc's book also states that after New York took action, "Kentucky became the first state to establish a government-run gambling commission." Perhaps due to this change, as other states closed their race tracks in the early 1900s, the Kentucky Derby stayed alive. Starting in the 1920s, Churchill Downs eventually adopted a new style of wagering that replaced the lawless bookies called pari-mutuel betting (originally called 'Paris Mutuel'). By the mid-1930s, most states started using this form of gambling at their horseracing tracks.
Still used today at Churchill Downs and their online betting website, pari-mutuel wagering means that all bettors contribute to the same pool of money for their Kentucky Derby picks -- and avoid bookies no matter where they are in the U.S. By using the fairer style of pari-mutuel betting, a great deal of intrigue is built up in the days before the Kentucky Derby resulting in the state of mind known as Derby Fever.
Unlike the first races at Churchill Downs, since no one is behind the scenes fixing the odds for the 2012 Kentucky Derby, we can fully conclude that no one on earth actually knows which horse will win this year.

source: http://sports.yahoo.com/news/kentucky-derby-2012-betting-odds-history-fans-view-120000104.html