Looks like PC payers are planning to stay and churn the markets instead

your right its the only thing we can do,but it still has its drawbacks.

Thanks for your honesty, luloo. I have no doubt that is the plan of most despite their public displays of "I'm leaving", "betfair is finished". We all know that most are planning to stay and are hoping the competition leaves and leaves the way open for them.

The ironic thing about this, is that those who do pay their fair whack of commision are going to see reduced profits due to the new competition and more efficient markets. While at the same time giving betfair the more efficent pricing and hedging ability for the new sportsbook.

The pc charges will affect everyone in some ways but most will not understand why.The betfair traders will have a big advantage if all the pc payers pack it in,at the moment they come second,how can some one working on a wage for betfair beat the pros.The unfair tax will surley give them the edge.

I've already been doing this to minimise the original PC!

Who is going to stay
--------------------
Tick merchants : will stay. No other better place for them
Insiders: will stay
courtsiders: will stay
Bots : will stay. No other choice. They will stay even if betfair charge them 90%
Fast picture sweepers: will stay
1000 layers and after event(horse falls, match finishes) 1.01 backers : will stay

for above categories of people they are getting almost risk free money. so they won't bother with new rules

who will leave
--------------
risk taking punters: for the commission they have to pay the risk is not worth to take
genuine punters: will leave
genuine layers: will leave
Infact anyone who operate without help of bots or automation or fast pictures or inside information need to take risk to bet. The risk they take may not be valuable to bet on betfair in future. I belong to this category and will stop betting with betfair in future.

betting_quant, I'm sure yr analysis is correct. The pc-evading tactics of players discriminating about what bets they will take will already have eaten into the profits of the suppliers paying more than bf asked for in comm. (as a proportion of winnings).

The changes will be designed at driving out the first lot. But if they stick around, what will happen to the profitability of the operators like Betting Promotions w/ guaranteed supplier terms w/ bf?

Will only High St. and other bookmakers using bf as a hedging mechanism (often IR) be left?

My concern is that the Purple ones are not ready for a huge influx of customers, you would have thought that they would be bombarding us with propaganda to urge a move, all I have received is an e-mail about poker from them. They just couldn't cope and they know it.

need to start making close to 0% arbs to get myself away from the PC charges

What is the logic behind this. I would've thought arbing would've reduced pc's.

Interesting summary UK25 ..I guess some will be looking at old jobs /new patures ,what will be next for you ?

u25k, good analysis.

Clearly bf need an economist to explain to them what happens when when risk takers leave a market.

u25k not trying to nit pick but wanted to know how you define genuine punters and genuine layers?

Same thing to me.

I want to classify into two types risk taking and non-risk taking. Anyone who takes risk and successful are now forced to leave. Non-risk taking betfarians will stay and going no where.

There wont be any but the a few of the biggest of the 480 doing any churning imo.  Most of the 480 will be non automated and wont do much if any churning.  Those that are big and are automated and use the API will probably develop software to simultaneously offer the same odds on **** where they will have brokered much lower commission. 

I think churning is an option for some at 20% but its time consuming and at 40% or more it becomes almost pointless unless you are automated.  Most or at least a sizeable chunk of manual ordinary players will have left within 12 months.  Small fast pic players will probably be the worst affected but again some will leave.

All in all I really dont think this is a winning solution from Betfair unless they are going to get a massive amount of premium charge from a small very elite band, when you consider all the negatives.  I had a look at the coorporate statement and the exchange part of the business looked healthy, although its impossible to gauge from the figures how much of the business is threatened by new regulations in Europe.

Didnt even mention the disincetive for those in the 100-250k bracket to keep trying to win.

I don't buy that it matters who wins.  The important thing is the incentive is there to win and provide liquidity/business. 

They've got too greedy and they should take heed of what happened in Hong Kong.

Clydebank
But if you provide liquidity simply to win more and more, who in the end is going to end up as your counterparty ?
We are talking about liquidity providers whose algorithms mean that they cannot lose, not might not lose but cannot.

FAFH you think casual punters are more likely to stay if they bet into less competitively priced markets because that is what you are saying?

This place will be just as competitively priced as before.  The markets that wont be will be the non derivative ones

No what I'm saying is that because of their high strike rates and/or no risk algorithms, certain punters seem to be able to win pretty much no matter what the prices are within reason of course.
That is they cannot lose whatever scenarios evolve.
They can only effectively lose if they are taxed at more than 100% on their gross profits.
How do you handle these persons ?. Ban them ? No that is not the BF/exchange model.
BF is saying they can only accomodate these customers by taxing their extraordinarily high profits at extraordinarily high rates to generate enough revenues to spend on marketing programmes required to replace the punters who are losing, in aggregate, extraordinarily large amounts to these super gamblers.

