“Turnover fee”?

well abanjo, u have opened the box......so for what its worth here goes.

your just about right with the bookies turnover, however if the bookie backs it back with a bookie in his state where they r licensed then he pays tax on what he has left on his book, but if he bets back with a interstate bookie or overseas bookie he pays tax on the lot.

Now turnover tax with Betfair is a whole diff kettle of fish.
if on BF i back a horse at 5/1 for 100$ then BF pays tax on the 100$, and then if you lay that same horse at the 5/1, betfair pay tax on 500$. so for the maths at 1.5% fee on turnover, they will pay 1.5% t/o tax on my bet = $1.50
and on your bet 1.5% t/o tax = $7.50
total tax to the state were the race is held is = $9
now add to that their state tax where they are licensed on betting = ??? (diff states diff tax)

so i'm sure u can work out from here why BF's model will not work, as in the majority of cases they would be losing on the transaction.
they have a few options they can now take on NSW racing but whatever they r, the punters will be worse off on laying horses on NSW racing.
this is only the beginning , already cries in Victoria to switch to the turnover fee, and now even the sporting bodies (cricket,afl.nrl,tennis) will be looking at the turnover model for further funding. So if that happens in the sports feilds it back to the courts they all go to work out what the all the sports are entitled to get from the bookies and BF

Logroller if your example is correct then BF will be out of play when all the other states adopt the NSWs
model.

I will stand corrected if any knows for sure how  it will work, but  logroller i dont think your calculation could possibly be correct.

Standard transaction

bookie
lays 100$ x 5/1= loss
punter
  bets 100$ x 5/1 = winnings

turnover for tax purposes= 1.5% x 100$= 1.50$

betfair

layer  same as above

backer

same as above

the  bookie does not pay turnover tax on what a punter wins, just on what is bet.

Why would it apply to punter winnings on BF?

Reverse the thinking.

Betfair

horse loses

backer loses 100
layer wins 100

turnover =100

horse wins

backer wins 500

layer loses 500

however the  cash in hand for the layer is still 100.

therefore I propose the tax on any 100$ bet is 1.5% = $1.50 regardless of the price of the winner.

thats my 2 cents


tax same as above

i was under the impression that the tax is only on the back bet.
its the traders that distort betfairs profit.

for instance,
a trader has multiple lay bets for $10 000
and
multiple bets to trade out.
and
makes maybe $20
but betfair pays 1.5% tax on the $10 000
= $150
the trader pays befair between 2 and 5% of his $20 profit (between 40 cents and $1

very interesting point  aaachen.

what your saying is that a trader could "turnover " 500$ to make 20$.

BF collects say 5% of the 20$= 1$

But turnover tax is 1.5% x 500$= 7.50$

under this scenarion BF will have no choice but to change its model to a turnover based system.

Say 5 % of bets placed.

Pays 1.5, collects 5 giving it a 3.5% margin.


Point of interest

bets 100  TAB takes 20 % with rounding =20$

BF punter wins 500 x 5% = 25$ takeout.

ok ben, look at it this way then how much is the punter laying out with BF to have the bet. which is by the way what turnover is.

the backer of a 5/1 shot is outlaying 100$ , so 100$ is regarded as t/o
the layer of a 5/1 shot to win 100, is outlaying 500, s0 500 is regarded as turnover

i think u will find that this is the way turnover is calculated

ben if it was your scenario then why would they be crying , beleive me this is the way it will work

really logroller? Are you sure?

you may well be correct.

If so then its a total disaster for BF.

Under this scenario BF has an unknown turnover tax prior to any meeting.

ben u answered it in one of your statements, "the tax is only charged on what is bet" the chap laying 500$ to win 100$ has in fact bet 500$ in that scenario, just like me backing a horse to win 20$ at 1/25 (1.04) i am betting 500 to win that 20, and the bookie will pay tax on the 500


i'm as sure as i can be ben, without being too arrogant to be proven wrong

all bookies have an unknown t/o tax prior to meetings

why dont BF just change the way they display the fields etc. As in ''All to hard'' that just raced would appear on BF as:

S-R-2-1

and so on. its the way we fill out tickets in the TAB anyway cross referencing with screens and newspapers etc. Same same imo and users would get the gist of it. Even sports bets in the tab need a 5 or 6 digit code filed in on the ticket.

That way BF are not using published race fields to market and make money from. BF is simply making their 'own' codes for traders to trade on.

Or am I way off i really havent looked too much into all this till now the decision has been made

sounds like  you well researched on it logroller  better researched than me.I'll accept thats the way it is and no one has posted otherwise.

