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The betting system is typical in that those who bet make money when their choice wins the games. However, like in horse racing, there are odds attached to each contestant. The longer the odds, the greater the payout for a bet.
For instance, if a horse is 2-1 in race and you bet $5 and that horse wins, you get $10 in return. A horse with a 2-1 odds has been selected as a favorite to win or is seen as having a good chance to win. In The Hunger Games, Cato is a favorite at 3-1. The Gamemakers have placed good odds on Cato winning because of his skill and training.
If you bet that same $5 on a horse that is 10-1, you would win $50 because the odds are longer on that horse. This horse has been chosen as not very likely to win before the race, so the payout is greater. The District 9 tributes are more like the longshot. They are both set at 22-1, so it is seen as less likely to happen, but if it did someone would get 22* their initial bet.
The only other wrinkle in how betting works in The Hunger Games is that bettors can alter the game by helping to provide gifts to the tributes. As Katniss gets a few throughout the match, we can assume there are backers or possible bettors providing Haymitch with money in hopes of helping their chances.
Your answer was very detailed and well written and certainly answered the question. My question for you however, is if you believe the better system was ethical or not in the novel?
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