General Betting
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Just got my premium charge statement from betfair
Just got my premium charge statement from betfair
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Replies: 310
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it not just bookmaker...but any account that can beat betfair new sportsbook
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Betfair want to turn this into poker, with vast numbers of mugs churning money around in circles, never making any money, and donating their 20% to betfair.
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20% that was PC1 now it 40% min for PC...
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No Bacon, Betfair want to be chief bookie. The mechanism is in place to lay any bet so no closed accounts. They can either kill off the inefficient bookies or earn off the good ones. Either way they win. The PC payers do not, in my view, matter in terms of revenue and are expenable.
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bf_fananatic 27 Jul 11 14:46
only 1 in 10,000 users will be charged pc2 and they will still make more from betfair by a country mile than any other betting company long term so now betfair have 5.2 million users |
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bf_fanantic : I will say one thing
We should be so lucky. |
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You also have to remember that Betfair make significantly more than the 'visible' charges from its customers.
The key additional earnings come from interest. The opportunity cost becomes increasingly higher as the benefit of using incremental capital declines. There is also the cross matching to consider. As a profitable customer I still frequently get cross matched. Finally there are the data request/transaction charges. It's difficult to estimate, but it seems reasonable to assume that the charges exceed the cost to Betfair as they have been introduced years ago, and technology improves extremely rapidly. The compounding effect in my account has diminshed over the last three years, as a result of both lower returns on incremental capital and ever increasing charges as as share of GP. At some stage, I will reach a point where I can't use incremental capital effectively. All these charges are chocking off growth of the exchange, draining their own liquidity so to speak. It does seem a bit weird that I've pumped almost all my profit back to the point where Betfair have taken more from me in charges than I have withdrawn in profits, despite being on about 21% charges generated. |
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It is my believe that a company like Betfair, which is obviously drowning in cash, is not going to use the additional funds to develop the exchange.
They are simply extracting profit for the shareholders, which it is their right to do of course. With the new supertax I am firmly convinced that a charge on profit at time of withdrawal is far superior. This incentivises people to keep using their funds rather than withdrawing. With the original PC the concern was that it would be too easy to cheat. I don't think that's the case now though. Those using illegitimate means to avoid the charge can do so no less easily than if the PC2 was deducted at withdrawal. |
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"It is my believe that a company like Betfair, which is obviously drowning in cash, is not going to use the additional funds to develop the exchange. They are simply extracting profit for the shareholders, which it is their right to do of course."
If this were true, why isn't their dividend/share price ratio good, driving the share price up? |
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You would have to ask the board why they choose to have money in the bank and buy back their own shares rather than pay more dividend.
They have £ 155 millions in the bank (April 30th) and a very good cash flow from their operations so I think it's fair to say they are drowning in cash. |
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Maybe so! But if you are correct, then following that up with "They are simply extracting profit for the shareholders" is incorrect, quite the opposite. (I know you didn't say that)
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SOMETIMES LIFE SEEMS SO UNFAIR,THESE PROBLEMS ARE SENT TO YOU ,TO MAKE YOU THE MAN YOU ARE TODAY
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I'd say a share buyback programme and increasing the company's cash holdings also is profitable actions. Dividend isn't everything in investors eyes.
I'd say investors would look more at growth and P/E before P/D. |
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*PROFITABLE ACTIONS FOR SHARE HOLDERS*
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SOMETIMES LIFE CAN SEEM SO UNFAIR,PROBLEMS LIKE THIS ARE SENT TO YOU TO MAKE YOU THE MAN YOU ARE TODAY
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SOMETIMES LIFE CAN SEEM SO UNFAIR,PROBLEMS LIKE THIS ARE SENT TO YOU TO MAKE YOU THE MAN YOU ARE TODAY
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they buy back shares (as opposed to pay a dividend) because they think they are undervalued and/or it is a more tax efficient way of returning cash to shareholders.
Also... people keep going on about Betfair's share price fall and interpreting it liberally. The share price fell from the flotation price, which is the price that loads of earlier investors and employees were able to sell their holdings. So it looks like these people got a good price (you think it was a co-incidence they floated after the World Cup?) and now the stock market is waking up to the fact that the company is just not worth what it floated for, because growth prospects are not as great as originally expected (/advertised!!??). |
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Just Checking
When: 28 Jul 11 12:51 "It is my believe that a company like Betfair, which is obviously drowning in cash, is not going to use the additional funds to develop the exchange. They are simply extracting profit for the shareholders, which it is their right to do of course." If this were true, why isn't their dividend/share price ratio good, driving the share price up? Rate reply: 0 (0 Ratings) The report button allows you to report a post, comment, reply or another user's behaviour. | report block user Just Checking Maybe so! But if you are correct, then following that up with "They are simply extracting profit for the shareholders" is incorrect, quite the opposite. (I know you didn't say that) I don't really see what that has to do with anything? Betfair is (still) trading at a high multiple of earnings, so I think that is why. I think the dividend to share price ratio doesn't really give a lot of useful information. To make my observation that 'Betfair is drowning in cash', it doesn't make any difference whether the share is at 400 or 2000. |
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But the dividend (and to an extent share price) does make a difference to "They are simply extracting profit for the shareholders". Not that there's acutally anything wrong with doing that, within reason.
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A charge on withdrawl is a non-starter. Someone pays millions in commission and wins a few hundred grand would have to pay despite taking huge risks. These type of punters are worth their weight in gold as they win and lose huge amounts with little or no edge. They are just as likely to win a few hundred grand as lose it.
