Net Pool Pricing

Introduction

The United States government eliminated the 30% withholding tax on foreign winning pari-mutuel wagers in 2004, which removed one of the barriers preventing Canada to commingle with U.S. tracks. However, one of the CPMA requirements for this to occur is to change the U.S. host track's pricing package from standard pricing to net pricing. This upgrade to NPP (Net Pool Pricing) enables U.S. and Canadian tracks to deal with foreign tax rates and currency values.

This pricing package accomplishes this by commingling Net Pools (subtracting association retention and taxes from the gross pool) as opposed to commingling the Gross Pools. This not only overcomes the barriers indicated with the standard pricing calculation, but it is arguably a more accurate method of calculation. This may result in slightly different pricing results for the Place and Show pools particularly in situations where one of the horses on the board has been bet down significantly.

Net Pool Pricing allows each jurisdiction participating in the pool to offer different retention rates (also known as takeout rates) than the host track should they choose or be regulated to do so. For example, if a participant chooses to use a higher takeout than the host track, they will have proportionately less weighting in the commingled pool than wagers with a lower takeout rate. Therefore, jurisdictions using a higher retention offer a lower payout to their customers and the remainder of the network is not affected. This also would work the other way should the participant use a lower takeout, and their respective prices would be higher than the host track.

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 Pools:

Fans will notice that show pools with a heavy favorite that you would expect to return $2.10 for all three runners, now 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 model.

Calculating Projected 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.

Net Calculations

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