PC Charges yes they really do screw traditional PUNTERS

No question about that generalisation.
This could very well be a bad decision. But it could equally turn out to be a masterstroke.
I just don't know.
Does anybody yet ?

It could be a masterstroke. A week and a bit in and everything seems the same at the moment. If people have left I haven't noticed. But goodwill has been lost from betfairs most important clients. Longterm they might not get away with that.

Anyway goodnight. I'm outta here, I've done my money for the night. Botafogo held on for a 2-1 win. Not good.

Goodnight. Nice chatting with you.

PumpkinSlayer : The thing is though, they say they only break even with me as a client at 20%. Well, there is the transaction charge so it's not that costing them money. So why do my bets cost them a lot more than some placing the same volume of bets who loses?

The punters who lose, break even or make small profits will be paying a huge percentage of their gross profit in commission. You only pay 20% so your activity is costing BF more, as in they are making far less from you (even after you've paid the premium charge) than they make from non pc customers.

But my activity isn't costing betfair anything more than a loser unless you assume money from losers somehow belongs to betfair instead of the poeple who seed their markets, supply the cash, intelligence and take all the risk.

Your activity is costing more because you pay them less. To take it to extremes, if you won every bet you placed you would be paying less than 5% of your GP in comm before pc, while a break even punter could be paying 100%. Why would BF want to let you carry on at that rate? You are costing them money and bankrupting valuable losers from churning in the betting pool too quickly.

I'm guessing if you decide to go elsewhere BF believe you will soon be replaced by someone less successful than yourself, which is their goal I guess.

But in that statement is the assumption that betfair have a right to taking the losers money and not me. Even though it's me who takes all the risk etc.

As Magician pointed out in the other thread (Andyl's thread) BF are the ones who took all the initial risk.

No, I did as well not too long after. And their risk diminished rapidly. Mine is still very real.

Doesn't mean they should cease to reap the rewards of the initial risk though.

But they cashed in with the flotation. Rewards are now being taken from those who keep the site afloat and given to the idiots who thought buying their shares was a good idea.

I understand that the Las Vegas casinos , having heard that a betting exchange is taking a share of winning punters profits, have plans to introduce WC's - no, not what you think - but a "Winnings Charge" on all profits made at the tables, the machines and in the Sportsbook.

A spokesman for Ballagio said "We provide the platform through which players can make money and it's only fair that those players who win consistently should pay a little extra because they are taking the food from our mouths by walking off with their profits. They are seriously jeopardizing the business model by draining the casino of its liquidity. In previous times we would have adopted other means, such as breaking a few arms and legs, to discourage winners from playing here, but we are legit now and don't do that sort of thing. It's in everyone's best interests, especially ours."

The new charges, which are thought to be up to 60% of profits are to be be implemented as soon as the player has made a profit or after the first 5 minutes in the casino. There are rumours that casinos will also introduce entrance fees and charge for drinks which were previously free for table players. The old habit of providing free rooms for the high rollers, plus aeroplanes and cars, is to be abandoned on the grounds that these people have plenty of money and can afford their own transport.

It is thought that this new business model will enable the gambling industry to recover from the disastrous last few years since the financial crisis. What else can people spend their money on, after all.

Dateline April 1st, Vegas.

Let's say you were an investor. Five years ago, wd it have been better to invest in return for an equity share in Betfair or Bet365?

Pure exchanges are not that good a business. The model of giving a good deal to the self-destructing losers and fun players and excluding the shrewdies is a better one than providing a platform on which the shrewdies gradually extract the cash of the losers.

I used to think that unlike with Woolworths, Pontins, Habitat etc. there was a secular change towards an exchange model. I now think that the change is in favour of market-efficient prices, but that the customer-facing bookie does not need to be an exchange.

askari, most of the winners on betfair were manufactured by betfair and could've been destroyed by them just as easily. wrt normal gambling, take away the shrewdies and a new level of shrewdies take over.

Feck
BF surely has not manufactured the ability of many punters to use excell to process and analyse performance data to compile more accurate odds/prices than others ?
Oh sorry I've just noticed you did say most pof the winners, not all.
Coming back to the good value type punters, neither BF nor the HS bookies are ever going to be able to handle them very profitably are they ?
I'm not sure what the solutions could ever be to have such punters in abundance on your sites ?
Are there feasible ones to your knowledge ?

Feck, the reason that people winning on bf by trading and offering now-you-see-it-now-you-don't-offer have no moved to accurate calculation of true chances (in some field, however small) is that they haven't needed to. It has been more profitable to develop e.g. their software applications.

Perhaps they wd be able to bet and find value consistently. Or perhaps they wd dislike the variance and move to some other pastures like futures or currency trading.


