General Betting
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05 Aug 11
01:45
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Date Joined:
17 Jul 11
the fundamental differences in exchange and bookmaker betting and business models
betting enviroment
Bookmaker creates profit by laying all risks at a lower rate of return than the perceived chance of the runner
also he offsets any changes in amounts laid between risks by altering the price relative to volume of bets
thus they nearly always averages a healthy 25% plus gross profit.
The bookmaker discourages a profitable environment for winning and making a profit for the customer in the long term
exchanges never profit directly from any losing bet as he is neither laying or backing any item in an event
instead the customers back and lay between themselves and agree the price relative to volume and movement of matched price
the exchange then makes a small commission charge between 2-5% of profit of all winners of event and makes a marginal profit
an exchange by this process creates a market that has very small difference between implied chance and market value.
the exchange encourages a profitable environment for winning and also trading in the long term
winning environment
A bookmaker can afford to pay occasional winning punters but cannot afford to pay continually winning customers that reduce there profits and although having the revenue to pay them prefer avoidance.
an exchange can afford to pay continually winning customers and can tolerate them but only on a conditional basis
Business profit environment
A bookmaker will make a profit that is not marginal and providing profitable customers that persist are refused business can on average make a business viable profit to sustain the company and the companies future investment
An exchange though its marginal profits can only make a functional profit if liquidity and fluidity is high, as the money moving though markets must be circulated many times to ensure that enough charge is generated to sustain the company and the companies future investment.
Winning customers tolerated tolerated on a conditional basis
Due to persistent winning customer avoidance by bookmakers this section applies only to exchanges.
Exchanges offer a new and exciting condion for persistant winning customers which is acceptance
but as the exchange model has only been active for just over 10 years there has had to be reviews in the charging rates of this group.
As an exchange, profit for customers can be made in 2 ways.
1....Trading....when a customer makes persistant profitable positions on the matched prices between backing and laying in events.
2....Speculating....when a customer makes a persistant profit by matching prices that reflect greater values than implied chances
As the years have gone by, persistent winning customers have been actively making profits on a greater level and in greater numbers.
Technology and software specially designed to enable persistent profit has flourished and users have become more successful in there ventures.this has helped increase liquidity but has decreased fluidity as larger amounts of money are circumvented from the revenues and into customers personal accounts and not making the amount of multiple commission charges expected thus the exchange cannot break even with this sector of customers and effectively makes a loss with there acceptance.
As the problem has become greater so has the need for a control method to balance the perceived required profit of the company to encourage and maintain levels of new customers against the loss in created profit due to loss in fluidity of the most successful customers
The premium charge was then created to address the imbalance and maintain the important ethic that winners are welcome.
This concludes my report on this matter and I hope customers more fully understand why exchanges still offer the best only environment for all types of customer.
Thank you for taking the time to read this and good betting in the future.
betting enviroment
Bookmaker creates profit by laying all risks at a lower rate of return than the perceived chance of the runner
also he offsets any changes in amounts laid between risks by altering the price relative to volume of bets
thus they nearly always averages a healthy 25% plus gross profit.
The bookmaker discourages a profitable environment for winning and making a profit for the customer in the long term
exchanges never profit directly from any losing bet as he is neither laying or backing any item in an event
instead the customers back and lay between themselves and agree the price relative to volume and movement of matched price
the exchange then makes a small commission charge between 2-5% of profit of all winners of event and makes a marginal profit
an exchange by this process creates a market that has very small difference between implied chance and market value.
the exchange encourages a profitable environment for winning and also trading in the long term
winning environment
A bookmaker can afford to pay occasional winning punters but cannot afford to pay continually winning customers that reduce there profits and although having the revenue to pay them prefer avoidance.
an exchange can afford to pay continually winning customers and can tolerate them but only on a conditional basis
Business profit environment
A bookmaker will make a profit that is not marginal and providing profitable customers that persist are refused business can on average make a business viable profit to sustain the company and the companies future investment
An exchange though its marginal profits can only make a functional profit if liquidity and fluidity is high, as the money moving though markets must be circulated many times to ensure that enough charge is generated to sustain the company and the companies future investment.
Winning customers tolerated tolerated on a conditional basis
Due to persistent winning customer avoidance by bookmakers this section applies only to exchanges.
Exchanges offer a new and exciting condion for persistant winning customers which is acceptance
but as the exchange model has only been active for just over 10 years there has had to be reviews in the charging rates of this group.
As an exchange, profit for customers can be made in 2 ways.
1....Trading....when a customer makes persistant profitable positions on the matched prices between backing and laying in events.
