New Australian pricing

How can the above work if they have to pay 1.5% of backers stakes to racing?

Maybe there's not actually that much turnover thru the NSW markets and increasing the base rate throughout the whole of the AUs and NZ markets allows them to offset. Plus it allows them guage what effect an increase in their overall base rate will have especially if they want to increase to base rate when the sportsbook comes in' to herd people over from the exchange. Think of it like when the  Government wants to try out a new tax they try it on the jocks first, feck :)

6.5% aussie race commission ? is that right ?

as if it wasnt hard enough to profit as it was ....

That's a 30% increase on the base rate of 5% commission. Not good. :(

.. and what happens to the premium charge ?

Joe, why wouldn't the NSW racing authorities just start trading massive amounts on the NSW markets?

lol re Jocks.

i.e. 100K lay at 2.0, 100K back at 2.0, they pay no commission but they receive 1.5K turnover fee.

If there is as much ping pong money in Aussie markets as there is in the UK then I can't see how BF can make it pay on a turnover tax regime.

mebbe it's charged on "net" back bets?

My immediate thought was the opportunity for foul play under the 6.5% charge.

All it takes is for one user linked to Racing NSW, or one of Betfair's competitors (and therefore ememies) to back and lay the same selection for large amounts to guarantee the racing authorities high commissions.

Amazing decision by Betfair to accept the charges from NSW racing and the followers from Victoria. Now they have made the charge for all Australian racing I assume the other states and codes will follow in charging 1.5% t/o charge. Why didnt they shut down NSW racing on here last month to make a stance?

How long now before everyone else asks for 1.5% of backer turnover? I am sure the UK levy would like that. The EPL might be interested too. How can the Betfair model be expected to work with a 1.5% turnover charge when the whole ecosystem of the exchange depends on traders? Its a low margin product.

I expect you will find that betfair's creative management wontt have too much "backer stake" to pay turnover tax on.  With cross matching I expect betfair will find most of the bets will be non-turnover "lay bets"

Hazel, you perhaps have to hope so... The other disturbing trend is for sports authorities to get wise to the fact that they can impose variable fees (for data etc.) wrt which events are really popular and important.

The Melbourne Spring Carnival is already charging 2% over the odds compared to Victoria's state races (and they are popular enough).

As tracks get more powerful in England, you can see the time when Royal Ascot apply directly to betting operators for fees.

Imv bf royally botched the whole handling of the turnover tax in Australia. They expanded too quickly, didn't cultivate friends or political connections (thinking their partner had these in hand), then found themselves having to choose between accepting a protectionist decision or cutting jobs.

How can this work ?
Customer has 1000 @ 1.1 and wins.
Turnover tax = 15
Betfair earn 6.5 in commission (assuming no com discounts)so lose 8.5.

Will they claim the customer had 100 @ 11 for the selection not to win ? So now the turnover tax is only 1.5?

hazel, the cross matcher (i.e. betfair) would then be seen as the backer. If it wasn't then the NSW authorities would soon change the definition.

There must be something more to this or, as I said earlier, the racing authorities themselves could just generate massive turnover by trading.

Feck
Do you really believe that the NSW racing authorities would even consider, let alone be allowed, to bet and lay large offsetting amounts on BF to ramp up the turnover base on which they are to receive a 1.5 % commission ?
It would be highly criminal to say the least and would threaten everything they have gained, if they did it and were exposed in due course.

What's to stop a disgruntled customer doing just that?  On a big meet with plenty of liquidity they could quickly cost BF tens of thousands.

Actually maybe not tens of thousands but loads of backs and lays at the same price would soon add up.

Surely there is some kind of netting per customer which Betfair can use to show what was the real turnover on an event?

FAFH, WALOFS. The Vis is right. There's a near endless supply of disgruntled betfair customers. I'm sure many pc payers / Voler La Vedette backers would be quite happy to accommodate the NSW racing authorities even at a small cost to themselves.

I do believe though that something must have changed since the original announcement as even the clowns at betfair wouldn't leave themselves that open.

hazel, I should have added, if betfair were allowed to use the cross matcher as justification for everything being a lay bet why wouldn't the tabs / bookmakers be allowed to do the same?