Bf's fundamental mistake was in conceiving itself as a traders' exchange. They cd have avoided all the confusion, the messiness and ill will of the pc s had they espoused some differential charging scheme for traders and bettors from the outset.

I largely agree w/ you and have no prob. w/ the principle of the pc.

The level at which it is levied, though, and its execution (its complexity, its confused rebating mechanism, its retrospective element, its communication etc etc) leave something to be desired; and I think there are more robust ways of bf sharing out the proceeds w/ winners that wd not be structured like the current charge.

If a winning punter on here frequently offer better prices than all the traditional bookies and still manage to make a good profit, then yeah BF should be very happy about that and be careful not to squeeze him so hard that he decides to leave. When BF try to become a bookmaker they will find that it takes intelligence and much research to be able to offer industry best odds and still make a profit. Odds higher than all the bookies ahould have the potential to attract new customers yes?

Mr Anderson, if the punter wins, then the bookmaker, that is bf, loses. Why should betfair let this lie?

Not sure I understand how you reason. It's other players who lose money to the winning player. If a traditional bookie offers better odds than the winning player on BF they can lose their money with them instead. Losing players can decide to bet elsewhere you know? On some events you can forget about trying to get a balanced book. There may be one or two popular selections that all recreational gamblers want to bet on. You're not going to get some random recreational gamblers who are willing lay those popular selections for tens of thousands at prices above the bookies. In my view people who help this site offer better odds than the bookies should be good.

Second sentence should read: If a traditional bookie offers better odds than the players* on BF...

Do you think that betfair are a bookmaker or not?

If you think they are, the question is why they shd tolerate any consistently winning customer. Surely the losing player wd have got matched at the market price anyway and wd keep on betting, losing slightly less over time.

If you think they are an exchange, the question becomes what proportion of losers' profits is equitable for them to take (and what proportion shd go to the consistently winning players).

That is all the debates over the pc really are: discussions over the terms of a profit share.

And further, most of the discussion takes the form of a haggling over price, like two women in an Indian bazaar--the pc payers do not dispute that bf are entitled to a cut for providing a platform/service, and bf cannot be serious in thinking that they (or some more acceptable partner) are going to replicate every scrap of the pc payer's liquidity.

the pc payers do not dispute that bf are entitled to a cut for providing a platform/service

This must be a recent development askari

can someone tell me ...as  bet fair have faster feeds on most games ... don't they swipe the 1.01 etc aren't they the real clock beaters  ?

Feck, they are all saying things like 'at 20% it was tolerable and even an incentive to churn money' but 'at 40% it is inequitable, bf have gone too far, where is the incentive to bet etc.?'

Some of them cannot go elsewhere and are trying it on, like someone haggling at the only market selling whatever they want to buy.

Rs1, they had a bet matching mechanism that could be construed as doing something like this, but were told by regulators to revise its operation to offer bettors something closer to best execution.

Me? I think they are an exchange, but they have announced plans on becoming an integrated bookmaker/exchange. In some markets it's quite common that the price on BF on some selections falls a bit below the best available price at the bookies even before commission has been subtracted meaning that people could decide to bet with a bookie instead.

Sorry if this sounds stupid , but in the t&c's of the PC

- Bet in more than 1,000 markets

In what time period is this , weekly , monthly or from the start of your account to the present date?

lifetime of the account

thanks , that means more or less everyone will meet that criteria

how is it possible to find/work out if your commission generated is less than 40% of lifetime gross profits ?

If you don't currently pay the regular PC I think you will have to call/email them and ask.

Askari
Seemingly many of them on here don't think that BF is entitled to get any of their money.
Quite how that would work as a business model, I'm not too sure.

dont mind them getting some it but NOT ALL OF IT

*of

and some seem to think that all winners just are a liability to the exchange, and that it is of zero value if they offer better odds than all the bookies, and all other players on BF

Mr Anderson, I think they are a bookmaker.

My strategy depends on them being a worse price than the High St and this is a strategy that turns over a conservative 5 million a year.

They are happy for all these pc-paying winners to go and well shd they be. Of course many aren't going anywhere b/c their strategy depends on the liquidity of price-invariant punters on here.

Someone else will surely offer the same odds.

Granted, there may be MMs on lower-liquidity markets who keep bf's customers playing, and I agree that special terms shd have been set for these people (or rather than pricing shd have been set on some more discriminating basis than simply % of profit paid in charges).