2....Speculating....when a customer makes a persistant profit by matching prices that reflect greater values than implied chances
As the years have gone by, persistent winning customers have been actively making profits on a greater level and in greater numbers.
Technology and software specially designed to enable persistent profit has flourished and users have become more successful in there ventures.this has helped increase liquidity but has decreased fluidity as larger amounts of money are circumvented from the revenues and into customers personal accounts and not making the amount of multiple commission charges expected thus the exchange cannot break even with this sector of customers and effectively makes a loss with there acceptance.
As the problem has become greater so has the need for a control method to balance the perceived required profit of the company to encourage and maintain levels of new customers against the loss in created profit due to loss in fluidity of the most successful customers
The premium charge was then created to address the imbalance and maintain the important ethic that winners are welcome.
This concludes my report on this matter and I hope customers more fully understand why exchanges still offer the best only environment for all types of customer.
Thank you for taking the time to read this and good betting in the future.
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So you see the fundamental problem is that to allow persistent winners to continually use the system they must pay a charge that reflects the commission lost on the profit taken out of circulation!
If the exchange model fails then all persistent winners will fail and the better bettor market will be no more
so please support exchanges
If the exchange model fails then all persistent winners will fail and the better bettor market will be no more
so please support exchanges
Good question trev, because if they can accept winners but on condiontions then surely we can accept them in exchange[:D]
Contrary to what you may think I've always supported the PC, although it is flawed in some aspects regarding bettor's sequences of events.
The main issue I've had with your posts is that you don't appear to understand that non pc payers pay a greater percentage of their GP to BF, especially as you wanted to see PC payers rewarded with shares!
The main issue I've had with your posts is that you don't appear to understand that non pc payers pay a greater percentage of their GP to BF, especially as you wanted to see PC payers rewarded with shares!
And you seem to incorrectly assume that all winners pay PC.
Good points trev, i see what you mean, customers not paying pc do in fact pay there fair amount of commission and also
add there own level of liquidity and are as important to the company as the big winners, in fact this group is probably the preferred customer, also some winners may not pay pc.
add there own level of liquidity and are as important to the company as the big winners, in fact this group is probably the preferred customer, also some winners may not pay pc.
You assume betfair have a right to every penny doposited. The problem is that isn't true. They say I cost them money. That just isn't true either. They are not a bookmaker in the true meaning of the word. They provide a platform for people to match bets. The flotation has made them greedy and they try and justify it. And as I have said before, the premium charge payers are sharp minds. They will pass as much of it as they can onto you and other recreational players. The mugs will pay more than the pros will, so why is it a good idea?
A key flaw is that Betfair does not reward customers that do not take their profit out of circulation.
Liquidity is drained in only two ways:
1) The drain that occurs by Betfair taking commission and other charges
2) The drain that occurs by winners taking profit out of circulation.
For the first 4 years of my time on Betfair, I didn't withdraw a penny of my profit.
Liquidity is drained in only two ways:
1) The drain that occurs by Betfair taking commission and other charges
2) The drain that occurs by winners taking profit out of circulation.
For the first 4 years of my time on Betfair, I didn't withdraw a penny of my profit.
I have not implied that betfair deserve every penny deposited, all betting operations pay-out or no-one would pay-in.
.
But businesses are geared via infra-structure to maintain profits or all the things and services we enjoy in the modern world would disappear.
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But businesses are geared via infra-structure to maintain profits or all the things and services we enjoy in the modern world would disappear.
Yeah pumpkinslayer, I agree that the idea of consistently winning customers costing Betfair money is more than a little strange. Some of these are winning customers that offer the odds that are better than all the high street bookies by such a large margin that even after paying 5% commission recreational punters are better off here.
You'll be hard pressed to find a bookie regularly offering 80+ on a 100/1 shot, but plenty are willing to offer here, and if you trade it or place a large amount of bets, you will win consistently.
I don't understand why you think the PC cost will be passed on to recreational punters though. Any strategy that is used specifically to minimise PC will surely involve churning large amounts with a minuscule edge, tightening spreads, which is exactly what Betfair wants. In that scenario, the ones that lose out aren't recreational players, but small winners who need a decent margin to make it worth their while and can no longer get matched.
You'll be hard pressed to find a bookie regularly offering 80+ on a 100/1 shot, but plenty are willing to offer here, and if you trade it or place a large amount of bets, you will win consistently.
I don't understand why you think the PC cost will be passed on to recreational punters though. Any strategy that is used specifically to minimise PC will surely involve churning large amounts with a minuscule edge, tightening spreads, which is exactly what Betfair wants. In that scenario, the ones that lose out aren't recreational players, but small winners who need a decent margin to make it worth their while and can no longer get matched.
