JustRalph
11-23-2005, 12:59 PM
Anybody care to comment on pro's and Cons of net pool pricing?
see info below from Sam Houston:
Sam Houston Race Park
begins Net Pool Pricing
For further information,
e-mail us at: mutuels@shrp.com (mutuels@shrp.com?subject=Net-Pool Pricing)</B>
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. 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 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.
FREQUENTLY ASKED QUESTIONS
Q: Why is SHRP 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.
For further information, e-mail us at: mutuels@shrp.com (mutuels@shrp.com?subject=Net-Pool Pricing)
see info below from Sam Houston:
Sam Houston Race Park
begins Net Pool Pricing
For further information,
e-mail us at: mutuels@shrp.com (mutuels@shrp.com?subject=Net-Pool Pricing)</B>
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. 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 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.
FREQUENTLY ASKED QUESTIONS
Q: Why is SHRP 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.
For further information, e-mail us at: mutuels@shrp.com (mutuels@shrp.com?subject=Net-Pool Pricing)