There are two participants in each entry to the Calcutta – the shooter and the buyer.
In a Calcutta, bids are placed, auction style, on the shooter who they think will win the event (you can bid on yourself too). All the money raised through the “auction” goes into the pot. At the end of the tournament, those who “won” the shooter that then won the event receive a pre-determined payout from the auction pool.
Bidding for each shooter begins in random order, with only one shooter being bid upon at any time. Accordingly, participants bid among themselves to “buy” each of the shooter, with each shooter being assigned to the highest bidder.
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 shooter, 30 percent to the “owner” of the second-place shooter. It is just as common for the “owner” and shooter to split the pot evenly – the point is that the rules of the Calcutta should be clearly documented at the start.
An interesting element of Calcutta auctions is in determining an appropriate wager for each shooter, 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 shooter fluctuates during the course of the betting. For example, even if a bidder knew the Kentucky Wildcats would be the NCAA Basketball Tournament winner and thus pay out 32% of the pool, the bidder 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.