Payoff Calculations
On bets with only one way to win, the pool remaining after the horse racing track takes it's cut is divided among the winners in proportion to the amount bet.  The payoff per $2 bet is always rounded down to the next increment of 10 or 20 cents.  This is called the "breakage," which is not an insignificant amount of extra money for the track.

For example, if $1000 is bet in total on win bets, and $200 is bet on the winning horse, then the payoff for the winning tickets will be determined as follows.  First, the track collects it’s cut, we’ll say 17%, that leaves $830.  Then, the bets on the winner are deducted, that leaves $630 for paying winnings.

The ratio of winnings to winning bets is $630/$200=3.15.  This ratio is then applied to the minimum $2 bet: 3.15 * $2 = $6.30.  The $6.30 is rounded down to $6.20, which is the final payoff per $2 bet.  All winning bettors will be paid at this ratio.  For example, a $100 bet will win $100*(6.20/2.00) = $310.  When collecting a winning wager the bettor will also receive their original wager back.  In the above example, a $2 winning ticket would get back $8.20 ($6.20 in winnings plus original $2.00 bet).

In the case of the place and show bets, the winning pool is divided equally into one pool for each winning horse.  For example, assume $1000 is bet on place bets and the first and second place horses are x and y.  Further, assume $100 is bet on x and $200 is bet on y.  First, the house takes their 17% cut leaving $830.  Then winning bets of $300 are deducted leaving $530 to pay the winners.  Half of the $530, $265, will be paid to the winners of each horse.  In this case, the ratio of winnings to winning bets on horse x will be $265/$100=2.65 and on horse y will be $265/$200=1.325.  The un-rounded winnings for $2 on horse x are 2.65 * $2 = $5.30, and on horse y are 1.325 * $2 = $2.65.  These amounts are rounded down for winnings of $5.20 on x and $2.60 on y.  Including the original wager, winning $2 tickets on x receive $7.20 and on y receive $4.60.

Sometimes when a strong favorite wins, especially on a show bet, the winnings may round down to nothing.  In this event, the track must pay back a minimum of $2.10 per $2.00 bet, even if it results in a net loss for the horse racing track.