Feck
When they ( the NSW authorities) would simultaneously gain from increased turnover tax ?.
Somehow I don't think that would be legal.
BF would be all over them like a rash, if nothing else.

You've lost me FAFH. Is it illegal for members of the NSW racing authorities to join betfair? Is it illegal for disgruntled bf customers to trade?

Without knowing the details and NOT having thought through ... could betfair change it's terms and conditions to specify a bet/turnover as being the liability of the user at the point when the event starts i.e., the "suspend" appears.  Bookies can cancel bets pre-event if they like which is kind of like trading out of a position..you see the direction I'm going with this?  Not sure about in-play but pre-event I wonder?

t&c section1.2

.....In particular you undertake not to (i) engage in any activity which has the purpose or effect of causing damage to or in any way hindering our business operations or generating or increasing a liability on us, including without limitation any tax, levy or duty collecting authority; or (ii) bet on, or manipulate any individual Market in a manner which we believe has the purpose or effect of adversely affecting the integrity of the exchange or any Market.

personally I am not so worried about how betfair cope with a turnover tax, I am more interested in how many punters continue to bet here with a 6.5% MBR. 

I have long thought that Betfair will want to increase the MBR to facilitate growth.  It tried 7% in some events a few years back, but was not strong enough at the time to withstand protest.  It is a much stronger company now and has since introduced the premium charge without distress. Growth is Betfair's number one goal.  Increased MBRs will happen sometime in the future, the Australian punters will determine how soon.

adversely affecting the integrity of the exchange

Feck
Doesn't "NSW racing authority" refer to some sort of state Govt. regulatory body overseeing/regulating racing in NSW ?

Annoying things about this
(a) tax on turnover introduced to support an ineffictent operation - Racing NSW. The racing product there has been declining for years eg shrinking field sizes, unable to support Saturday class racing on public holidays (usually either have midweek prizemoney or a meeting at a second tier track). R NSW were the ones who bought the case in. At the same time Racing Victoria have been consistently maintaining and even improving their race strength and prizemoney. How can they do that under the "unfair" old commission that is not enough to pay the way according to R NSW. Hmmm
(b) The High Court decision. As far as I can see it seems anti-competition, favouring the established less efficient players.
(c) Punters end up paying for higher horse sale prices, that really helps the race clubs??
(d) BF's lack of fight once the decision was in.
(e) BF once again shafting the easy target, it's clients. There's no other exchange for Oz racing. At least there's a number of other betting agencies in Australia. Against that the corporate bookies (mostly owned by UK firms now) continually ban cients and it galls to bet with the TAB's that feed the race clubs taking advantage of this decision.
(f) BF imposing a blanket increase on all racing. Not all states or even codes have asked for the extra payment yet they slug clients betting on those "old commission structure" markets

Point (f) is a good one. How does BF justify this ?.
Bit difficult though to have different commission structure for races in different states I would obviously guess.

Why not FAFH. That was supposedly why they brought in market base rates in the first place although that & betfair holidays were a smokescreen for increasing the commission point bands.

A ridiculous move by Betfair to have a blanket increase. Why penalise they punters who bet in the states, that have a gross profit system ?

I'm not sure how big a drop in liquidity the increase, will cause. I guess we will just have to wait and see, but if there is a significant drop, the states working on gross profit will notice the dip in Betfair's contribution.

Very concerning that the statement gives no particular details rather just blanket statements.
By applying the 1.5% levy across the board for all AUS markets, they are offsetting the traders and market makers because the position takers are the one's being hit hardest. As the levy applies to Racing NSW, all other States including New Zealand are a cash cow at this moment in time.

Does the 60% maximum apply to 6.50% or 5.00%?
Does the commission point structure change for AUS wallet?
Will the Betfair points schemes be seperate for each wallet?

These are just a few of the questions left by a blanket announcement with little detail included.

When I rang Betfair, the operator had no idea how to answer.

How about some clarification please, this is a major structural change for those with high turnover but low profit margins.

racing's not my thing, but I tend to agree with the point made some way above; BF should just pull out of NSW racing.

doing things this way just risks incentivising other governing bodies to go after more money the same way.

as things stand they appear (I may be wrong) to be subsidizing a bigger payment to one state by higher charges across the board, which will actually decrease the take of other states by decreasing turnover.

if that's the case then it's plainly not sustainable as all states will go for the same model. and if it takes 6.5% base rate across the board to subsidize one state's rake, what's it going to take to do the same for all of them?

