Hullin, Chapter Two, Mishnah Nine
Our mishnah deals with various prohibitions concerning where one lets the blood flow from the animals neck when he slaughters. The point of the mishnah is to ensure that the way that Jews slaughter their animals does not look like the way that idolaters slaughter their animals. It is interesting that with regard to this specific issue it was deemed important to distinguish between Jews and idolaters. Since slaughtering an animal is such an important moment in society, both economically and socially, it probably very frequently had religious significance. As a moment fraught with such meaning, the rabbis felt it crucial to distinguish Jewish practice from the practices of others.
1) One may not slaughter [so that the blood runs] into the sea or into rivers, or into vessels,
2) But one may slaughter into a pool (or vessel) of water.
3) And when on board a ship on to vessels.
4) One may not slaughter at all into a hole, but one may dig a hole in his own house for the blood to run into.
a) In the street, however, he should not do so as not to follow the ways of the heretics.
Section one: If one slaughters and lets the blood flow into the sea or a river, it may look as if the person is using the animals blood to worship the sea or river. If he slaughters into a vessel it may look as if he is collecting the blood to use it in worship. Alternatively, this may look as if he is performing a Jewish sacrifice outside of the Temple. Therefore, all of these practices are prohibited.
Section two: The correct reading of this mishnah is probably not pool of water but vessel with water. While one cannot slaughter into a vessel, lest it look as if he is going to use the blood for a sacrifice, if there is water mixed in, it doesnt look like he is going to use the blood, because that is not how sacrificial blood is collected.
Section three: When he is on a ship, he can let the blood drain into a vessel, and even one without water. On the ship it would be clear to all witnessing the slaughter that the reason he uses a vessel is to avoid a mess. Furthermore, he wouldnt want to use the water which has to be preserved for drinking.
Section four: As we can see at the end of the section, it seems that the heretics, who here refer to idolaters (and not heretical Jews), used to slaughter into holes dug into the ground. Therefore, a Jew should not do so. However, in his own house he can dig a hole and slaughter so that the blood flows into the hole, but not directly into the hole. In the streets, one shouldnt even do this.