Why should they need to maintain profits? I'm sure they do but it's a stupid point of view to take.
Perhaps circulation aka fluidity is over-looked by the winners that boast of the value of liquidity, betfair profits are based on long-term fluidity , short term liquidity means less expected profit for betfair, the shortfalls in circulation created by winners creates a loss in commissions.
I would ask all persons opposed to any premium charges that if exchanges that allow long term winners to devalue the commissions increasingly ,cant invest, cant maintain the infra-strucure , cant attract enough new customers stagnate and ultimately fail, what would the future hold for those customers if betting exchanges were then not available in the future ?
I would ask all persons opposed to any premium charges that if exchanges that allow long term winners to devalue the commissions increasingly ,cant invest, cant maintain the infra-strucure , cant attract enough new customers stagnate and ultimately fail, what would the future hold for those customers if betting exchanges were then not available in the future ?
Also there seems to be a denial that betfair haven't played apart in the continued growth and success of the company
.If from the start of betfair to this day no big winners had persisted then would not betfair of made greater profits and greater growth and attracted more customers as the same amount of money would of been deposited and circulated more effectively thus creating more profit from marginal commissions, so how have the persistent winners helped betfair?
It seems that betfair has helped persistent winners and built them up at there expense which is in line with the
fairness ethic of the company, there has too come a time though when we must all pay the ferryman!
.If from the start of betfair to this day no big winners had persisted then would not betfair of made greater profits and greater growth and attracted more customers as the same amount of money would of been deposited and circulated more effectively thus creating more profit from marginal commissions, so how have the persistent winners helped betfair?
It seems that betfair has helped persistent winners and built them up at there expense which is in line with the
fairness ethic of the company, there has too come a time though when we must all pay the ferryman!
I think that's completely wrong. In the early days Betfair needed winners more than at any other stage. A betting exchange consisting purely of punters betting for fun is not feasible in the real world.
The reason being that if a certain type of bet is very popular, for instance England to win pretty much anything, the people on the other side of that bet will be those with a profit motive. If they were not there, the people trying to back England would have no-one to take their bet. You can't argue that when the price gets silly the market will take care of it, because that would once again create systematic winners.
When markets are efficient, someone is getting paid to keep them there. To say that the big winners that provide odds where otherwise there would be nothing there are somehow operating at the expense of Betfair just doesn't make sense. The more of these winners there are, the more competition there will be to create tighter spreads.
I believe that winners don't compete against recreational punters, but rather they compete against each other for the recreational punter's money.
The reason being that if a certain type of bet is very popular, for instance England to win pretty much anything, the people on the other side of that bet will be those with a profit motive. If they were not there, the people trying to back England would have no-one to take their bet. You can't argue that when the price gets silly the market will take care of it, because that would once again create systematic winners.
When markets are efficient, someone is getting paid to keep them there. To say that the big winners that provide odds where otherwise there would be nothing there are somehow operating at the expense of Betfair just doesn't make sense. The more of these winners there are, the more competition there will be to create tighter spreads.
I believe that winners don't compete against recreational punters, but rather they compete against each other for the recreational punter's money.
It seems what you say investor2 must be correct, but also some of my points must be correct therefore an exchange needs winners,losers and a successful exchange to flourish and all parties are as important as each other, if you take the case of betfairs main rival, they have been active for around ten years and yet they are realistically only 10% the liquidity of betfair, this success of betfair must of primarily come from being "first to provide the service" then reliant on customers to build up the finance base to power growth, but of course keeping the customers will be what betfair have excelled at to date and also attracting new customers has been a key development, also the quality of the betfair service is second to none in my opinion.
My personal opinion about the pc1 and pc2 is that these charges wont prevent winners from winning and being successful
but add a partnership element to winning , also there are natural ways to increase profits and one hopes a more profitable betfair can attract more customers and all parties enjoy continued growth and prosperity.
My personal opinion about the pc1 and pc2 is that these charges wont prevent winners from winning and being successful
but add a partnership element to winning , also there are natural ways to increase profits and one hopes a more profitable betfair can attract more customers and all parties enjoy continued growth and prosperity.
worry think about this from betfair shareholder point of view, is just how much money betfair need from each account to pay it's way to make a profit (pay it fair way)...If betfair really need 40%-60% of my profts, then i think betfair is in a lot of trouble as a company
I just think, betfair cost is so high, that betfair has spent to much money on tech and non gambling sh!t, that betfair has price it's self out of the betting exchange game
I just think, betfair cost is so high, that betfair has spent to much money on tech and non gambling sh!t, that betfair has price it's self out of the betting exchange game
thus they nearly always averages a healthy 25% plus gross profit
The road up to the tax office is infested with muggers. Many taxpayers never make it to the tax office with their taxes because they are mugged. Some are even murdered so never pay taxes again.