Viva

Betfair have missed the boat. Victoria have already indicated that they will move to the turnover model after August, albeit on a 12 month trial.

NSW and Vic are by far the largest states when it comes to betting on horse racing. They would have at least 70% of the national turnover.

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racing's not my thing, but I tend to agree with the point made some way above; BF should just pull out of NSW racing.

doing things this way just risks incentivising other governing bodies to go after more money the same way.

as things stand they appear (I may be wrong) to be subsidizing a bigger payment to one state by higher charges across the board, which will actually decrease the take of other states by decreasing turnover.

if that's the case then it's plainly not sustainable as all states will go for the same model. and if it takes 6.5% base rate across the board to subsidize one state's rake, what's it going to take to do the same for all of them?


Turnover will drop and they will get less money out of Betfair than they did before.

'daq hasnt increased their aussie commission have they ?

They don't bet on Aus racing anymore (only did for a short time before they got in trouble)

More changes to the pricing structure for betting on Australian racing, was announced yesterday by Betfair.

A 1.2% charge on all back bets, if you meet the criteria.

See the Aussie Forum or check this link.

betfair.com.au/turnovercharge/

This surely is the death knell, for traders on Aussie racing.

Thanks Castiron.

What do you think Feck ?

Plenty on the Aussie forum saying the heavens are about to fall in.

I know your opinion of the Ferengi.

I'm just reading that link just now castiron. Will get back to you shortly.

Sorry Castiron, I got waylaid. I'll have to take a look over the weekend. With another page added to volume 3 of the commission system betfair are becoming about as appealing as filling in a tax form.

They shd just pull out or sack 60% of their Australian staff. Or be a straight bookmaker and turn off the exchange facility altogether.

They've capitulated in the face of a change they shd have been able to see coming but are carrying on w/ the illusion that they have a sustainable exchange product. What a car crash.

My first thoughts on the new pricing WERE it was an intelligent attempt at covering the turnover levy while protecting liquidity. Ignoring the MBR increase that betfair have already implemented it won't really affect the casual backer. If you're only backing 1 or 2 horses per race (with only the occassional odds on shot) it's highly likely your commission generated will amount to less than 1.5% of your stakes, even if you're on the minimum 2%.

[e.g. If you backed 3 1.5 shots for 1 unit each in 3 different races and got 2 winners you'd generate commission (2%) of 0.05 which is greater than the 0.045 turnover levy betfair would be charged. If all 3 won though you'd only generate 0.03 but in reality we're talking 50 bets plus and not 3.]

I'm currently either backing or laying almost every runner in each flat race. Generally the dutched price of the lays are the inverse of the dutched price of the backs. Where the latter isn't long odds on my original thinking was that there would be no reason for me to change my modus operandi. With that in mind I was thinking there was no reason real liquidity should change much. Obviously your short term tick traders are fkd but their absence wouldn't affect liquidity in any way.

I keep using the past tense w.r.t. my thinking because that was before I cleared up some misconceptions I had about the charge. I originally thought that if your generated commission fell short of the turnover charge you were only charged the difference but on reading the t&c's again it seems that if you're a penny short you'll be charged 1.2% of all your back bets. Please correct me if I'm wrong but the example they give doesn't leave much room for doubt.

In addition to that, there is no carry over from week to week like the pc. With the pc, if you lose 5K this week then you can win 5K the following week pc free. With this charge however one week you could have 50 backs all losers and the following week they'd contribute nothing. Those of us who are gamblers rather than traders are aware of how cruel this game can sometimes be. I've had periods of up to 8 weeks where I could count the winning days on one hand. I've also had incredible periods where the reverse is true. We're back to the problem with the original pc (pc1). Why should two people with the same turnover, number of bets and profit be charged differently just because the sequence of their bets differ?

The commission scheme has become so ridiculous I'm losing the will to live. If they ever make a film about betfair it should be called The Picture Of Dorian Grey II (always assuming one day they'll repent their sins).