I think the current system is about right. A 95% pc charge for clock beaters is the only ammendment I think would be suitable. They have been bad for Betfair from the start and its about time Betfair properly address the problem. |
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Ah I see what you mean. I wouldn't expect it to affect dividends for at leat 12 months though. We'll see what's going on then.
So far Betfair has been diverting money away from the exchange in myriad ways for things like casino, lmax, poker, exchange games etc. The exchange has improved over the years, with more markets, but improvements have been very modest if you compare them to other big internet 'technology' companies that were around in 2000. |
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I think you misunderstand frog2. I'm not talking about being charged just for withdrawing, just changing the time the charge takes place for PC payers only. They would get charged at withdrawal on profits 'realised', rather than paying weekly.
This would also eliminate the need for rebates that many are in favour of. |
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Only problem if its not weekly people are more likely to try to avoid it.
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TheInvestor2, of course that would be a much more fair and better solutions for everyone paying PC, so I think I can say it wont happen
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Lex
One thought that I havnt seen posted re PC1 or PC2 Wouldnt the top winners and therefore PC payers be .... bookmakers? The top winners are not the same set of users as the pc payers. |
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The top winners are not the same set of users as the pc payers
Can you explain that please? |
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Lex, I gather that there are some top winners who have high volatility and so are not subject to the charge.
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Hi 1.01 , does high volatility mean that they are chasing?
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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? |
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Lifetime
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Investor
Charging PC only on withdrawals would not address the basic problem that BF says it has , would it ? For sure your suggestion would see BF retaining cash in clients' accounts for longer, but as it is ring fenced the only benefit to them would be from interset earned on such funds. Would that be sufficient extra revenue for them for the marketing spend they say they need to make to attract new betting funds to replace those being won by the big winners ? |
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They have abandoned the reason being need for advertising funds now.
This time they only talk of it as customers paying a fair price for their benefits of using this site. |
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I still like the example someone once posted that a bettor playing even chances with a 6% edge and a 5% comm. rate would pay circa 44% of GP in commission.
Sort of neatly fits in with the general PC target levels. Is it just a manufactured coincidence ?. That is just really backfitting ? |
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FINE AS FROG HAIR
When: 28 Jul 11 20:22 Investor Charging PC only on withdrawals would not address the basic problem that BF says it has , would it ? For sure your suggestion would see BF retaining cash in clients' accounts for longer, but as it is ring fenced the only benefit to them would be from interset earned on such funds. Would that be sufficient extra revenue for them for the marketing spend they say they need to make to attract new betting funds to replace those being won by the big winners ? You are forgetting something very important. Anyone that wins at a very fast rate is likely to hit capacity very fast and start taking money out. A few people will be able to compound and effectively use a very large balance though. Betfair's advantage is threefold: 1) interest on funds as you mentioned (but that's the least important) 2) this person will pay more commission as they will have more funds to bet with (they will grow faster)* 3) liquidity is improved as there will be more money in the markets. * commission I paid per calendar year: 2007 £46 2008 £1,156 2009 £6,038 2010 £13,222 Without PC, I would have compounded at a faster rate and would now be paying more commission. It won't make any sense for a player who can't use a big bank to just let the money sit there so bf get only interest. The downsides are: 1) the charge could be avoided by some by illigitimate means. 2) the player could actually have a big loss which wipes out what Betfair would have received, but that shouldn't really be an issue for bf as this will be quite rare. While a customer's profits are growing quickly, it makes sense for Betfair to defer charges as they will ultimately gain from the relatively unhampered increase in size of this player's activity. |
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As you say all assuming the players will bet in increasing amounts as their retained funds grow.
Smaller players will I would think, but many larger players maybe not. They have already reached their upper betting volume thresholds, in a practical involuntary sense at least. I'm sure many of them would theoretically like to be able to bet in ever increasing amounts to make ever increasing profits. Their motto would surely be the sky's the limit, with or without Bf's encouragement on this. No I think the best solution is for BF to find some way to smooth out the charging of the PC to give " rebates" or " offsets" for extended losing periods following winning ones. |
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Lex,
There are big winners that don't pay pc and relatively small winners that do. The 500 affected by the new pc are not the 500 most successful users. |
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You're right that in most cases they have already reached capacity. The beauty is that this problem takes care of itself, as these people will have no reason not to withdraw.
So yes anyone retaining funds is extremely likely to increase betting volume. Large or small, it makes no sense to keep money on here if you're not using it. Let's say theoretically I could make 5x what I'm making now. Whether I get there in 2 years or 5 years makes a big difference to what I pay Betfair overall. In 2009 I paid about £7.5k in PC. Had this been compounded along with the rest of my balance I would I would be paying Betfair more in commission on an ongoing basis AND still owe them the original £7.5k as well. I've been able to maintain an average compound rate of +6% per month since 2007, although since 2010 that's dipped to about 5%. I used leverage in the past, so my equity grew faster than that. Back in 2009 an extra £7.5k would have made a big difference. I would have made and paid significantly more, had I been able to defer. |
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catfleppo
28 Jul 11 22:24 Joined: 22 Feb 07 | Topic/replies: 169 | Blogger: catfleppo's blog Lex, There are big winners that don't pay pc and relatively small winners that do. The 500 affected by the new pc are not the 500 most successful users. How does that work out catfleppo? |
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surely though the problem with your idea investor is it means BF lose control of their cashflow.
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Viva is right in that BF need to be able to predict not only what amounts of cash revenues to expect but also the timing of such. ( unless of course they dip into the trust accounts eh Viva ? )
Sorry couldn't resist. Once a tart always a tart eh ? |