I really am looking for a simplistic rebuttal of my admittedly simplistic view of the whole problem.
Can anyone please help this simpleton out ?

FAFH you said this......But if you provide liquidity simply to win more and more, who in the end is going to end up as your counterparty ?

thats got nothing to do with your last past.  You are answering me  like Melody would from The Apprentice

If anyone has a 100% cant lose pricing model, they can take it anywhere and profit anywhere. Its not betfairs model, its not betfairs prices.

They advertise that it is theirs and assume punters are coming to betfair because its betfair, not because of the competative pricing provided by its users.

Seems there is an assumption that they wont leave by betfair or at least the prices will stll be around 99%

Be interesting to see what markets and their spreads look like in the new season.

As for their algorithms this is a free to enter market.  They might be making money today, they might not make money tomorrow.  They arent guaranteed anything, today or tomorrow.  They invest their time and expertise developping these programs and the programs have no guarantees at all and many will fail.  Besides how many of the 480 fit into your desription?  5? 10? 20?

What will these guys do now if they do exist?  Use programs to provide simultaneous prices across different exchanges imo.

Clydebank
Maybe you're falling into the same trap that I have been accused of falling into many times on here, which is just because you can't do something, don't assume that everybody else can't.
It seems to me from posts from various people such as Bayes, Contrarian, Aye Robot to name just a few obvious ones, they cannot realistically lose as long as they stay reasonably alert and vigilant to the subtle changes in market practices  as they evolve over time.
Now I have no idea how they do it, but I have come to believe and accept that they can.
Btw I have never watched The Apprentice and so I can't respond to your Melody point.
And tbh I can get the gist at all of that particular post.

Btw I'm still waiting from someone out there the most simplistic rebuttal possible to a simpleton.
" You're wrong you idiot ".
Now don't let me down on this.

Also Clydebank my question is in essence.
BF claims to have revenue shortfalls and the only possible source to fund these is to get more earnings out of the big winners.
Are they right or wrong ?.
If wrong, or worse they are lying about the whole thing, explain to me simply how you know that.

FAFH...you are crediting the 3 you mention of making extraordinarily high profits.  How much is that?  I dont doubt they make automated profits.  How many people have posted that they are affected and how many of them are saying they use algorithm based bots?  By far the overwhelming majority of those affected are saying they don't.

You only have to use common sense to realise that if only 480 people have made 250k or more (at 40% gross) in up to 10 years there arent many people at all making extraordinarily high profits.

Exchange revenues are on the up FAFH.  All you have to do is look at the coroporate figures.

and just like Melody in The Apprentice I have absolutely no idea what point you are trying to make.  I questioned you on one point and you still havent answered it.

What do you mean by....But if you provide liquidity simply to win more and more, who in the end is going to end up as your counterparty ?

Because if you price up a deal and you win in the long term then, in a zero sum game, you will run out of people to take the other side of your bets ?.

Also Clydebank it's not just enough to say that exchange revenues are up. BF is saying thaey are still not sufficient to operate and grow the exchange satisfactorily.
And the question is how else can they increase exchange revenues except by
1) attracting new customers and increasing betting turnover
2) taking more commission revenues from existing very profitable customers who are paying low revenue amounts in relation to their net profits( everybody else is already being taxed to the max, that is the losers and the marginal net winners).
And the first source of revenues (1) is dependent on the marketing spend which needs to be funded in large part by the second source of revenues (2), or so they are saying.

everybody else is already being taxed to the max, that is the losers and the marginal net winners

fafh, what you mean in essence is that these customers are losing more often than the winners. well the best way to fix this of course is to start winning more often. if they can't that's their responsibility and no one else should be made to pay extra to compensate their shortcomings.

I don't really get why you keep going on about running out of people to take the other side FAFH. Most people spend money on gambling, so it's not a given that they will quit after losing x. All this does is shift profit from one party to another. None of this money will be used to develop the exchange, it's pure profit (you also have to consider negative long term effects though).

Of course a certain % of players leaves each year, the vast majority of which will be losers, that need to be replaced. The PC does nothing to address this though.

Whether or not this is a good move remains to be seen (unlike the original PC, I don't this is a good move).

What would address the ever growing need of BF to spend monies on marketing campaigns to attract more and more new customers to fund the voracious feeding habits of the big sharks ?
I know a bit hyperbolic, but what the heck ?

What would address the ever growing need of BF to spend monies on marketing campaigns to attract more and more new customers

how about more seeding in the forums....oh hang on.....that's already happening.....

Now that is a reply of rubik cube proportions.

