A Calcutta auction is an open

auction An auction is usually a process of buying and selling goods or services by offering them up for bids, taking bids, and then selling the item to the highest bidder or buying the item from the lowest bidder. Some exceptions to this definition ex ...

held in conjunction with a

golf Golf is a club-and-ball sport in which players use various clubs to hit balls into a series of holes on a course in as few strokes as possible. Golf, unlike most ball games, cannot and does not use a standardized playing area, and coping wi ...

tournament,

horse race Horse racing is an equestrian performance sport, typically involving two or more horses ridden by jockeys (or sometimes driven without riders) over a set distance for competition. It is one of the most ancient of all sports, as its basic p ...

or similar contest with multiple entrants. It is popular in

backgammon Backgammon is a two-player board game played with counters and dice on tables boards. It is the most widespread Western member of the large family of tables games, whose ancestors date back nearly 5,000 years to the regions of Mesopotamia and Pe ...

, the

Melbourne Cup The Melbourne Cup is a Thoroughbred horse race held in Melbourne, Australia. It is a 3200-metre race for three-year-olds and over, conducted by the Victoria Racing Club on the Flemington Racecourse in Melbourne, Victoria as part of the Melbou ...

, and

college basketball In United States colleges, top-tier basketball is governed by collegiate athletic bodies including National Collegiate Athletic Association (NCAA), the National Association of Intercollegiate Athletics (NAIA), the United States Collegiate Athleti ...

pools during

March Madness The NCAA Division I men's basketball tournament, branded as NCAA March Madness and commonly called March Madness, is a single-elimination tournament played each spring in the United States, currently featuring 68 college basketball teams from ...

. Culcutta auction is a

sequential auction A sequential auction is an auction in which several items are sold, one after the other, to the same group of potential buyers. In a ''sequential first-price auction'' (SAFP), each individual item is sold using a first price auction, while in a ''se ...

, where the bidding for each contestant begins in random order, with only one contestant being bid upon at any time. Accordingly, participants (originally in

Calcutta, India Kolkata (, or , ; also known as Calcutta , the official name until 2001) is the capital of the Indian state of West Bengal, on the eastern bank of the Hooghly River west of the border with Bangladesh. It is the primary business, comm ...

, from where this technique was first recorded by the Colonial

British British may refer to: Peoples, culture, and language * British people, nationals or natives of the United Kingdom, British Overseas Territories, and Crown Dependencies. ** Britishness, the British identity and common culture * British English, ...

) bid among themselves to "buy" each of the contestants, with each contestant being assigned to the highest bidder. The contestant will then pay out to the owner a predetermined proportion of the pool depending on how it performs in the tournament. While variations in payoff schedules exist, in an NCAA Basketball tournament (64 teams, single elimination) the payoffs could be: 1 win - 0.25%, 2 wins - 2%, 3 wins - 4%, 4 wins - 8%, 5 wins - 16%, tournament winner with 6 wins - 32%. The precise rules of a Calcutta can vary from place to place; many tournament organizers employ software programs that apply odds and determine win-place-show amounts. Perhaps the simplest and most common Calcutta payout is 70 percent of the pool to the "owner" of the winning tournament team, 30 percent to the "owner" of the second-place tournament team. An interesting element of Calcutta auctions is in determining an appropriate wager for each contestant, as the payoff will directly hinge on the size of the pot and thereby the size of the bids being placed. Thus the value of each team fluctuates during the course of the betting. For example, even if a bidder knew the

University of North Carolina The University of North Carolina is the multi-campus public university system for the state of North Carolina. Overseeing the state's 16 public universities and the NC School of Science and Mathematics, it is commonly referred to as the UNC Sy ...

would be the tournament winner and thus pay out 32% of the pool, he would still be unsure of the exact value of the team (unless it was the last team being bid on) since the payout depends on the sum total of all winning bids, i.e. the final size of the pool. Another typical variation in NCAA Calcutta auctions is the bundling and auctioning off as a block the lowest seeded teams in each region, called the "Dogs". For example, the 16th to 13th seeded teams from the Midwest Region would be bid upon as a bundle named the "Dogs of the Midwest". The winning bidder would own all 4 teams and usually recoups his or her investment if one or two of the Dogs wins an upset. This is similar to

parimutuel betting Parimutuel betting or pool betting is a betting system in which all bets of a particular type are placed together in a pool; taxes and the "house-take" or "vigorish" are deducted, and payoff odds are calculated by sharing the pool among all winnin ...

, in that the winnings are awarded from the total pool of bets, but differs in that only one player can bet on any one contestant. However, a player may purchase as many contestants as they desire. One variation that has grown as the Calcutta auction is used more in conjunction with March Madness involves auctioning teams off in the reverse order of their seeds instead of random order. As bidding evolves, this aids bidders in estimating the final pot size since the heavily favored teams that command the highest bids are auctioned at the end, thereby limiting the risk on the larger bets. A Calcutta golf tournament is seen in the 1967 film ''Banning''.

Notes

{{reflist, 2 Types of auction Backgammon Melbourne Cup Wagering