After pointing out that I was a liquidity provider rather than a liquidity drainer, I received the following email from Betfair. Draining of liquidity takes place when money is withdrawn and not used on the exchange, not when it is won.
Feel free to assume that any changes to the PC either now or in the past, will increase the take for Betfair:


Please be advised that there is no current discrepancy. When someone wins on Betfair, they will continue to bet on Betfair. If they keep winning they will continue to use our exchange. When they lose they will bet less. If they keep losing they will eventually leave Betfair.

The people that continually win, such as yourself, can only win if Betfair continue to develop the exchange and continue to bring new users in. If we did not do this, then your bets would not get matched and you not be able to win. Therefore, winners cost Betfair more than losers.

For this reason the premium charge has been introduced and those customers who win continually have to pay slightly extra [sic] so we can maintain the level of liquidity that we offer.

I would say that if there was no PC, liquidity would be better. However, there is one thing that may stop this being true, that's the fact that PC payers can profit from any margin no matter how small, that others can't profit from.

A focus on liquidity drain rather than profit would be good. Someone that makes a lot of money and continues to bet larger and larger (like me [;)]) is obviously more valuable than someone winning an equal amount that is not growing and withdrawing all profit. The reason being that Betfair's take increases over time rather than remaining stable, and liquidity is improved by a lack of withdrawals, and consistent use of funds to bet with.

I think we can say Pythia was wrong, and I'm sure he would be apologising profusely if he did come across your question.

Pythia Joined: 07 Sep 05
Replies: 19 10 Oct 09 17:17   
People seem to think that because the allowance has been amended they will pay more but the evidence we have, when examing all accounts, suggests this won't be the case because of earlier betting patterns.

I don't dispute some people will pay more but they're mainly those customers who will no longer be able to offset transaction charges or have a betting strategy that won't benefit from the new changes - these numbers look like being fewer than a couple of hundred or so accounts and are primarily linked to people betting in fewer than 250 markets pa. It could, of course, be that I am missing something and I'll double check with the PC team on Monday morning.

The changes do take about 15% of people out of the PC net and will, overall, result in Betfair making 15% less revenue from the PC than last year.

I completely get why some people want to present this as a price rise but for the vast majority of PC payers it isn't. The fact that 30 or 40 people have been particularly vocal on here - many of whom were also similarly vocal last year - is something we, of course, take note of but it doesn not reflect the views of the vast majority of Betfair customers or even the consensus view of those customers who have paid the premium charge.

There was a lot of scaremongering about the charge, when introduced, last year, and many of those responsible for that are at it again this time around. The facts remain that from a customer base now exceeding 2.5 million and an actives base of 600k plus on the exchange, the people paying the PC total something around the 2,000 mark - I don't have precise figure but it isn't far of that number.

From my own point of view, I'm not going to engage with customers who I know to be posting deliberately misleading comments about their own activity on Betfair. I am certainly not suggesting you are one of those customers but there are plenty around and it is simply a fruitless waste of time to engage with those guys if they're not being straight with their comments.

In the end, everyone has the choice to say what they like on here and to decide whether to bet with us or not. Betfair is far from a monopoly, has to exist in a very competitive market place and if we're charging people too much for the service we offer then we will inevitably lose their business. I hope we're not doing that and our customers still recognise that Betfair charges fair and competitive prices for the service it offers. 

I know you said you'd get back to us on Monday, but I'm starting to think you've forgotten.

A few variables have changed a touch, could you just confirm we're still going to be paying less.

Thanks.

plenty of other Betfair plants are present but funnily enough they won't admit to being a betfair representative[:x]

Interesting Piece, just stumbled across this site. http://www.thesocialgambler.com/2011/06/29/greedy-betfair-stick-two-fingers-up-at-loyal-customers-again/

"Please be advised that there is no current discrepancy. When someone wins on Betfair, they will continue to bet on Betfair. If they keep winning they will continue to use our exchange."

I think they will find out that this is not the case

"The people that continually win, such as yourself, can only win if Betfair continue to develop the exchange and continue to bring new users in. If we did not do this, then your bets would not get matched and you not be able to win. Therefore, winners cost Betfair more than losers."

If winners didnt continually try and improve their edge, spend money on software, hardware and subscribe to certain publications they wouldn't be in a position where they could stick offers up on markets and entice customers into Betfair by offering better prices than available at the bookies and enable Betfair to make any money at all.

POT KETTLE ETC

Pythia 2008

"I work for Betfair although am not an apologist for it. However, the claims being made that all Betfair is out to do is rip-off punters has to be challenged. As does the absurd claims that most winning punters are being asked to pay commission and then an arbitrary 20% ‘tax’ (as people have referred to it as) on top of that.

The people being asked to pay the premium charge are, on the whole, those guys who take more out of the exchange than it costs the company to bring in new customers to compete with them. Even assuming, as some folks on here seem to want, there was a mass migration to ****** or another exchange, that exchange would be faced with the same issues Betfair has a few years down the line.

The exchange eco system is a relatively new one and just because this company came up with a pricing structure a few years ago that has remianed pretty much unchanged, and also been adopted by other betting exchanges, it doesn’t mean that this structure shouldn’t evolve over time.


People can take a view about whether charging fewer than 500 winning customers out of more than 110,000 exchange punters, last week, is the right move for the overall health of the exchange. But to suggest that Betfair is intent on forever putting up prices and charging whatever it can get away with is risible.

It is in the best interest of the company to do what it thinks best for the overall benefit of all of its customers and using money raised from the premium or any other charges to reinvest in the product -and in marketing and offers to attract new and retain exisitng customers – is a business decision I, for one, think is right.

Where the company hasn’t done so well, imo, is in how it has communicated information on the new charge to some customers. Lots of people seem to think the day will come when they will be asked to pay the new charge even though there is no prospect of this happening. Some of the misinformation has been spread about by people with a vested interest in either pushing their own agenda or in damaging Betfair but it is fair to say that the company could have done a better job in explaining itself too."

"But to suggest that Betfair is intent on forever putting up prices and charging whatever it can get away with is risible"

Nope, far from being risible it is in fact 100% spot on.

I kind of see this raise in premium charges as balancing the socialist books, redistributing the wealth from the successful punters to rewards less successful

  So you do consider Betfair share holders to be among the less successful ??

Leinster is a COMPANY MAN. I hope im on the streets before I become one of those.

TTT