*it's highly unlikely your commission generated will amount to less than 1.5% of your stakes

This business of suddenly becoming liable to pay the full amount when you cross from 49 bets to 50 or because your commission paid falls a penny short is worthy of the social. "Ah, you've got 8,000 in savings, sorry you don't qualify" versus "You've only got £7,999.99 in savings, that's fine, you qualify".

Many customers will be aware of the recent Australian High Court ruling requiring wagering operators to pay a fee based on turnover to accept bets on New South Wales thoroughbred and harness racing. Racing Victoria and Racing Queensland are both also moving to a fee regime based on turnover with Queensland commencing on 1 August 2012 and Victoria expected on 15 August 2012.

Betfair has been reevaluating its pricing structure in the wake of these decisions and it has been determined that regretfully a turnover charge will be applied to a very small group of customers who meet specific criteria. This will ensure Betfair can continue to offer the best wagering product in the market and provide our customers access to all Australian racing content. The charge will come into effect on 30 July 2012.

The charge will only be applied on those markets which Betfair is required to pay a turnover fee. For a complete listing of jurisdictions affected by a turnover fee please refer to this link.

The turnover charge is being applied to customers in exactly the same way as the racing bodies are charging Betfair, however at a smaller rate. Therefore Betfair continues to absorb a portion of the fee it is being required to pay.

The new turnover charge is applicable to a very small group of customers. It is necessary to ensure Betfair can continue to operative viably on turnover charge markets. The turnover charge is aimed at customer activity which generates large volumes of back bets without providing Betfair with the corresponding revenue to cover the charges accrued. Therefore without the charge Betfair would be left with a turnover fee payable to racing bodies but no revenue with which to pay it.

This charge will only apply to customers who during a week meet all three of the below criteria:

    have matched back bets on 50 or more markets which Betfair is subject to a turnover fee from a racing body (‘turnover charge markets’);

    have matched back bets with an aggregate value of $2000 or greater on turnover charge markets; and

    the total commission generated by the customer on turnover charge markets is less than 1.5% of the aggregate value of matched back bets placed by the customer on those markets.

Total commission generated is half of the commission paid plus half of implied commission, calculated by the formula = (commission paid + implied commission) ÷ 2.

Implied commission is 3% of player losses where players make an overall loss on a single market.

Turnover charge markets will be identified in the grey text of the market view.

The turnover charge will be 1.2% of the aggregate value of matched back bets on turnover charge markets.

Betfair is being charged 1.5% of the aggregate value of matched bets by Racing NSW, Harness Racing NSW, Racing Victoria and Racing Queensland. In both Victoria and Queensland this rate increases to 2% for their premium racing months. You can see a current list of the tracks that the charge applies to click here.

The charge will be calculated for the period from each Monday to Sunday (GMT), and will be payable on a retrospective basis. The charge will be debited from a customer’s UK wallet each Wednesday, alongside any applicable premium charge.

The charge will only be incurred for any week when a customer’s betting activity meets the criteria. Please note the charge will not be applicable to any lay bets.


During a weekly cycle, a customer has matched back bets to an aggregate value of $10,000 over 100 NSW and Victorian thoroughbred markets. The customer has $100 in Total Commission generated.

Criteria:

       
Back bets placed in 50 or more turnover charge markets

             YES

    75 turnover charge markets

Matched back bets with an aggregate of $2000 or greater on turnover charge markets              YES

    $10,000 of matched back bets on turnover charge markets

Total Commission generated on turnover charge markets is less than 1.5% of aggregate matched bets              YES

    $100/$10000 = 1%


Turnover Charge payable will be 1.2% of $10,000 = $120.

Customers will be contacted directly by a Betfair representative and informed on the first occasion on which this turnover charge would have been payable.

Customers will also be afforded a one-week ‘grace period’ designed to give them an opportunity to refine their betting habits should they wish to do so. The first notifications to affected customers who have triggered the grace period will be sent the week of August 6, 2012.

A summary report of an individual’s weekly activity will also be available if requested.

Betfair remains committed to providing our customers with the best products and service in the market and the implementation of this turnover charge is imperative to the future sustainability of the business.

