Net-Pool Pricing at Beulah Park
October 8, 2005
An Explanation of Net-Pool
Historically, prices on pari-mutuel races have been calculated by dividing
the GROSS amount of winning bets by the net pool. The net pool is the total
amount of wagers reduced by the commission rate, or take-out. This process
returns a fair price provided all wagers were made using the same take out.
Not all international jurisdictions, however, are allowed by local law to
wager into U.S. pools using the local take-out rates, and must use the
standard take-out rate for their locality. They have, therefore, been
forbidden from wagering into our pools.
To accommodate multiple take-out rates, the Net-Pool pricing model was
established in approximately 1995. Under the Net-Pool pricing model, the
payouts are calculated by dividing NET amount of winning bets, (rather than
the GROSS amount as in Standard Pricing) by the net pool. Each locality then
multiplies the payout by the compliment of the commission rate (1-
commission rate) to arrive at the local payout.
This process weights each wager according to the local commission rate, as
the higher the local commission rate (take-out), the lower the local price.
For example, $100 bet at 17-percent commission is worth $83, and $100 bet at
18-percent commission is worth $82. The payout at the locality with a
17-percent commission rate will therefore be slightly higher than the payout
at the locality with an 18-percent commission rate.
Place and Show Pools:
For most pools and payouts, if all localities were using the same take-out
rate, the prices would be identical under both the Standard and Net-Pool
pricing models. But in any multiple winning runner pool (Place and Show and
any other pool in which a dead-heat creates two or more different payouts),
the Net-Pool model distributes the same amount of winnings slightly
differently. This is a function of allocating the profits to the different
winners based on their NET winnings rather than their GROSS winnings. The
total amount of monies paid out will not change, but the net effect, in
these cases, is that the favorites will pay a little less, while long shots
will pay a little more.
$2.10 Payouts and Minus
Fans will notice that show pools with a heavy favorite that you would expect
to return $2.10 for all three runners, may now pay significantly higher on
the two non-favorite horses. This is because that even though the payout on
the favorite is reduced to a number even farther below the minimum $2.10
payout, it still must return $2.10. But the other horses are not
participating in the minus pool as they were under the Standard Pricing
Payouts using Tote Board Information:
One of the results of the Net Pool pricing model is that one can no longer
accurately calculate the payouts using only the information available on the
tote board. This is true for all pools, including the Win pool. The reason
for this is one needs to know the commission rate of the wagers on each
runner in each pool to determine the true NET pool and NET winning wagers.
The tote odds continue to be accurate, as the tote has all of the necessary
information to properly calculate and display the current odds / payouts.