What do you think BF will do from here under this scenario?

yeah sosa your way off, all though some time ago an overseas bookie said he doesnt actually show the race fields under any thing related to him, he only quotes the name or numbers over the phone, but that was well before the internet becoming the massive betting tool it is.

I'm sure Betfair will only pay the 1.5% turnover on the back side, not the lay side.

I recall PVL stating this when challenged how unfair it was, for Betfair.

your wrong castiron, that is what the whole fight was over, this is the start of the finish for BF as we now know it

Maybe, but I doubt it.

I think it has more to do with traders backing and laying the same horse multiple times.

please understand one thing...............the racing bodies /authorities have always hated the fact that punters with BF can lay a horse to lose, this was the whole agruement from the very start of BF all over the world, this is what the powers in racing have wanted to stop from the start of exchanges, and now they have found a weapon, beleive me they will aim that weapon right at the heart of exchanges and try and run them completely out of business.

also Cast, laying is fundermentally the same as backing, no real diff, i am still outlaying a certain amount of money to win a certain amount of money, its all the same and the outlay is turnover, whether with a bookie,tab or BF

Im sorry but me thinks it has to be on the back side.  Because if you back a horse the a corperate say $100 @ 5.5 return is $550, The corperate only pays tax on the back side not on hes lay side

imo the only way it could happen your way castiron  ...

was if bf INITIALLY 'took over' all the lay bets (tho flagged them against the a/c holder's account for LATER reimbursement or collection ... plus commissions etc)

... that way the BACK bet is the only exposed punter "turnover"

... and the BF race screen would only register the 'amount' on the race as the 'back' amount

but whether that concept is legal i dont know

yeah harder2 win, its the same on the layside pleeeaaassssssee.

I thought BF pay it on lay side as well effectively making the fee 3%. The reason the corp bookies only pay on the back side is that their customers dont make the lay.

Logroller, The bookie has risked $450 to a $100 pays $1.5. Not $6.75 of $550 in turnover!!!!!

I specifically remember the interview with V'Landys. It was either on TVN or Sky.

He stated that Betfair only paid turnover on the back side.

What if someone bets $1000 in running at 1.01 to win $10.00. They pay about 50 cents or so commission, and betfair pays $15.00 turnover tax....

Joel most would only pay 25-30 cents commission.

"He stated that Betfair only paid turnover on the back side."

if we could  get Gilliard to pay her tax on  back  side , OZ would never go into deficit

Yeah I was going to say that, though I would think those taking 1.01's would also be paying the Premium Charge too.

ok i wont argue any more i have stated my opinion.

and to ben ....the way i see BF going is to past the 1.5% t/o on the layside onto the punter, if that is the case the pro's will ajust their little sums/algorithm's to find the juice, but it will be the end of 101% markets on the backside and 99% markets on the lay side

thats a strong possibility logroller.

layer- loses 500+ 1.5%= loss 507.61% charge to account.

that would solve their problems.

in that case im guessing the prices here would become less generous.

u got it ben

I think if the High Court read this thread they might have reconsidered their decision. I've read all the submissions & didnt get a sense of how unfair this fee is.

A 50% fee on total commissions received would be fairer

Any turnover paid by Betfair will be based on the sum of the bets on the back side.  The lay side bets simply match these and will be irrelevant.

cant help myself...........thanks for the insight "onthechase".....so then, i only lay horses! so it wont affect me in anyway shape or form then, dont know what all the fuss is about then

beauty

Unfortunately not, logroller.  If Betfair have to pay the turnover fee, it will have to raise this money from its punters either by taking 1.5% off the top or by setting new commission rates on winning bets (both back and lay).  Either of these methods would affect by backers and layers

Should read "Either of these methods would affect both backers and layers."

Correct weight, OnTheChase

well i surely hope u 2 r right,

if it is a fee on only the backside for BF, then i've done a few calculations and i reckon all BF need to do is put the comm rate up by 0.5% on the races were the racing bodies turn to the turnover fee model. all other markets remain the same comm rate.

don't get too excited folks ... this is from the News release on this very Forum ... as a BF Service Announcement ...

*************

“This finding essentially means that it is six-times more expensive for Betfair to offer New South Wales racing to customers compared to offering racing from any other state in Australia.

“A turnover fee will place extreme pressure on our ability to continue to offer our customers what we believe is the best product in the market.

“It will directly and significantly reduce the competitiveness of wagering on racing in NSW.  It is ultimately the punter who will pay for this lack of competition as it will impact on the variety, quality and value of betting on racing in NSW.

back bet turnover is correct - traders is what will stuff them up - easy fix, ban traders

filthy traders

Any one that thinks what you are risking in a lay bet is your turnover is wrong, think of the bookies you are no different to them.

