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Stephen Morana`s (BF Financial Director) view of his customers....
Stephen Morana`s (BF Financial Director) view of his customers....
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Askari, I have not asked if they have the intention to be a bookmaker. I have asked: "Since when are they 'officially' a bookmaker?"
If they want to be a bookmaker please do so. Feed the markets, close the exchange, open a regular bookmaker, etc, etc. But selling (and defending) that the PC has to do with the protection of losing customers, with helping losing customers to lose more slowly and all the bla, bla, bla ... is ridiculous ... |
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The real trouble with all this debate is that nobody really seems to know the actual facts underlying the economics of running a gambling exchange business model.
Maybe somebody outside of the very senior echelons of BFis privy to that, I don't know, but I haven't seen anybody put up any good facts on it on here. Perhaps it's all as simple as saying that if somebody bets a certain amount of turnover through BF then unless he/she generates charges in excess of x% of that turnover, he/she is not paying their way. If that figure, that is charges to turnover, is even just( say) 10%, then it's hard to imagine anybody on a very low charges/GP ratio would be paying their way. |
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The underlying economics of running an exchange are well known. You pay a price per transaction and the transaction has a minimum size.
Before gambling exchanges started, stock exchanges have long set the model and it is clear and profitable. Believing that the money flowing through the exchange belongs to the exchange owners has nothing to do with the economics of running an exchange. |
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Are betfair themselves paying their way?
Betfair's counsel, Alan Robertson SC, declared that his low-margin client got a raw deal because the turnover fee equated to a tax of more than 50 per cent on the revenue Betfair earned http://www.smh.com.au/news/sport/horseracing/betfairs-lowmargin-business-structure-is-flawed-says-racing-nsw/2009/11/18/1258219882900.html Gross profit is key as is it being re-evaluated on an ongoing basis. Betfair would have a fit if 8 year old profit affected this years corporation tax |
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I remember when they threw the hissy fit about that, it was just after one of the PC hikes/introduction
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So would players who are have a betting strategy that generates a very low charges to GP ratio be paying their way?.
It would seem to me that the only way you can generate a very low charges/GP ratio is to bet relatively selectively, picking off good prices if and when you see them. That is relatively very low turnover but getting high profits, which are many cases withdrawn from the pool of betting funds, never to be seen on the BF site again. Is that sustainable ? |
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Duncan, first, it's not my preference--I'm not defending the pc and in point of fact, my strategy is not that different from yrs, though I also arb and take straight backs, usually not on bf.
From bf's point of view, yr price-sensitive strategy is taking from bf and from their losing client base w/out giving enough back. If you cd guarantee to be in the market at any time and for any runner, you wd be offering some sort of valuable service--but you (and I) don't: that's not how we operate (we're too price-sensitive) and too small. Better for bf to match the losers' bets themselves or (given labour costs) to delegate it to some party who churns more and gives them a better share of their gross. In other words, I'm not sure that the management is so stupid. |
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Fine as frog hair - yes betfair have obviously an obligation to ensure every punter pays his fair commission/charges, but 60% (62.5+% in reality). That figure is arrived at not from negotiation or from looking at competitive pricing, its a monopoly making a killing.
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saint-pilgrim, they are a bookmaker on every calculation of tax or levy payments (they're no longer bound to pay the last, but do on a bookmaker basis).
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Must see the london stock exchange try that one with their most sucessfull gamblers, "we are taking up to 60% of your profits as you are draining liquidity from here"
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askari betfair have moved their operation to gibraltar to take advantage of their better tax/charges regime, it must be assumed that betfair likewise respect any client who wishes to move their operation to take advantage of better taxes/charges.
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Saint-Pilgrim
Are the economics of running a gambling exchange really the same as running a stock exchange. In the former there is a one off exchange of money. It could all just there and then, particularly if one player then decides to quit while ahead. In the stock market the money roundabout is guaranteed to go on and on as shares are sold onto other parties ( new and old)coming into the picture all the time. |
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Is the stock exchange charge not on turnover? If it is then there's no point in anyone using it as a comparison as we already know a charge on turnover would mean the majority of Ferengi wouldn't be able to make a profit far less 40% of a profit.
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FATH, they have moved the goalposts w/ the new pc so radically that the implication must be that one of their previous stances (either 1) that winners paying more than 20% profits in charges funded bf's maintenance and advertising costs or 2) that lifetime winners can avoid the pc but cost the company) has to be wrong.