Someone else will surely offer the same odds.

askari, I think you would be shocked how small a number of people provide a huge amount of liquidity. At the forum christmas party last year on my table alone you could account for 30% of all money matched in the place market. It is the case that mugs have a strong tendency to back rather than lay. If you remove the pros there will be a large imbalance between backing and laying. Now people will step in and start laying because they will see an opportunity, but liquidity would crash for a considerable length of time and in the end you would still have a new set of pros. You just cannot remove them. The nature of the exchange means its inevitable there will always be big winners.

is still true with crossmatching slayeroftenkins?  everyone back so betfair make price on other selection?

pumpkinslayer, I understand (or can guess at) how few players there are in size on the lay side, but bf wd surely have done a check on the percentage of charges they pay in relation to profits and set the new pc at a rate that ensures some degree of liquidity for their markets.

The full-bookers i.e. people wanting minimal variance of results and consistent wins who have got over 250k may be genuine losses for bf--but the thinking here is that either they will adopt more up-and-down strategies from race to race, putting their edge to use some other way, or a new class of layers will rise up to replace them.

Or alternatively the exchange will slice and dice backs into lays of opposing runners, poss. on the enhanced sportsbook it will be offering.

As some indication of how few big players there are full stop, I saw that just after most of Glorious Goodwood I was in the top hundred of people collecting points on some half-arsed challenge to win a picnic hamper or a shinbone of Paul Nicholls's most disappointing horse. The top hundred! And I am a recreational player who doesn't bet most days and am almost never below 3.6%!

The suggestion to me is that there are only a handful (between 10 and 20) people who offer liquidity day in, day out on the horse markets (and of those, only three to four offering bets across the board) and that, further, bf wd be fools not to have canvassed those people's opinions carefully on the level of charges they can take in order to remain in the game.

I said nothing about there being or not being big winners or about any tendency for money to move from incontinent gamblers to careful, controlled players w/ a proven strategy.

premium charge circ 2011/7 effects and postulations to possible betfair customer groups

betting group    there effect   group  proposed action       result of proposed action   
-----------------------------------------------------------------------------
averge punter            nil          migrate                 nil
pc1 payer(max matched)   nil          migrate                 reduced liquidity market 5%(loss of 95%)
pc2 payer(max matched)   pc charge    migrate                 reduced liquidity market 5%(loss of 92%)

conclusion..... there is no where to run that wont result in a considerable loss in profits
when betting at matched maximums (average 93.55 loss)in the other exchanges, betfair liquidity cant be matched!!!
The top guns on here know that.Complaining and moaning are useless policies as words dont
keep big businesses afloat and staff working

Liquidity shown in other exchanges is corruptly represented, the prices are copied from betfair
but the matched figure is based on total possible win and exposure amounts so is say between
6 to 20 times magnified than betfairs, this is done to give bettors a false picture of the other sites liquidity, anyone falling for that is not aware of the truth.

The net result of the pc2 will be greater profit for betfair to put back in the system to fairly
compete with the major hs bookmakers and give incentives to new customers, other exchanges are of little concern and they too will eventually adopt a premium charge when under the weight of housing winners at the levels betfair does.

The remarks in the the thread title are illogical as how can 0.01% of customers affected by the pc2
be classed as the traditional punter? whats traditional about using a fairly new platform with current
liquidity and fairness available to constantly make a large profit via auto-trading, complex prediction
betting or laying off considerable sums by bookies, if traditional is used in terms of average puter
than he/she will be unaffected!

Well, it depends on whether the liquidity from the migrating players can be replaced by other providers.

if were all honest theres nothing wrong with the concept that a fair exchange will encourage winning and certainly go against the grain of traditional betting companies that refuse such people
but what do you do as a company when quite a large group make so much money beating all the other players and not giving betfair a chance to make repeated small commission charges from the placing of bets when huge chunks(millions) is withdrawn from the betting account pool.

Do you think the top bettors using advanced software or bookies laying off strong fancied winners
deserve to be supported forever at the expensive of all other customers and betfair, well done betfair for making what is in my view a correct adjustment to the charges of this group, I wouldnt have any problem paying my pc2 if I were as lucky and as lucrative as these information gurus that make a big living out of betfair!

If you are a traditional backer with say a strike rate of up to say 40%, the only players who will avoid the 40% PC, as far as I interpret the rules,is if you have a poor NP% on stakes or are a net loser. In which case, the £250k qualifying level for lifetime earnings would be unlikely in any event.

On the otherhand, if the minimum earnings level has been reached, and you are doing better than say 10% return on stakes, have no doubt, you will be liable for the 40% rate.

