The premium charge is a charge aimed at winners, not traders. If Betfair had wanted to target traders they would have a model based on reciprocal betting on selections within markets- i.e. is the account backing and laying to a similar amount within a market.


im a trader and it looks like its about to him me,  THT

:(

I don't fall into any of those three and I pay it, I just lay at long odds in sports.

Betfair could stop trap bettors easily. Betfair could target traders easily. And if you are certain that the only other people on here who make PC liable money are insiders, maybe you should pass your magic radar onto Betfair so they can stop them too. It is a tax on winners, plain and simple.

There are other things that grate with this whole episode.

Betfair said they want to take money off people who immediately take money out of this site. As a layer I leave my money in here, as the bigger my bank gets, the more lays I can theoretically make. This would be another marker of traders compared to gamblers. Traders probably work off smaller banks, constantly withdrawing chunks- so why not reward people who leave large amounts of money in their accounts in some way.

There are other rewards and incentives they could offer to individuals who are wrongly affected by the charge. While treats and trinkets will not make up for the £31k I have paid out in PC so far, they would be nice. In the 8 years I have been here, the only thing I've been offered is a day at the races some 250 miles from where I live. A quick look at my account would tell them I have no interest in horse racing.

If they really didn't want to target gamblers with PC it wouldn't take long to come up with ways of, at the very least, sweetening the pill, or better still, streaming them away from it altogether.

inner city sumo, I operate i a way similar to you.
I put this question to Betfair. Although I made a lot of money on here all of it has been reinvested.

The only withdrawals I've made so far, have simply been
part of what I deposited in the first place. Despite paying close to £10k PC in 2009, I haven't actually realized a penny of the profit for myself, so obviously I cannot be draining liquidity.

Then Betfair came with the real reason, to paraphrase: "Those that win a lot and pay a small amount in total charges, will continue to bet, even if those charges are increased.".

That's fine, but rather than all that spin, I would have preferred an open and honest policy, that simply stated the real reasons for the premium charge, rather than making excuses.

Templeton Peck, what helps in lowering PC is using your money on very low or no yield strategies that you normally wouldn't consider.

The PC has the unnatural effect of rewarding you for decreasing efficiency. In betting as in investing, it's not just how much you make that matters, but also how much risk you took to make it (which gives you an idea of how sustainable your current levels of profit are).

Given a choice between winning on average:

Choice 1) £25k per month (after commission) on markets and losing £10k on markets

Choice 2) £50k per month (after commission) on markets and losing £35k

Given only this information any rational person should choose choice 1. If this person was then told how the PC works, they should choose the 'inferior' choice 2. In the case of choice 2, you would still pay PC, but not as much, and your commission rate will be lower as well.

If you pay PC, and expect to continue to pay PC, you are effectively no longer paying commission. You have instead entered into a profit share agreement with Betfair.

What this means is that as a PC payer, you can ignore the effects of commission on your bets. For instance, lets say that in a particular football game you lay 1 goal or more in total goals at 1.13. Now you have the choice to back at 1.15 or lay 0-0 in correct score at 7.6.

If you choose to lay 0-0 (which is the equivalent of backing one goal or more at slightly better than 1.15), you can ignore the loss due to commission, as this will reduce your PC by the amount that you lose.

However, if you are using large stakes relative to your total bank, this may not work, as the increase in exposure means you can't trade effectively.

Anyway, the conclusion is this:

As a PC payer, you can ignore commission. This also means that if you place a straight bet where you believe you have a 1% edge, it's worth doing (the fact that you lose after commission doesn't matter).

It gets a little more complicated than that, but that's it in a nutshell.

The premium charge is aimed fair and square at users that extract cash from the exchange so efficiently that they generate insufficient revenue to cover betfair's costs.

It's debatable whether that is even true.

In any case, some PC payers don't extract any cash from the exchange. Like I said, I have withdrawn £0.00 of my profit since joining in mid 2006.

I'm just pointing this out, not asking betfair to change anything. The charge raises uncertainty for the future. How will Betfair increase it's charges in the next few years and beyond?

Betfair is still the best betting exchange by a fairly wide margin, with or without the PC, so switching isn't a good idea (for me at least).

It is unfortunate that stealth charges are not taken into account (Betfair's cross matching for instance). It's not just 'losers' who find themselves on the wrong side of this. If I want to back at 1.03 in a market with 2 selections and I can instead lay the inverse at 34, I may choose to back at 1.03 in certain circumstances, taking into account the likelihood of my bet getting matched.

Every cloud has a silver lining, and in the case of the PC, it has spurred me on to achieve a higher commission discount rate.

The really nutty thing about the pc is this. Suppose betfair didn't deduct normal commission and just deducted/rebated after every market so that all winners paid 22.5% of their overall profits. Each Wednesday they then calculated what each person would've paid under the old system for the previous week. If that amount was more than what had already been deducted the customer would be billed for the difference.

1) Everyone would pay more or less what they're paying now.

2) The only people who wouldn't be billed on a Wednesday would be the current pc payers.

3) The current pc payers would stop moaning.

4) Everyone else would start moaning because they'd then realise they were subsidising the middlemen leeches that make up the bulk of 3).

I don't suppose any pc whingers would like to address this post.

I will say one thing in favour of premium charge. It's not right that a big winner with high turnover pays 2% commission on winning bets, and an habitual loser with medium turnover pays a higher rate of commission.

FFS what's wrong with a flat rate of 3% commission? Anyone with high turnover doing his brains can then be rebated 1/3rd of his commission over a period.