This is how you work out turn over no matter if you back or lay ((Returns - Outlay) / Outlay)

They can only tax on one side because for every backer there must be a layer of equal value if they taxed both sides they would be double dipping.

The easy fix for traders is to separate back and lay in to 2 markets, this won't effect people laying or backing multiple horses but will effect traders.

Back 200 @ 3.00
lay 203.39 @ 2.95
Back Comms 20.00
Lay Comms  10.16

This would stop traders overnight because the profit on this would only be 3.39 yet min comms would be 10.16

So if I ring up a bookie and ask what price can I back the next 3/1 fav to lose and he quotes me 1/4. And I say I'll have 400 on it........... What is then considered the bookies turnover to pay tax on.?

i think betfair will add an extra % levy on all win bets
not lays

and possibly a levy on traders.

lets say first lay or bet on any horse or dog
attracts commission as it is now

but multiple bets or lays on the same dog or horse
attracts some sort of surcharge.

Ok, the question here isn't weather the TAB 's and racing boards want Betty out......we already know this,it is quite apparent. Possibly one state may hold the line , however there is a reason NSW and PVL charged into fray, and not the others.
What they ( NSW) are defending is the heinious "turnover tax model". The price of punting is too much now , they won the battle but will lose the war to....pokies , sports ,keno  etc .

Well done Establishment , enjoy your sandcastle while it lasts...won't be long now

$1 million on black caviar @1.04

corps pay the punter $40 000
and $15 000 levy.

like you you think thats gonna happen?

more like offering $1.02 about something
that should be $1.04

the shorter the price ,the more distorted it becomes

u got it aachen, now transfer that model to the BF back and lay model and BF r out of business.
hopefully only the back/side will be liable to pay the fee, and then i'm sure BF will come up with a formula, that the punters will pay for in the end. but at least they will continue

Would mean the end of in-running unless they can work something out

at the end of a race betfair obviously already work out who wins what - wouldn't it just be 1.5% of any winnings?

if thats the case maybe Betfair slug us an extra 1%

in that case if you were returned $100,000 over the year you would pay an extra $1,000

which is good because it's important the Gerry Harvey's of the world have than money for their prizemoney

it's very important to me that people like Gerry stay in the game

Craig, it doesnt quite work like that. My commission generated over a year is close to 17%. Thats is b/c you pay on every winning market. You dont get a refund of commssions paid for every losing market.

You would be surprised but a 1% increase in commissions would have a big impact on your profit over a year.

In fact the no of punters that win over a year would reduce significantly.

you may have have win markets of 1.5million and loss markets of 1.4 to win the 100k
so you are paying an extra 15k hence 15% in actually fact craig

i was talking about collecting $100k and maybe losing $90k - so yes agree the $1k is 10% different to the overall profit and loss

obviously you guys bet bigger than me

because all these speculations are filled with 'who knows' and 'what ifs' ... wouldn't you think that at some point .... in the bf case before their worships ... that this dilemma would have been brought to their worships

all i remember reading was how bf felt they were hard done by ... because of some imaginary retsriction of trade based on cross border interstate business ...  ffs

i can see how the corps turnover situation was easily decided upon ... but why didn't bf see the writing on the wall ... and explain clearly ... why turnover is 'clouded' in their model ... and NOT THE SAME .. as the decision based on the corps situation ?

ken callendar in todays Daily Telegraph wrote the following

One of Australia's foremost legal minds said the racve may not be over between Racing NSW and Betfair

He went on to say Betfair might still have a case to go the ACCC claiming it's customers are disavantaged or even to go a step further and mount a challenge in the Federal Court under the Trade Practices Act - he said hope not i say hope so although I hope they mount a better case - maybe they need Kye and a few others from here onboard

The ACCC option was considered when they lost the Federal case:
http://www.heraldsun.com.au/businessold/sportsbet-betfair-must-pay-race-fees/story-e6frfh4f-1225954967866

But not sure why it hasn't been mentioned since...perhaps they were waiting for this point.

Craig they cant go any further with the arguement already used or ruled on, this is the end of the line. it has been ruled upon that Racing can charge for the use of their product, nothing can change that.

the big hurdle now is to determine what constitutes turnover in Betfairs business model, and who makes that call.

If the racing bodies push that both the "back and lay" in the BF business are turnover then it is the death of betting exchanges in Australia

But if they determine that only the "back" side is to be taxed (which seems to be the common view) I have done some quick calculations and i came up with: BF only need to add .5% comm to affected races and they will be no worse off. Of course, us the punters get it in the neck again and its the end of 101% markets on the back side and 99% markets on the lay side, but the market place will work it out only time will tell.

actually i am wrong in my calculations so completely disregard the .5% add on.