Only madmen would think the solution to this problem was to tax the muggers.
Only madmen would think the solution to this problem was to tax the muggers.
The "solution" is even crazier when you consider the muggers now spread black propaganda about the tax office all over town. Few new tax payers now register with the tax office for fear of losing their house. The tax office is now effectively a closed shop.
i think a lot of folk are missing the big message from premium charges and are failing to read in between the lines
betfair is so successful to winners and pays so much out to them that the lost in circulation of revenue caused by them has to be addressed so this means the following must be the logical implications of the said charges;
1...Betfair is undoubtedly the biggest payer to persistent payers in the betting world
2...Betfair has made the most growth by any betting company in a ten year period
3...Betfair is ten times the liquidity of any rival exchange and offers this liquidity to other potential winners.
4...Betfair now has a closer business relationship with winners and there mutual profits
5...Therefore there is not only acceptance but commitment to winners.
betfair is so successful to winners and pays so much out to them that the lost in circulation of revenue caused by them has to be addressed so this means the following must be the logical implications of the said charges;
1...Betfair is undoubtedly the biggest payer to persistent payers in the betting world
2...Betfair has made the most growth by any betting company in a ten year period
3...Betfair is ten times the liquidity of any rival exchange and offers this liquidity to other potential winners.
4...Betfair now has a closer business relationship with winners and there mutual profits
5...Therefore there is not only acceptance but commitment to winners.
Betfair doesn't pay anyone, they're just a broker between winning and losing punters.
Betfair doesn't provide liquidity, their customers do.
If the customers were organised we could do this on another platform at a drop of a hat, because that's all Betfair is, a platform. It is not the market.
Exchange betting is the way forward but at some point in the future there will be no premium charge as it's unsustainable. A competitor will come through and Betfair will either back track or die.
Imagine if in the not too distant future the USA and China opened up. Do you think Betfair would still be the market leader with a premium charge of up to 60%?
Betfair doesn't provide liquidity, their customers do.
If the customers were organised we could do this on another platform at a drop of a hat, because that's all Betfair is, a platform. It is not the market.
Exchange betting is the way forward but at some point in the future there will be no premium charge as it's unsustainable. A competitor will come through and Betfair will either back track or die.
Imagine if in the not too distant future the USA and China opened up. Do you think Betfair would still be the market leader with a premium charge of up to 60%?
I personally did not see any profit in following horses or punters that were blinkers GOM
I will seed my own threads rather than have silly ones at the top
Get On - BF is a paid advertiser on the biggest US gambling forum Rx.com and it is clear to almost all there that BF cannot compete on US sports with either the best of the sportsbooks or M@tchbook. So how'd they sell PC to US customers above and beyond a product that is not competitive for US sports already is beyond me.
Anyway getting back to bf_f - good post however you have conveniently avoided mentioning that it is the huge sums invested in technology, new products and markets and the huge cost of trying to acquire players now that BF isn't acquiring them thru word of mouth that is the primary problem as to why BF needs to raise funds thru extra charges.
The problem now for BF is that it has got too big and so many areas aren't paying for themselves and it's gonna be hard to backtrack hence the numerous increases in commission, then PC1 and 2. Real problem is that all these things continue to make the product more uncompetitive, liquidity falls leading to more uncompetitive, less liquidity.....
Big problem and no matter how you justify it, truth is BF has messed up an awesome product of 7 odd years ago and impossible to go back there and grow the company properly now.
Don't get me wrong I love the "theory/ideal" of the exchange over bookmakers but BF is so far from those ideals that the product is barely recognisable.
Anyway getting back to bf_f - good post however you have conveniently avoided mentioning that it is the huge sums invested in technology, new products and markets and the huge cost of trying to acquire players now that BF isn't acquiring them thru word of mouth that is the primary problem as to why BF needs to raise funds thru extra charges.
The problem now for BF is that it has got too big and so many areas aren't paying for themselves and it's gonna be hard to backtrack hence the numerous increases in commission, then PC1 and 2. Real problem is that all these things continue to make the product more uncompetitive, liquidity falls leading to more uncompetitive, less liquidity.....
Big problem and no matter how you justify it, truth is BF has messed up an awesome product of 7 odd years ago and impossible to go back there and grow the company properly now.
Don't get me wrong I love the "theory/ideal" of the exchange over bookmakers but BF is so far from those ideals that the product is barely recognisable.
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