Fred, what I'm saying is that the money I have won over the years has been used to increase my bank. My bank is now many multiples of what it was when I started.

When you say extracted, I thought you meant realized, as in withdrawn. Perhaps I misunderstood you.

As I have been increasing my bank exponentially, I would say that both Betfair and myself would be better of if PC was deferred until you withdraw (realize or extract if you will). That way my bank grows faster, the amount of commission I pay increases at a faster rate, and the PC still stands at the same level. The only way Betfair lose out is if I lose everything (or at least a very large chunk) in the future. I'm making the assumption here that most PC payers, will continue paying PC in the future.

Perhaps Betfair have already factored this in, and there are other things I'm failing to consider.

Good luck with that Templeton Peck.

Just to finish of, the best possible position to be in ignoring your commission discount rate, is not to be a PC payer, but to be someone generating just over 20% commission. That way you pay the smallest part of your GP to Betfair relative to everyone else, but still get the full benefits of your commission charges.

So that they can make money by way of additional interest or commission on the money before it leaves the site. Given the choice of 'just PC' or 'Interest then PC' I'm surprised Betfair don't take the latter.

Having money in your account means it can still be lost. As they offer no rebates Betfair premium charges on the assumption that money cannot be lost. Only when it is withdrawn from here, can it not be lost on here.

I think we all know there is another reason why they don't give rebates...

Likewise the sample size on which any charge is calculated is hypocritically short, absolutely fatal in terms of alienating gamblers. They are interested in charging lifetime winners- so confident are they that these individuals are lifetime winners, that they choose to charge them on a weekly basis. If they are so confident in the abilities of these permanent winners, why such a narrow timeframe? Why not monthly, quarterly, half yearly? By doing it weekly of course they are also more likely to catch the regular punter who has a very big and flukey win.

I don't see that at all ICS. If they weren't leaving themselves open to abuse I'm sure they'd have introduced rebates and there would be no Wednesday deduction as they'd deduct/rebate pc's after each market. Making the period more than a week would make it all the more likely there'd be accounts in negative balance at settle up time.

Let's say they made the period a year. If you had a year of pc's to pay would you not be tempted to withdraw your balance before betfair docked your account? You could then open an account in a different name. While you could do that every week it's obviously a lot more trouble and you'd run out of names. If their sole intention was to catch as many people as possible they'd never have changed it to lifetime profit.

Feck N. Eejit Joined: 10 Jan 02
Replies: 1185 21 May 10 15:47 
Investor, with reference to my 09:34 post, why should pc payers have the bulk of their contributions deferred until withdrawel and not other winners? PC payers would appear to be a special case inasmuch as they pay a lower percentage of profit in commission than everyone else but why should they be made an even bigger special case? Why would betfair defer the charges for those that generally contribute zilch in real liquidity so that they can contribute 1.2 * zilch?


I'm not saying it should only be PC payers. Incentivising certain winners to keep their funds in their account would be good for many customers (and for Betfair). The only thing to consider is the likelihood that these winning customers go on to lose at a later stage. Which means that deferred charges would disappear. Naturally, this chance is much lower with PC customers than marginally profitable ones (although there are exceptions).

To work out how this could be done optimally would be quite a task, but I think Betfair would be well served in doing so. It's win-win.

Investor, you didn't address the point that most pc payers don't supply liquidity.

You could define it as sh1t if you want but it won't make it sh1t. Are you saying that if they did away with the pc so that troy would only have to pay 40K on his next million then that's an incentive to gamble BUT if troy has to pay 200K on his next million then that's an incentive to follow in his footsteps. Most gamblers were unaffected by the pc so why would gamblers consider gambling pointless because traders are being made to pay nearer to their fair share?

How does PC incentivise gambling when one week you win x, the next week you lose x, and pay up to 0.2x from the week before?

Why should I care less what Troy does or doesn't do? This charge was never implemented to catch just traders, because they can be better identified by their strategy and staking patterns rather than their win rate. It is a charge for anyone who wins at a certain rate.

As a gambler I find that the existence of the charge makes me want to avoid a gambling strategy that involves peaks and troughs. It reduces the incentive to take risks and persist with a strategy with peaks and troughs because as a gambler there is nothing to say I will never hit that damning succession of troughs. In that sense I would gladly swap what I do now for something with far less risk, something where you can calculate exactly what is going on, a 20% charge on every green screen you create.

But if I do wipeout I will have paid all that PC on the assumption I am a lifetime winner when I am not!

Similarly, I think the moment you start believing it's impossible to lose, or that you will always be able to make money then you really are in trouble. There are plenty of things that can go wrong. The money in my account is not truly won money until it is out of the account!

And there will be someone who has paid 99.99% of their winnings in commission- are you really saying everyone should pay the same rate?

The fact that people pay different rates out of their winnings is not a justification for the charge. You follow that to the logical conclusion then no one will be allowed to win at all because there will always be someone paying more of their winnings in commission than you. When the charge goes up to 80% you could be on the other side of this having this conversation with Mr 99.99%.

Yes, you are in a worse position than me. And there are people in a worse position than you- where do you draw the line though because you can keep on moving it until the point where the whole endeavour is pointless.

I've actually only been relatively profitable in the last 21 months, I was only allocated an account manager a year ago, so if anything I would have been paying a much higher rate of commission than you for at least six of my years here, and a lot of the time I was operating at a loss.

I've not looked at the other thread yet. I will when this one has died down. By the sounds of the title it sounds similar to what I have mentioned earlier regarding being able to identify traders from the reciprocity of their bets.