Apart from the principle of a tax on prodits, its also clear that if you have a strategy where you might benefit from the variance in any period  where you might win, PC at 405 becomes likely. Add on top the inequity attached to sequencing, and the overall conclusion to be drawn isthat  the title of the OP is indeed a correct statement.

bf_fantastic, a lot of the pros with pass on a decent chunk of the charge to average joes. You will be paying the premium charge too without ever knowing it. But you will be paying, so don't be so quick to think it's good for the majority.

pumpkin
The imposition of the PC2 onto certain players is not meant to make the exchange any cheaper for other players. It is supposed to be intended to ensure that BF is generating sufficient revenues from these high earning players to reinvest such revenues ( in part if not in whole) into expanding, or at least maintaining, the size of the betting pool, isn't it ?.

I agree, it is. And I doubt they care if I pay the charge or generate enough commission to cover it. But there are people who are defending it who don't realise that it is bad for everyone.

fafh - no, it isn't. even BF don't claim that. when they brought in PC2 they said that they already broke even on the people affected.

I didn't honestly realize that Viva.
So what spin have they actually used to justify PC2 ?.
A money grab ?
No spin at all ?

they essentially say - which is actually reasonable as far as it goes, imo - that they have a right to make a profit from these customers as well.

of course, this begs all kinds of questions as to how you judge the impact of a customer on your bottom line, but that's a different and far more complicated debate.

You mean they haven't ever mentioned at all that these players are one way draining the pool of betting funds too quickly ?
I thought they had said something like this ?

It is hard to judge the impact of a customer on your bottom line, but in one market I work it I can safely say if I did match bets, no one would. I am not costing them anything beyond the transaction charge. It's just PR, a load of tosh, and an excuse to make more money. Like they told us the old pc was to spend on advertising which turned out not to be true.

no, their line is that PC1 addressed the issue of winners costing more than they paid in commission. PC2 is to make them profitable rather than breakeven.

if I can find it I'll cut and paste the quote.

...

Why are you making these changes?
The Premium Charge was introduced in September 2008 to ensure that our most consistently successful customers are charged at least what it costs Betfair to provide the service that they ultimately benefit from.
At 20%, the Premium Charge ensures that we are not subsidising the profits derived by consistently profitable customers. However, breaking-even does not allow us to invest in the Exchange to the extent that we need to, in order to keep upgrading our platform and products, for all of our customers. Betfair is now requiring a small number of our most successful customers to pay a fair price for the service provided.

Yes, they say that, it doesn't mean it's true.

If the 480 left tomorrow, betfair profits fron the exchange would go through the floor. We do not cost them money, we make them money. If we were on 0% commission and no fees we would make them money.

actually, I'd say some of you cost them money and some of you make them money.

courtsiders and trap betters cost them money; market-makers and anyone pushing books towards 100% make them money.

this is why the terms in which they've couched the debate are meaningless. you can't judge the impact of a player on the bottom line just by their profitability.

Yes I would wholly agree with that.

pps suggesting top earners would leave a top exchange to not pay a charge and go into the desert looking for another lake to bathe in is like saying the Olympic shooting finalists at next years London Olympics are all going to shoot themselves in the foot after they receive there medals!

lets hope for there own sakes if they pull any triggers, that they miss

But Viva if any player is making consistently high earnings and paying very low charges relative to GP ( say less than 10%), wouldn't it be fair to say that it would be hard to see how BF are making any real money out of them and, furthermore, hard to imagine how they are good for the growth of the exchange.
They're just too skillfull for their own good, assuming they're not "cheaters ".
Unfortunate perhaps, but the majority rules as always ?

People will leave. There are marginal pros who make say £30K a year but can't afford to take the cut.

I shall retire to bed, all this illogical behavior is very tiring

Froggy,

The decision is driven purelt by greed. BF's board are answerable solely to the City spivs behind
the float.

The example you post above could be mitigated via rebates for losing weeks.

Yes it really is the marginal Pros who are going to be killed by PC@.
Not even the " amateurs"  ho make 30 K will be killed per se, just perhaps a bit deflated.

ok by marginal as you say 30K, guys or gals, in a 1/12 market will make what, say 30k/12 at you no where, little compensation in that move or retirement option.

please don't tell me they wont have anything left when they have paid there tax, oops

Steering
Yes the move of BF into a public company has changed all internal policy making criteria of BF.
No doubt about that really.
Confuses any and all debate comparing the past to the present.

But Viva if any player is making consistently high earnings and paying very low charges relative to GP ( say less than 10%), wouldn't it be fair to say that it would be hard to see how BF are making any real money out of them and, furthermore, hard to imagine how they are good for the growth of the exchange.