If Betfair move offshore can they avoid the turnover charge?

There will be some offshore companies who will avoid paying, but for a myriad of reasons, Betfair will not take this route.

For starters, their licence to bet in Aust,is 50% controlled by James Packer, the owner of Crown and Burwood casinos. There is no way he would jeopardise, his status as a good corporate citizen.

I see. They moved the servers for UK customers to Gib without tarnishing their reputation. Most of the big UK bookies are there and are free to not pay the UK racing levy for their online business. These companies still have a presence on every high street in the UK.

A 1.5% turnover tax will make Betfair unusable for NSW races. If the other states follow then I cannot see how they will make it work going forward.

Froggy

In a submission in an earlier court case, Betfair stated that paying 1.5% on turnover, was the equivalent of paying 60% of gross profit. So, Betfair is still making a profit on NSW racing, albeit a much reduced one.

I'm guessing they will wait until the dust settles, and see what the other states, plan to do.

i good run down of the whole situation by the guys on the punters show yesterday - worth watching

http://www.puntersshow.com.au/index.php?_a=videos&videoId=288

Marc is spot on, black out NSW racing and show them what the real effect is - it has to happen imo

the examples of traders are crazy stuff - Betfair is out of pocket every time a trader gets a trade right - it's only on punters that they can wear the 1.5%. 

Other alternative, that has been highlighted here, is to charge traders differently

My call, wait until the the end of the autumn carnival and pull the pin for a bit

ACCC / Trade Practices Act are options but going back to court will look terrible for the company

castiron, i'm not their accountant but they may be making a gross profit however after admin, advertising costs etc etc they would making a significant net loss on NSW racing.

Castiron,

I dont know about those figures. Just looking at my figures for last week on Aust racing (dont have NSW split):

Total back stakes: £262,383.60
Total commission paid : £129.53

If racing wants 1.5% of backed stakes Betfair would have to pay them £3936 on my bets when they only got £130 from me.

A 'turnover' charge will have the affect of massively reducing 'turnover' on here. If 'turnover' drops so too will liquidity. The more illiquid Betfair becomes the less people will use it. This will lead to an ever downward spiral.

The figures you see under 'total matched' on here have never really told you much. Its just a general guide to the amount of liquidity in the market.

Anyone who wanted to damage Betfair could just self-match bets on NSW racing and thus giving them a 1.5% liability on the backs with no commission if the bets are scratched out.

This charge is likely destroy Betfair as we know it and end up producing racing less income not more from exchanges.

obviously unsustainable Frog - question is, how much extra would you be willing to pay???

Wombleoz, a turnover charge completely destroys exchanges. A punter who is a straight backer on 2% commission betting on even money shots pays about 1% of turnover in commission. Bet on odds on shots and it is much lower. To cover betfair costs commission would have to massively increase on straight backers and traders would have to go. The only way to do this is to have commission based on turnover not net winnings per Market. Do this and about 80 to 90 perc of liquidity goes overnight.

sounds spot on Frog - and is possibly why they are increasing fixed odds services - i.e. Tote Extra - so they can offset the two against each other but in the end it's just not sustainable a turnover basis

And it's precisely why a very shrewd (I can think of another word) Racing NSW brought this legislation in back in 2008. It was to destroy Betfair.

Betfair argued its case on S92 of the constitution...and as very much a 'layperson' the anti-competitive provisions of the ACCC would appear to me to be a better avenue. But I don't know if their last bolt is shot...

In the fair dinkum department BF's turnover is only the % they take !! A bookie takes the whole amount when someone loses. BF get a %. To tax them on the whole amount is against the constitution, its aginst the you know.... just the VIBE... should've had Dennis DEnuto on the case.

Agree with wombleoz, pull the pin and lets see the figures. Just figured why Dominic only did Caulfield this week. Throw some money at Dallas and get some official punters representation going. Wasted a whole lot more on lawyers so far.

RVL's figures suggest a turnover tax would raise only 1 million extra over a profits tax. They must be using a different method of working out turnover than NSW then?

I think that's spin Joel...or their modelling isn't too good!

Great pick up Harry re Dominic B. That doesn't bode well...it's only a small thing, but it now looks a lot, lot bigger to me...

And let's not forget the CEO left earlier this year.

For anyone interested, some of Dominic Beirne's thoughts for Rosehill Saturday at www.rsn.net.au/downloads Winners Thursday 5th April.

