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Net Pool PricingThe U.S. 30-percent withholding tax on foreign winning pari-mutuel wagers was eliminated in the fall of 2004. In order to facilitate foreign currencies, taxes, and commission rates, pari-mutuel prices need to be calculated using Net Pool Pricing.
Net Pool Pricing allows each jurisdiction participating in the pool to offer different takeout rates than the Host track. 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. Therefore, jurisdictions using a higher retention offer a lower payout to their customers and the remainder of the network is not affected. Similarly, a participant using a lower takeout would pay out higher prices than the Host track. Any changes to these takeout rates at the Guest level would have to be provided to the Host with sufficient advance notice to implement.
As this pricing method commingles Net Pools (subtracting association commission and taxes from the gross pool) as opposed to the Gross Pools, it is arguably a more accurate method of calculation for two reasons. First, in the event of a minus pool in a split pool such as Place or Show, the association cannot net off positive and minus breaks to reduce the value of the minus pool. Second, customers selecting long shots in a split pools (e.g. Place and Show pools where the favorite wins) receive a higher payoff than when calculated under the traditional Gross Pool model.
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