General Betting
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"Betfair Plc's insatiable appetite for short-term profit appears to know no bounds. The once innovative 5% flat-rate online betting exchange first ramped up its transaction charges in 2008 with the introduction of a 20% Premium Tax on client gross profits, and have today announced their intention to up this effective commission rate to an eye watering 60% on a sliding scale from July 18th. In essence if you have failed to generate commission of at least 60% of your gross profits over the lifetime of your account, over and above a certain threshold, Betfair will dip their hand into your wallet and reclaim the difference. Customers will be left facing 100% of the liability of the bets they place, however may only retain 40% of the winnings resulting from these wagers. Considering that client winnings are derived directly from other customers - Betfair merely providing the exchange platform - these exorbitant charges (the highest transaction charges of any exchange, sports or otherwise, in the world) represent the most flagrant abuse of a near monopoly that I have ever witnessed, and I wholeheartedly believe that a legislative cap ought to be put in place to protect this company’s end users from falling victim to unadulterated corporate greed. A legislative bill forbidding online betting exchanges operating in the United Kingdom from charging commission rates in excess of “a reasonable %” should suffice to ensure a fair playing field for all stakeholders involved. Without such a cap Betfair will no doubt continue to exploit its "near monopoly status" (the words of Betfair co-founder Andrew Black) in the industry at the expense of the people who ultimately built their £1bn empire - its customers."
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If the government finds out the truth of how much a lot of people make out of betfair then they will have betfairs Premium charge as income tax. If I were you I would keep quiet as far as alerting the government. The best us winners can hope for is that betfairs plan backfires and **** grows liquidity wise into a viable alternative.
KC is absolutely correct. We can't really rely on anyone to help us out of this situation, and given the regulatory environment, which is changing in other countries, need to be careful we don't do more harm than good.
The games over, if a tax isn't introduced over the next few years then any alternative such as Betdak can only eventually go down the same route as Betfair
some sensible comments above - the Competition Commission will not be remotely interested in this and there are probably more MP's than 60% players on here - less than 1 per constituency!
The argument should be with betfair and if government were to get involved then the taxation aspect can come into play in difficult times for the economy.
The argument should be with betfair and if government were to get involved then the taxation aspect can come into play in difficult times for the economy.
There would seem to be two avenues:
1. Shareholders to kick up a stink at the AGM (particularly if this starts to hit liquity/profits)
2. Someone who is affected by these charges to take BF to court. I said this when the original charges were introduced that they are unfair and should be subject to legal challenge. The reason is this:
There are no rebates for losing periods. Example:
Johnny Bigbucks has a stonking good year and wins 250k net profit. Betfair say thanks very much, we'll have 60% of that - i.e. 150k. Next year, things take a turn for the worse and Johnny loses 250k.
So his net p/l over the two year period is £0.
But he's paid 150k to Betfair and is therefore -£150k.
Betfair should rebate him the 150k because over the two year period he has not met their threshold of being over 250k up.
As far as I understand however (unfortunately I have not been profitable enough to qualify for the pc), there is no rebate. Its just tough luck Johnny.
This charge is acutally worse than being taxed by the govt, as the top rate of income tax is 50%, you would be entitled to deduct costs and you would get rebates. Not to mention of course that if you earned over 250k you could probably hire decent tax lawyers to reduce your liabilities somewhat, or even just move Jersey.
1. Shareholders to kick up a stink at the AGM (particularly if this starts to hit liquity/profits)
2. Someone who is affected by these charges to take BF to court. I said this when the original charges were introduced that they are unfair and should be subject to legal challenge. The reason is this:
There are no rebates for losing periods. Example:
Johnny Bigbucks has a stonking good year and wins 250k net profit. Betfair say thanks very much, we'll have 60% of that - i.e. 150k. Next year, things take a turn for the worse and Johnny loses 250k.
So his net p/l over the two year period is £0.
But he's paid 150k to Betfair and is therefore -£150k.
Betfair should rebate him the 150k because over the two year period he has not met their threshold of being over 250k up.
As far as I understand however (unfortunately I have not been profitable enough to qualify for the pc), there is no rebate. Its just tough luck Johnny.
This charge is acutally worse than being taxed by the govt, as the top rate of income tax is 50%, you would be entitled to deduct costs and you would get rebates. Not to mention of course that if you earned over 250k you could probably hire decent tax lawyers to reduce your liabilities somewhat, or even just move Jersey.
Option 1 is entirely reasonable Alan.
Option 2 is an utter waste of time imo and the very clever people on here who make large sums of money will surely realise that. The 500 or so that are affected by this can go elsewhere or pack it in if they are unhappy about the new pc - or stay here and live with lower profits. Everything else is largely hot air.
Option 2 is an utter waste of time imo and the very clever people on here who make large sums of money will surely realise that. The 500 or so that are affected by this can go elsewhere or pack it in if they are unhappy about the new pc - or stay here and live with lower profits. Everything else is largely hot air.
Alan, it's all very well making up hypothetical cases to demonstrate how bad the charge might be but Johnny Bigbucks doesn't exist, the scenario you've created is absurd and your maths is wrong!
"In essence if you have failed to generate commission of at least 60% of your gross profits over the lifetime of your account, over and above a certain threshold, Betfair will dip their hand into your wallet and reclaim the difference."
This is not true. If you are to pay 60% they assume you have always paid it. They will only charge if your future betting doesn't generate 60%, not the past.
This is not true. If you are to pay 60% they assume you have always paid it. They will only charge if your future betting doesn't generate 60%, not the past.
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