I think the fact that RVL actually seem to like Betfair these days is a good thing, they would probably work something out with them to ensure it's benificial to both parties. I think SA's & QLD's relationship is not bad either. Not so sure about WA but if they can continue to operate, just without NSW it wouldn't be so bad.

agree Joel. only thing that worried me was Rob Hines saying that whilst they support Gross it would be good for uniformity if the same approach was national...and then going onto say BF may have to change its model...or words to that effect. 

I guess it's all speculation till we hear what's going on behind the scenes. Not much fun though waiting.

any chance they pull the pin .. just before the races start tomorrow?

dont think so Nick.
That would stuff us {their customers] around too much.
I want em to do it.But we need some notice.

I can recall the Victorian breeeding lobby critical of RVL after the 3-0 Federal Court judgement. This caused RVL to backtrack and issue press releases to the effect they wished NSW Racing every success and would await the High Court case with the inference that they would go back to Betfair and renegotiate. IMO they will following NSW Racing.

If they did do a deal with Betfair, it would be a disaster for NSW Racing.

They would have to wait till after the carnival if they are going to do it imo. I hope they do, if not we are all stuffed as i doubt betfair will survive here. Promote VIC racing and NSW can run non totes in front of their 150 mill grandstand....

The markets for Saturday are well up and running.
They wont do it this week. imo.

Just to put some figures on it by looking at the UK. In the UK the levy for racing is 10.75% of gross profits from revenues from UK customers betting on British horseracing. Last year this figure was £6.5m. This implies that commission charges from UK customers was about £60m.

Last week available (19-25march) the total matched on UK racing was £177m. These means backed 'turnover' is £88m. Times this by 52 we get £1.3bn. This was taken from a quiet week with relatively low turnover.

If UK racing demanded 1.5% of this turnover Betfair would have to pay £69m a year. This is greater than their total commission revenue from UK customers betting on UK racing. THe money does not exist. The 'turnover' figures are meaningless. It is greater than 2010/11 total levy from all bookmakers which was £59.5m.

I hope that NSW racing is not merely working out its predicted revenue looking at current turnover figures. If they are they will be very disappointed with the results. If you charge on profits you encourage firms to maximise profits. This means they offer value to the customer.

If you charge by turnover it encourages betting companies to decrease turnover and raise margins. This is bad for the customer and bad for racing for its position in the rest of the gambling market. It will make betting on NSW racing expensive compared to racing elsewhere and more importantly compared to other sports and casino games. THe betting companies will promote other forms of betting instead.

Charge too much and racing will lose its market share forever.

Can still run a loss on some products, so be it if NSW racing makes them a loss, anything we win will be turned over on the sports betting anyway...

Why doesn't RVL commit to Gross Profit model, and with Betfair, target the top half a dozen players in Sydney to move their operations to Victoria. Last person to leave could turn off the lights.

Apr 5, 2012 -- 4:42AM, frog2 wrote:

Just to put some figures on it by looking at the UK. In the UK the levy for racing is 10.75% of gross profits from revenues from UK customers betting on British horseracing. Last year this figure was £6.5m. This implies that commission charges from UK customers was about £60m.Last week available (19-25march) the total matched on UK racing was £177m. These means backed 'turnover' is £88m. Times this by 52 we get £1.3bn. This was taken from a quiet week with relatively low turnover.If UK racing demanded 1.5% of this turnover Betfair would have to pay £69m a year. This is greater than their total commission revenue from UK customers betting on UK racing. THe money does not exist. The 'turnover' figures are meaningless. It is greater than 2010/11 total levy from all bookmakers which was £59.5m.I hope that NSW racing is not merely working out its predicted revenue looking at current turnover figures. If they are they will be very disappointed with the results. If you charge on profits you encourage firms to maximise profits. This means they offer value to the customer. If you charge by turnover it encourages betting companies to decrease turnover and raise margins. This is bad for the customer and bad for racing for its position in the rest of the gambling market. It will make betting on NSW racing expensive compared to racing elsewhere and more importantly compared to other sports and casino games. THe betting companies will promote other forms of betting instead.Charge too much and racing will lose its market share forever.

Good post.

I would say that BF would have made this case, as they did when the UK (BHB tried to ask for the same deal a couple of years back). I cannot believe that the Aus court didn't grasp this.

You may have seen this boys and girls...

http://racenet.com.au/news/789/78939.asp?c=1

I think as said above it's prob unfortunate it's the carnival. Otherwise the taps would have been turned off.

This announcement surely means there's little of no dialog between BF and RNSW which was my one great hope. In light of that - pull the pin!

sorry..missed the boat in the other forum... a Good Friday to all.