I am pretty sure they were right first time. In terms of generating commission and covering bf's corporate expenditure, the new pc payers 'pay their way'--but bf see a financial advantage for themselves in putting them these offers by some other means. |
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"as we already know a charge on turnover would mean the majority of Ferengi wouldn't be able to make a profit far less 40% of a profit"
Er, we don't actually know anything of the sort, you cutting and pasting the same post on lots of different threads and presenting it as a fact doesn't count, sorry |
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askari1
03 Jul 11 15:30 Joined: 29 Nov 01 | Topic/replies: 809 | Blogger: askari1's blog Duncan, first, it's not my preference--I'm not defending the pc and in point of fact, my strategy is not that different from yrs, though I also arb and take straight backs, usually not on bf. From bf's point of view, yr price-sensitive strategy is taking from bf and from their losing client base w/out giving enough back. If you cd guarantee to be in the market at any time and for any runner, you wd be offering some sort of valuable service--but you (and I) don't: that's not how we operate (we're too price-sensitive) and too small. Better for bf to match the losers' bets themselves or (given labour costs) to delegate it to some party who churns more and gives them a better share of their gross. In other words, I'm not sure that the management is so stupid. ------------------------------------------------------------------- Really Askari ?...you mean to say that Wray and Black never considered that people might win on here ? When they set the comm they never factored it in ? Come off it ! You are presenting an even handed (if misguided)argument and that I respect...but you still avoid the nasty unpalateable truth... BETFAIR LIKE ALL GAMBLING COMPANIES ARE NOW OF THE OPINION THAT PUNTERS SHOULD NOT BE PERMITTED TO WIN. THe 250K band will drop and will drop further...that is the only way profits will grow and they know that. This is no longer about a fair deal for punters and layers on here, I don`t give a second`s thought to shoring up BF profits and whether I am costing (aye right) them money. I and everyone else on here registered for what was available. It is no longer so..the goalposts have been moved, and continue to move until someone can launch an exchange model that is fair to both the company and punter. If that were to happen it will be goodnight BF literally in a flash and nobody will shred a single tear for them. |
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some exchanges pay Ferengi for their services in market making and liquidity. liquidity rebates
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A good thread,but can you imagine a newbie fancying his chanches and depositing 5k for example. If he heard that the shrewdies were on this forum and read this read, he'd be heading for the withdraw button as I post...
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Some exchanges charge them practically fk all on hundreds of bets placed in the course of a tournament. That's their choice. Betfair have at least finally realised that the vast majority of these ponces, who delude themselves that their intelligence is proportional to their profits, contribute zilch.
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I can`t imagine anyone joining the exchange after reading the forum Stewarty b...can you ??
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Duncan, we all have our different strategies. Luckily for me I can be accomadated elswhere for a good proportion of my bets. Even now you can start at 2.5% commission.
BF lie through their teeth even more now with their '20% better odds' adverts. I for one wouldn't weep if they went bust. And make no mistake, that's not beyond the realms of possibility. |
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Why do people talk about "shares" when comparing a stock exchange with the betting exchange?
Haven't any of you traded futures? A future has a start date/time, an end date/time and can backed and layed, just like any regular bet. It is 100% comparable to a betting exchange. As discussed above, Bf chose not to charge on a per transaction basis based on quantums or % of the size. Initially they were a "web page" but as soon as they introduced the API they could have introduced that model. And even now such a pricing model could have been introduced. It's not what they have done, because they have opted for the: "most money going through the exchange belongs to us and we will keep it" |
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Their shares have already halved in price. What would happen if they hit 75p ???? The taxpayer wont bail them out.....
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DD, stewarty and Feck. What do you think of my solution?
Obvious too late now tha bird has flown mind. |
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Totally agree Stewarty. I too hope to be accommodated across the road...but in running horses looks a problem there.. at least at present.
What is absolutely clear is that if this doesn`t cause a mass exodus then nothing will and Betfair will pat themselves on their collective backs knowing that NOTHING will shift those making it pay on here except account closure. The three card trick will then be easier to inflict on the unaffected at present innocents. |
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Are you talking about the transaction charge post Clydebank? If so I'd need to know more.
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spelled it out on a separate thread feck
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02 Jul 11 17:43
Joined: 10 Jan 02 | Topic/replies: 1,677 | Blogger: CLYDEBANK29's blog askari I was explaining why Betfair was initially successful...people saw the opportunity to make money in a totally free market. Having no transaction charges is essential for beginners and newbies and in general but if someone is making too much money without offering enough in return(in Bfs view) it is a far better tool, where the detail can be honed to target the right individuals and also you can discriminate between markets such that markets where there is no liquidity don't incur transaction charges. It would even up the balance betweeb gamblers and traders, it would be harder to avoid, there would be no sense that the company was stealing your profits, with each bet placed you'd know where you stood and there would be none of this sequential nonsense. Much much much better. --------------------------------------- Clydebank...there are many worthy suggested ways of gaining revenue by other methods...I suggested the actual comm table being turned upside down whereby beginners start @ 2% and the PC payers @5% this increasing if you commit a crime like winning more than BF will allow [smiley:crazy] this encourages losers and break levellers who are doing nothing more than filling BF coffers. Your suggestion is just as effective...targeting the winners who are causing such grief to this poor exchange. I also like your idea of distinguishing certain markets for attention...I recall eg the Total Goals was 2% for years before BF woke up to the error of giving the punters a wee bonus now and then. I repeat I have no problem with BF trying to increase profitability, but this can only be done without the ill thought out monstrosity that is the premium charge ( I will no longer give it capital letters as it is unworthy...[:p] ) But as you rightly say...too late now, the iron lady is not for turning. |
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Duncan, I agree the ir is not the best there. However,backing and laying wise, what's to stop the big hitters on here, say , trying their hand to get matched for say 30% of their stakes???