FINE AS FROG HAIR
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What would address the ever growing need of BF to spend monies on marketing campaigns to attract more and more new customers to fund the voracious feeding habits of the big sharks ?
I know a bit hyperbolic, but what the heck ?

How about the extremely healthy risk free profits Betfair make from operating a Betting Exchange [;)]

Because if you price up a deal and you win in the long term then, in a zero sum game, you will run out of people to take the other side of your bets ?.

How can you not realise that is just a ridiculous statement? 

What would address the ever growing need of BF to spend monies on marketing campaigns to attract more and more new customers

If you read the financial reports you'd realise they spent less and are congratulating themselves on excellent customer retention.

Also Clydebank it's not just enough to say that exchange revenues are up. BF is saying thaey are still not sufficient to operate and grow the exchange satisfactorily.

And if they said the moon was purple with pink spots you'd believe that too no doubt.

Explain to me this if you will....  Copy and paste from a post of mine from another forum, so straight into it:


Ok. So here is where I get confused as to why people use the 60% figure.
Your account is assumed at the time the rate becomes effective, to have generated 40% in TOTAL CHARGES....

Ok, so week 1 after the introduction comes along you are at 40%. Now if you are assumed this, then surely that means your previous rate will stand you in good stead for quite some time while it works its way down from 40 down to closer to your actual rate, which it will take a long time to reach. In fact, you should be able to continue along to double the net profits at introduction, and still would be sitting on 20%, which means you shouldn't be paying more than 20% of your profits to them by this point.

Talking about could well happen and relating to the initial post.  I think large players may simulataneously offer identical prices across different exchanges.

Why?

Because the new set of charges have passed a tipping point and there is a belief that they are being looked down upon and insulted and there is a strong will to do something about it.

How? 

Under the new set of charges I believe it will mean for PC payers that paying commission across 2 sets of exchanges is not the deterrent it was before since comm paid will be offset against premium charges.  They may even be better off on comm levels below 3%.  That's one exchange sorted out, what about the other?  I'd say the answer was to fly over to Dublin and broker a deal

Investor, the type of gamblers that come on here are maybe a little different to the types of gamblers you and i have seen in high street shops/lottery players/ playing fruit machines etc .

A great many of losers one here probably lose modest amounts, they may understand the concept of odds and value but as yet havent worked out a way to profit , many aren't daft despite losing.

Remember coming on here ? did you win from the off ?  When i first came on here i lost in the first 6 months , not a fortune ...but i was only prepared to lose so much before calling it a day ...i wanted to test myself against the 'pro's' the masterminds .
  So there you have it, a limited pool of would be pro gamblers if you like ,and not the degenerate style of gambler we all like to mention .... of course some casual gamblers on here have left and  headed for the shops for the social side or a fix, but i can't see too may addicts even having a bank account let alone a BF account.

Well last night I was up until 1am to get some bets on the u17 game. That is what I have been reduced to.

The PC is in place as 'some accounts cost more to operate than they generate in commission.' In other words, site usage.

It is ridiculous that my site usage has gone up many times since the PC was introduced. My account was much more cost efficient to betfair then. Now its just a vicious circle.

Yes, coach I made a profit straight away. £1.21 per day during 2006 My max drawdown was hundreds of pounds though, so ending up with a profit was more luck than skill. Throughout 2007-2009 my profits were extremely consistent and growing exponentially, growth has slowed quite a bit since then, but it's still going well.

I agree that the average Betfairian may understand odds a bit better than average punter in general, but I still think they mostly bet for fun rather than with a serious idea of making a long term sizable profit.

unless you take 4/5 on the flip of a coinno one will lay value odds anymore.
Looks like when 5/1 is laid againsta 6/4 horse tha insiders are laying that bet.

Apologies if this has been asked before:

With PC1 its possible to churn away and if you generate 20% commission of your profits then no need to pay PC.

What about PC2, if you are on 40% or 60% would you then need to generate them levels of commission still? If so that's extremely difficult to manage manually, and only the most advanced of bot systems would be able to pull it off each week. Looks like the demand on the servers next week will be ridiculous

Investor,you are just too clever 

coach how long before you hit the 40%

it will be more than 40% pistach ,more like 55% ...but that's a long way off i hope ,i have only been FT for 3 years .

I'm guessing the landscape will change somewhat before then Pistachio....and hopefully for the better .

Otherwise i'm going to have to procure a set of step ladders ,a sponge  and a bucket from somewhere

Toilet brush for me I'm afraid to say. Don't like heights.

You could always specialise in bungalows eh ?

Good thnking coach. That's why you're probably a better gambler than me.
I'll think about a bit of diversification then.