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.

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 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.

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

One of the results of 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 tote has all of the necessary information to properly calculate and display the current odds/payouts.)