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Author Topic: Net Pool Pricing  (Read 1518 times)

« on: March 07, 2006, 10:42:53 PM »

Net Pool Pricing

Balmoral and Maywood Parks Adopt Net-Pool Pricing
October 31, 2005 --

An Explanation of Net-Pool Pricing:
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.

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% commission is worth $83, and $100 bet at 18% commission is worth $82. The payout at the locality with a 17% commission rate will therefore be slightly higher than the payout at the locality with an 18% 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 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.

For more information, Contact Us.
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« Reply #1 on: March 08, 2006, 02:51:04 AM »

Just another way for the track owners to siphon off money out of the pools.
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« Reply #2 on: March 08, 2006, 04:49:17 AM »

Just wondering if anyone can confirm if this is accurate or the closeness to accuracy it is? Good work Lockjaw as the info looks interesting... clocker
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« Reply #3 on: March 08, 2006, 09:28:33 AM »

    New York Net Pool Pricing
             By NYRA Press Office | Oct 22, 2005
"Longshots tend to pay a little more and favorites tend to pay a little less in multi-priced pools such as Place and Show."

The New York Racing Association is now calculating its pari-mutuel pools using a Net Pool Pricing model effective immediately. The 30 percent withholding tax on foreign winning pari-mutuel wagers was recently eliminated by the United States to enable the large amount of money wagered outside the country to be commingled. The change in pricing models permits countries such as Canada, England and others to commingle wagers into New York pools despite different legal deductions, takeouts, breakage and currency.

Net Pool Pricing allows each participating jurisdiction to abide by its mandated takeout rates without affecting the remainder of the network. For example, if a wagering site has a higher takeout than the host track, its payouts are lower. Conversely, a wagering site offering a lower takeout distributes higher payouts than the host track.

For New York fans, Net Pool Pricing will affect the way prices are calculated, but there will be no changes in prices under single-priced pools such as Win, Exacta, Trifecta and Pick Six. But, in multi-priced pools such as Place and Show, longshots may pay a little more while favorites may pay a little less. Fans will no longer be able to calculate prices from the pools listed on the toteboard because of the additional international variables that affect the algorithm.

Net Pool Pricing has been used successfully for years. American customers betting on the 1996 Breeders' Cup at Woodbine Racetrack in Toronto received mutuel information calculated by Net Pool Pricing. Woodbine, Arlington Park, and Emerald Downs have already moved to the Net Pool Pricing model.


The 30 percent withholding tax on foreign winning pari-mutuel wagers was eliminated by the United States to enable the large amount of money wagered outside the country to be commingled. For further expansion to occur, one of the requirements is to change to the tote calculating package that is most commonly used in the United States. This upgrade to Net Pool Pricing (NPP) enables U.S. tracks to deal with foreign tax rates and currency values.

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 elect 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.


Q: Why is NYRA changing to Net Pool Pricing in order to commingle wagers from Canada?

A: Since some countries such as Canada have different legal deductions, takeouts, breaks and currency, Net Pool Pricing is needed to combine their wagers and accurately calculate prices throughout the network.

Q: Will changing to Net Pool Pricing affect the way prices are calculated?

A: Yes, the algorithm used to calculate the prices is different under Net Pool Pricing. You should see little to no changes in prices under single priced pools such as Win, Exacta and Trifecta. Longshots tend to pay a little more and favorites tend to pay a little less in multi-priced pools such as Place and Show.

Q: Why can’t I hand calculate the prices from the pool values on the tote board?

A: Since Net Pool Pricing uses a complex algorithm to calculate the prices there are many other variables that affect the calculation of the price which are not displayed on the tote board.

Q: Has Net Pool Pricing Been Proven to Work?

A: Yes, Canadian racetracks have been using Net Pool Pricing since the Breeders’ Cup was hosted by Woodbine in 1996. Customers betting on Woodbine in the U.S. have already been exposed to this calculation method. Many states have since adopted Net Pool Pricing in their regulations including the RCI Model Rules.

Q: Is Net Pool Pricing more susceptible to minus pools?

A: Due to the nature of the algorithm used in Net Pool Pricing on a split pool such as Place or Show, a heavy favorite will not drive the value down on the remaining runners as much as it does using the standard pricing method. This may result in the favorite paying $2.10 and the other horses paying more, which is generally more favorable to the betting public. The negative break is then attributed to the wager and that association who bet down the favorite.

Q: How can pools from two different currencies be merged together?

A: Net Pool Pricing allows for pools in different currencies to be merged together by applying a daily exchange rate before the foreign currency enters the pools and again to the prices before being paid to the public.

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« Reply #4 on: March 08, 2006, 11:59:48 AM »

Anytime you have a "complex algorithm" expect to get shafted by the wonderful track owners in Illinois. Just who is there to check to see if their "complex algorithm" is correct?? Just themselves.
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Annnnnnnnnd they're off!
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Rebate shops are not the devil.


« Reply #5 on: March 08, 2006, 12:24:51 PM »

Here's the old e-mail I sent out explaining net pool.  Hopefully it helps a little bit...


Pool = $6,000
A = $2,000
B = $1,000
C = $500
Others = $2,500

$5,000 after take, with $1,500 to distribute.  Each "winner" gets $

A pays 500/2000 which equals $2.50 -- breakage to $2.40
B pays 500/1000 which equals $3.00
C pays 500/500 which equals $4.00

Note that "essentially" $333.33 of the takeout comes out of each "winner" because it's taken right from the top

Net Pool:
There's $6,000, and $2,500 of it is to be paid (net pool takes the commission at the end)
So, 2500/3 means each horse will be allocated $833.33 in winnings, pre-take

A: 833.33/2000 equals $2.83 times .833 (1-takeout) which makes the final payoff 2.36 -- breakage to $2.20
B: 833.33/1000 equals $3.67 times .833 which makes the payoff 3.06 -- breakage to $3.00
C: 833.33/500 equals $5.33 times .833 which makes the payoff 4.44 -- breakage to $4.40

With the net pool, notice that A pays 470 in take, B pays 305, and C pays 225.  That is because the takeout is applied evenly by the percentage of the pool, rather than just shared equally.

I hope this clears things up, but historically, I'm terrible at explaining things -- so feel free to ask more questions.


Pretty much, you apply the local takeout to your bet, and you have the payoff.

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Stick to Fantasyland pal, because you'll NEVER make it in the real world - TC
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