------------------

no, because in some cases BF benefits from their activity in ways not reflected in their commission.

eg, if someone can offer a 100.2% book in real time throughout an IP football match, the fact that those prices are there at that level will have several beneficial effects for BF. two off the top of my head:

1) it will bring in new custom/repeat deposits through the competitiveness of the pricing.
2) it will increase the number of times losers play through their money in losing it.

They won't move they will stop. I have a friend who makes books. His first year as a pro was good. last year he spent £10K more than he made. This year with the pc he might well give up. Yet he supplies a lot of liquidity. He's exactly the sort of person betfair need. I do feel the charge is catching too many people. It is too crude by far and will drive away people that are benificial to betfair.

whos on 30k and why? how many points profit is that at per day/week/year? how many markets do they use?what bet frequency and stake size?, are there betting variables set in stone, will a charge wipe them out?????

pumpkin
Maybe it won't hit the main mkts that BF makes it real money from and so they are perhaps really just focussing on the impact of PC2 on those ?
eg football, tennis ?

The people running the company simply don't understand enough about: [a] the basic percentages of a book; AND [b] the need for liquidity that "flows like a river" [to feed the mugs].

Exchanges are a very simple product. Their genius is in the [original 5%] commish rate, making each of the millions of zero-sum game bets struck a money-maker [via the winner's commish, which is funded by the loser's stake] ad infinitum.

That's why BF is a PLC. Everything else they've tried has added 0.000001% of the value [and I'm being generous...] of that original commish structure, which has prevented 98.3% of players winning LT.

And they're going to destroy their business from deviating from it...

In 20 years' time, they will be a famous case study in "how NOT to float"

well pps I can feel sorry for punters that aren't winning as much as they could but the pc2 charge will not stop winners and some will still make fortunes, but now in partnership with betfair instead of out of betfair or the losers or the system, what ever you want to call it, its evolution, survival of the fittest or on corporate level the fattest cat,but thats business for you money and thats what everyone wants from the next customer that signs up to the next replacement MD ,  its all about the money

I like you am as greedy as the next man, but if the next man wants more money to get me more and theres no other man than I pay the next greedy man, but thats just me being greedy[;)]

Steering
I simply cannot believe that there is neither any knowledge within BF on these types of matters, or any external consulting knowledge that they haven't tapped in this regard.
Just doesn't seem commercially feasible.

I don't either Froggy.

However:-

Actions, words and all that, though!

Their share price "performance" is a joke since the float.

Someone quite knowledeable on share mkts said on the financial forum that it has been reported that actually only 15 million shares were actually sold on the ipo.

so the supply was restricted [vs. overall share capital] at IPO?

And yet the shares still fell like a stone.

They'd be worth a hell of a lot less if a bigger % of share cap was released...

yeh the price bombed, 1.4 billion was an overpricing, because in these turbulent finacial times post the last recession which is still here investors are very twitchy and even though betfairs pedigree and last ten years growth are great, nearly all companies bomb after flotation but even more so in the current enviroment, today all prices rallied then dropped on some other news about the us, very twitchy at the moment.

Hence why they're now semi privatising themselves by buying them back in volume ?

Messrs Black and Wray pulling some strings methinks ?

Share buybacks have always signalled a company with too much cash & too few ideas.

As a trader, they did sell at 15 & buy at 5.

They have a modicum of my respect for at least getting that much right.

aren't betfair buying back some of there shares at a much reduced value, theres some sense in that as the initial investors were tied to a 190 day cant sell policy

iirc, only 10% of the company was floated.

I think that everybody associated with the float now regret it, that's for sure ?
A right pain in the butt.

betfairs current share value is the current valuation of the company from major market data firms
so a great time now to buy them as they should start gradually gaining, but thats longer term

think i read somewhere that one firm puts them at 660

gonna hit the hay lads - good, lively discussion on here tonight.

will try & pick up some of the subsequent comments on this thread over the coming days.

gn folks.

Are you posting in your sleep bff ?.
I thought you had retired for the night sometime ago ?

its like buying a pub, 20-30 times the annual profit not the value of the building , very crude calculation but it works

well normally I would be programming but got my son in the morning so posting is like sleeping compared to number crunching

Sweet dreams to all of whales and piranhas.

I can really recommend hiding bff. makes these threads 10x more interesting.

gn steering job , good posts, like your style, fafh are you still about mate

I know president I am one pain in the arse, sorry I cant help it

So you're all leaving me. What, do you have jobs or something?! I knew someone with a job once, absolutely swore by it.

lol i heard about him too, I asked a strange man where do you find one of these jobs he sent me to the jobcentre, it was empty I asked the woman Ive come to look for a job, the staff said who sent you  here was it a strange man?

BetAngle guy would be making betfair more money then he taken out..he pay less then 10%