I suggested this on another thread, but got little response. If they don't get matched to their satisfaction, fair enough, they always have here. If they did, which I personally think they would, ir would eventually take off imho. |
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Absolutely right Stewarty....but would you bet on the big hitters or even the former 20% payers defecting in total numbers ?
It hasn`t happened yet and I am far from confident that this site will look any different from July 18. Only when they discover the enormous effect on their (the punters) figures after a decent amount of time will they suddenly wake up and admit that the maths can never add up. |
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I suggested the actual comm table being turned upside down whereby beginners start @ 2% and the PC payers @5% this increasing if you commit a crime like winning more than BF will allow
Duncan, that cannot work as it would deter liquidity. As someone pointed out earlier you're choosing that because you have few losing markets. |
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Duncan, from what I've heard there's a handful of accounts that contribute more than 50% of horse racing liquidity. I'd imagine they'd all be price sensitive bot players and the 40% figure would've been chosen because it wouldn't affect them. While they're around the recreational players will be serviced one way or the other so the likes of ourselves are dispensable. As value players the likeliehood is we'd be going in the same direction as those big players anyway. Very few "gamblers" like ourselves will be affected by these charges and betfair now realise that, provided the main players are still here to service the recreational gamblers, the Ferengi can do them no damage outside of bad mouthing them (something they did for a third of the price anyway).
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Duncan, when you say
BETFAIR LIKE ALL GAMBLING COMPANIES ARE NOW OF THE OPINION THAT PUNTERS SHOULD NOT BE PERMITTED TO WIN. you're right, I agree w/ you, if by punters you mean souped-up recreational players like you and me. As to whether Wray and Black anticipated people making a living off their site, I seriously doubt they anticipated the success of automated strategies or of certain players occupying liquidity-draining niches like fast pics and the market-making advantage (manipulating the delay in IR sports). Anyone w/ an economics or intellectual background is more likely to have thought that exchange markets wd tend towards equilibria, such that all players exchanged money between themselves. |
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Duncan, I didn't agree with the 20% and eventually purple took advantage and offered 2.5% commission. (they still do) I don't agree with the 40 - 60% Dick Turpin.
Having said that, I've never paid the PC charge and never will. (unless it's a maximum of once). I know a trader on here who was informed he'd have to pay the 60% now. He's packing in on the 18th. I also know a punter who will now have to pay 40% I took a stand on principle, some punters seem to be 'content' with 40% as long as their winning. Mind boggling. |
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I'd imagine they'd all be price sensitive bot players and the 40% figure would've been chosen because it wouldn't affect them.
Sorry The EDGroup...why are you so certain that they won`t be affected by the 40% ? I don`t pretend to understand the implications totally but am baffled by that ! As for me personally if I lay 25 losers in a row and then one hit takes it all back and I am level having paid x comm where does it necessarily follow that I am better off with an increased comm charge at say 6% than the premium charge ? This pattern repeated would hardly be in my long term interests would it ? |
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Having the main players on 6% certainly wouldn't be in betfair's or your long term interests Duncan.
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Another thing that puzzles me.
There must 'big" winners who probably don't make any markets. They just selectively bet based on certain stats they have compiled. Now they would not be generating large earnings relative to GP. BF presumably doesn't want them " as is", because they're just bleeding the pool of other punters' funds drier and drier. But there can surely be no " BF becoming a bookmaker " agenda in BF hitting them with the PC. They're not even setting prices. And BF cannot even necessarily reverse engineer their successful betting strategies to replicate their success. |
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The_E_Dead_Group
03 Jul 11 17:08 Joined: 21 Jun 11 | Topic/replies: 89 | Blogger: The_E_Dead_Group's blog Duncan, from what I've heard there's a handful of accounts that contribute more than 50% of horse racing liquidity. Don't know where you heard that cracker Feck, but that is certainly not true. |
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Sait Pilgrim
Again I question the straight comparison of betting exchanges to futures exchanges. The latter is used by many as a corollary to other investing activities in stocks, bonds etc. It is not a stand alone activity. Liquidity in it is an ever growing factor, created organically by the world econony. On the other hand, The gambling arena is essentially a recreational one, in which a "relatively" few clever, sophisticated players are participating in. If these relatively few sophisticated players start to threaten the overall viability of the exchange by taking out more than they effectively contribute, then it has to be stopped in its tracks and fast. |
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2 reliable sources stewarty. The Hong Kong mob and the big oz player would be two of them.
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