Handicap
mid 17th century: from the phrase hand in cap ; originally a pastime in which one person claimed an article belonging to another and offered something in exchange, any difference in value being decided by an umpire. All three deposited forfeit money in a cap; the two opponents showed their agreement or disagreement with the valuation by bringing out their hands either full or empty. If both were the same, the umpire took the forfeit money; if not it went to the person who accepted the valuation. The term handicap race was applied (late 18th century) to a horse race in which an umpire decided the weight to be carried by each horse, the owners showing acceptance or dissent in a similar way: hence in the late 19th century handicap came to mean the extra weight given to the superior horse.
wiktionary
From hand in cap, in reference to holding the game stakes in a cap.
etymonline
handicap (n.)
1650s, from hand in cap, a game whereby two bettors would engage a neutral umpire to determine the odds in an unequal contest. The bettors would put their hands holding forfeit money into a hat or cap. The umpire would announce the odds and the bettors would withdraw their hands — hands full meaning that they accepted the odds and the bet was on, hands empty meaning they did not accept the bet and were willing to forfeit the money. If one forfeited, then the money went to the other. If both agreed either on forfeiting or going ahead with the wager, then the umpire kept the money as payment. The custom, though not the name, is attested from 14c. ("Piers Plowman").
Reference to horse racing is 1754 (Handy-Cap Match), where the umpire decrees the superior horse should carry extra weight as a "handicap;" this led to sense of "encumbrance, disability" first recorded 1890. The main modern sense, "a mental or physical disability," is the last to develop, early 20c.
handicap (v.)
"equalize chances of competitors," 1852, but implied in the horse-race sense from mid-18c., from handicap (n.). Meaning "put at a disadvantage" is from 1864. Earliest verbal sense, now obsolete, was "to gain as in a wagering game" (1640s). Related: Handicapped; handicapping.
