General Betting
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The premium charge was a clear admission that a tiny percentage of Betfair's users were sucking out a grossly disproportionate amount of the money. A flat-rate tax, though, probably just made them suck a little harder, albeit with Betfair trousering some of the proceeds. It did not address the fox-versus-chicken problem that may – repeat, may – come to be seen as exchange betting's major flaw.
Betfair, in this analysis, is a chicken house inhabited by several million birds and a handful of foxes. Some chickens are better than others at avoiding their inevitable fate – some indeed simply offer themselves up for slaughter – but no matter how much you run or hide, Mr Fox will get round to you in the end. Then, one day, there are no more chickens, and the foxes eat each other, or starve.
Greg obviously sees consistent winners as a problem for Betfair, even though these people must be paying a lot of commission. And the article suggests that the PC would have been a success, if only it had been able to drive the consistent winners away from Betfair.
Betfair, in this analysis, is a chicken house inhabited by several million birds and a handful of foxes. Some chickens are better than others at avoiding their inevitable fate – some indeed simply offer themselves up for slaughter – but no matter how much you run or hide, Mr Fox will get round to you in the end. Then, one day, there are no more chickens, and the foxes eat each other, or starve.
Greg obviously sees consistent winners as a problem for Betfair, even though these people must be paying a lot of commission. And the article suggests that the PC would have been a success, if only it had been able to drive the consistent winners away from Betfair.
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You could say same about Ladcrokes or Hills or any bookies. Why to chickens go to high street shops when they are long term losers and the fox is inviting them in?
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http://www.guardian.co.uk/sport/blog/2010/sep/14/betfair-flotation-betting-america very woolly imo. |
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Not chickens and foxes. We are cannibals.
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And this is what Greg Wood said on 9 Sept 2008, when he seemed to be against the very idea of the charge:
The loyalty of some customers may be tested to the limit, however, by Betfair's decision, announced yesterday, to introduce "premium charges" for some of their biggest winners. Betfair insists that the new charges will affect "less than 0.5%" of its customers, but still seems to stand in complete contradiction to the company's oft-repeated boast that this is a place "where winners are welcome". |
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Yeah stupid anology more i think of it and lack of understanding of how exchanges work and why people bet.
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two things:
how do bookmakers make their money? do they run out of chickens as well? and any serious article on betfair's future should mention what's happened in france and could happen in other parts of europe. |
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sorry brendan - didn't see your post.
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DStyle how do bookies make their money .. Simple they close winning accounts .. they dont care if your are a chicken or a fox .
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What Greg Wood doesn't realise is that by and large big winners dont pay premium charges, it's predominantly small winners.
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Good article I thought. Would like to see some mention of on course track players and also any possible levy increase on betfair will be interesting.
Clydebank - some on course in running players are paying absolute fortunes in premium charge. Well into four figures a week. |
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heynoodles as you increase your stakes your rate of returns decreases. Unless you are bettin markets where liquidity is low and the rate of return decreases very rapidly (like me for the most part)you are being very inefficient if you end up paying premium charges, as you should be increasing your stakes at least to the level where your returns are at a level where premium charges don't apply, which in itself is a significant notch below breaking even. The biggest winners will have million pound resources such that wiping out a big percentage of their bank with a bad run is not a factor. Possibly the most successful gambler in the world is a fellow by the name of Zeljko Ranogajec who allegedly bets $1bn a year based on on returns of 1% and 2%.
Betfair gave the game away with their statements and answers at the latest premium charge update session. |
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CLYDEBANK29 Joined: 10 Jan 02
Replies: 1110 14 Sep 10 12:12 What Greg Wood doesn't realise is that by and large big winners dont pay premium charges, it's predominantly small winners. In fairness, the list of things he doesn't realise seems to be rather long. |
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That said, the rest of the article is probably above average as such articles go.
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*Also credit to him for answering comments on his article, not many do that in this day and age and industry.
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The reason Betfair succeeds is because nearly every chicken thinks he's a fox.
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^^^ very good
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Surely if you had several million chickens and only a handful of foxes, then the chickens would actually reproduce quicker than the foxes could eat them?
The fact that all these `chickens` in the analogy all actually earn money elsewhere means it is a sustainable, reproducing resource. The fact that the bookmaking foxes have been around a lot longer and continue to feed heartily suggests the analogy is flawed. |
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Agreed. And I don't have eggs coming out of backside.
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It's also not allowing for the fact that a chicken can win by luck alone, just as people win the lottery.
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I have to confess something came out of my backside when Nadal broke first game last night.
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betfair will carry on being sustainable if it continues to have a steady flow of newly hatched chickens
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and something else i've noticed, the chickens make the most noise
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There is one born every minute. But these won't make any difference to the liquidity, if the market makers have gone elsewhere, due to the Premium Charge. I have found that, somewhere else, I am now getting football bets matched on the Asian Handicap (and paying only 2% commission). Also my antepost Cheltenham lays are getting matched (admittedly to small amounts). I now just use Betfair for those antepost markets which are not covered in other places and in which I have a very good chance of having a fully green book on the day of the race (which is not many).
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^some of the old codger chickens are dying off though
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That's one of the dumbest analogies I have ever seen.
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Laying is the way forward for chickens.
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Very good Marksman. Almost eggselent.
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Seriously though I think the analogy is spot on in certain respects.
Except for the fact that one day there will be no more chickens to eat. The supply is endless, as long as humans dream and hope. |
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Two years ago, Betfair started eating some of the foxes. Now the chickens are a little safer, but there is not enough seed in the markets, so they are feeding elsewhere.
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Yes, there has been a suspicion,for several years now, that, on the big farm with the purple gates, seeding takes place.
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Does the seed not pass between the Big red farm, and the purple n blue farm... ?
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we have chickens and foxes, what about fox hunters?? betfair maybe?? :)
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Sounds like we should call it Betfarm now ?
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Right im off to set up betfarm website for face book.
I saw today a company advertising "Forex" on face book. Talk about MUG money. |
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Yep we need a site where all the little piggies can put their snouts in the trough.
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It strikes me as one of the better-informed articles about exchange betting.
As for the glib notion that 'there's one born every mminute,' so it doesn't really matter if a tiny number of insiders are bleeding the mugs dry, a couple of points occur to me. Firstly, any business can lose customers faster than they can be replaced. And the PC seems to be an admission that Betfair is facing that challenge. Secondly, even if overall liquidity levels remain identical over time, the nature of that liquidity will change. My generation of punters were reared on horseracing. But guys having their first bet today are much more likely to focus on soccer or maybe even online poker. That's irrelevant to Betfair, but it should be setting alarm bells ringing within racing and other sports where, if the core support is wiped out, there'll be nothing coming along to replace it. |
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I've always though that Horse racing is an odd thing to bet on .
I say this because i guess there is little emotional attachment to a random horse in a race . I can understand perhaps a Sunderland fan betting a tenner on his team to win (or even lose)to create a little 'extra excitement' or ( 'insurance' ) In other words ,would anyone watch racing if betting didn't exist ? If the answer is no, and sports such as soccer and even tennis are increasingly taking the betting slice of the pie , then how much longer can Racing sustain itself ? |
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I had a go on the purple but the liquidity is pathetic , just suck it up as they say in Alabama.
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Coachbuster, there is a lot of emotional attachment. The public love certain horses, esp. in NH.
Attachments also builds up over a series of bets placed by individuals. Punters think, 'I lost a tenner when this beat me last time, I'll get it back when the beast runs again'. Horse race bettors bet in part for the experience of betting, not just for the monetary rewards. |