Despite this new charge, Betfair’s prices will remain the best of any wagering operator on Australasian racing.

Customers seeking further information on this pricing alteration can call the Aus Betfair helpdesk on 1300 238 324 (9am - 7pm AEST).
       
       
Turnover charges - Facts about Racing Industry Funding - States and Tracks

Feck

I believe your assumptions are correct.

There has been no mention of returning to the 5% maximum commission. This seems very unfair, as they charge the top rate of 6.5%, even in the States that don't use the turnover model of taxation.

When the commission increased a few months back, there was no noticable drop in liquidity. It will be interesting to see what happens this week.

Betfair never miss a chance for a sly commission rise Castiron. We've already had the betfair holiday points band revisal, the inflation points band revisal, premium charge, removal of premium charge yearly allowance and finally the super premium charge. Now Oz has another rise on top of that. They're a bit like the bankers. They've nothing really intelligent or innovative to offer so they raise profits by sleekit charge increases to mask just how bad they're doing. Meanwhile we've got tumbleweed early markets, Last5Minutes.com win markets that aren't far off being SP only and place markets where the top offers a minute from the off represent a max take out equivalent to the average wean's pocket money.

revision innit?

I would think it would have to hit liquidity castiron. They'll maybe have made a private agreement with their largest liquidity providers so it's not immediately obvious but if it was happening here there's no way I could continue unchanged under the present t&c's. If it was permitted, I might be able to get away with two different accounts (one backing one laying). I'd probably be able to maintain both on 2% and hope that the extra commission I'd be paying as a result of separating my backs & lays would be soaked up by the premium charge. I say might because I've only been using my current modus operandi for 2 months and results so far wouldn't bear that out but I'm hoping I'm just going through one of my many moderate spells.

The problem with the t&c's is down to calculating the commission generated over a period of a week. In a race I could lay half the field and back the other half and if one of the marginal value horses won I'd pretty much break even. That would mean it's a race I've generated no liquidity whereas my EXPECTED commission generated on the race could be quite large. Obviously the larger the sample of races used the nearer the actual and expected commission generated would merge but a week is nowhere near long enough. For me to continue unchanged they'd have to base the commission generated by the account over the lifetime of the account since the charge first came in. If they insist on doing it weekly then they'd have to base it on expected rather than actual commission generated (no idea how difficult that would be for them e.g. obviously harder to work out on multi-winner markets). The possibility that you could fall 1p short of the commission generated required to dodge the potentially devastating turnover charge will see a lot of real liquidity providers rethinking their positions.

I'm still having difficulty getting my head round the fact that they're actually intending implementing this business where you cross a line and get instantly whacked. The non-graduated nature of it is something you'd expect a city council to come up with.

If it happened here you could see the course players getting together to take turns about at 49 1.01 hooverings. Who would be expected to pay the turnover on those bets? The rest of us through increased charges?

Feck,  I've got two different accounts and was thinking of backing and laying the same selections to increase my commission.  Are you saying this is not permitted?

Could get really weird if you had a losing streak for most of the week and so paid little commission but went over 50 markets - have not done the numbers but could imagine a commission hit on top of a bad week being possible with some mixes of backs of different bet sizes?

It's OK AFAIK RichWill but don't know if it they'll make any changes for Austrailan races as a result of this turnover charge. I take it you're thinking of doing it for Australian racing?

zooot, a losing run probably wouldn't be a problem as you'd still be generating commission (if you were a 2%er a losing run would generate more commission than a winning run).

Having just read the Oz forum I've just realised the 50 limit allows traders to trade in 49 markets a week. WTF? They could generate massive turnover fees in those 49 markets, pay zilch in commission, generate no commission and everyone else is expected to pay their turnover fees via increased charges. I know they banned a few traders but they haven't prohibited it. This whole thing's badly thought out.

They state 'have matched back bets with an aggregate value of $2000 or greater on turnover charge markets'. Is 'aggregate value' the same as the sum of stakes?

Yes.

This 50 markets is a mystery as well. You could dutch every runner in 49 big field markets, generate massive turnover at little cost, pay no turnover charge and yet someone with 50 single backs closed out ir could get hit with a turnover charge.

Feck

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