General Betting
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The Premium Charge was brought in to compensate Betfair from big winners that cost the exchange money. But instead of it being a 10 year rolling profits of £250,000 needed to qualify. It is £250,000 net profits over your lifetime.
As the premium charge stands now it is purely for big winner that cost the exchange money. In 5-10 years time more punters will fall into this charge.
If Betfair only counts the last 10 years of profit it will serve the purpose the Premium Charge was meant for. Which is for people who make at least £25,000 average per year.
Otherwise in the future it will be for people who make £15,000 or £20,000 per year.
As the premium charge stands now it is purely for big winner that cost the exchange money. In 5-10 years time more punters will fall into this charge.
If Betfair only counts the last 10 years of profit it will serve the purpose the Premium Charge was meant for. Which is for people who make at least £25,000 average per year.
Otherwise in the future it will be for people who make £15,000 or £20,000 per year.
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No point planning for the future, betfair can change the goalposts at any time
£250k could be 100k in 5/10 years time
£250k could be 100k in 5/10 years time
PC isn't aimed at big winners it's aimed at consistent winners who, without it, don't pay enough commission relative to their gross profit.
I doubt they'll change the 250k threshold because, as the op says, it includes more and more users over time anyway. Rather cleverly imo.
I doubt they'll change the 250k threshold because, as the op says, it includes more and more users over time anyway. Rather cleverly imo.
If they lower the 250k threshold it will also take a larger amount of resources to police.
do you really think betfair will be an exchange in 5/10 years?.... the only people who justify the premium charge are those who have no other option.this public company is only interested in massive profits on a par with bookmakers and the only way to do that is to be one.
On the contrary I think the pc is only disputed by those who either don't properly understand it or are annoyed because they have to pay it.
It will be interesting to see what happens to Betfair and other exchanges over the next 5-10 years. I find it hard to imagine Betfair in business without the exchange still in there somewhere.
It will be interesting to see what happens to Betfair and other exchanges over the next 5-10 years. I find it hard to imagine Betfair in business without the exchange still in there somewhere.
catfleppo, I disagree. I think there are lots of people who dislike injustment even if it doesn't affect themselves.
At least I was wholeheartedly against it from day 1 even if I wasn't even close to paying it at that time.
Surely I can't be the only one.
At least I was wholeheartedly against it from day 1 even if I wasn't even close to paying it at that time.
Surely I can't be the only one.
It's strange to me that anyone really thinks the system was more just pre pc but I think we are in danger here of re-opening a can of worms that has been done to death many times over.
Without opening a can worms, 'more just' has nothing to do with it. Betfair took more money because they could.
JHENIN
The Premium Charge was brought in to compensate Betfair from big winners that cost the exchange money
Whatever you think about PC, this just isn't factual. Betfair have every right to charge whatever they think leads to most profit for them though. Betfair might just as well argue that a customer that makes £10M a year and pays £4M commission with £500k operating costs is costing them money, taking too much out of the system. The 20-60% barriers are pretty arbitrary.
Also, ask yourself why other exchanges haven't implemented a premium charge. Surely, if PC territory customers cost the exchange money, the other exchanges shouldn't be offering them sweetheart deals to move to their platform?
JHENIN
The Premium Charge was brought in to compensate Betfair from big winners that cost the exchange money
Whatever you think about PC, this just isn't factual. Betfair have every right to charge whatever they think leads to most profit for them though. Betfair might just as well argue that a customer that makes £10M a year and pays £4M commission with £500k operating costs is costing them money, taking too much out of the system. The 20-60% barriers are pretty arbitrary.
Also, ask yourself why other exchanges haven't implemented a premium charge. Surely, if PC territory customers cost the exchange money, the other exchanges shouldn't be offering them sweetheart deals to move to their platform?
For the top payers it's effectively a form of restriction. The only reason they still play on bf is that they have no other option.
As TheInvestor said, what's more "just" in someone paying a lot more and nobody paying less 
Oh no..... Ok, before pc winning customers paid between 5% and 100% of their gross profit in commission. Post pc they pay between 20% and 100% - the lowest payers now pay more. There is less variance and therefore it's fairer. There are aspects of the pc that I don't approve of but I don't see how it can be argued that it was fairer before.
I'd rather they had done away with the comm. system in favour of some form of transaction pricing than tinkered and come up with the pc.
There is less variance and therefore it's fairer.
Fairer for who? It's certainly a lot fairer for Betfair shareholders because they are pocketing the money that would otherwise go to PC payers.
Fairer for who? It's certainly a lot fairer for Betfair shareholders because they are pocketing the money that would otherwise go to PC payers.
The main thing I don't like about the charge is the smaller winners that have made over £100,000 and £150,000 over the lifetime of their account, lose the incentive to carry on betting with Betfair because they know once they reach £250,000 (some may take 15-20 years) it will become near impossible to make a long term profit.
Most on Betfair make a loss over the long term. But everyone bets on Betfair to try and make a profit. By charging the premium charge over your whole lifetime it takes away the incentive for smaller winners to spend time to attempt to reach £250,000.
Most on Betfair make a loss over the long term. But everyone bets on Betfair to try and make a profit. By charging the premium charge over your whole lifetime it takes away the incentive for smaller winners to spend time to attempt to reach £250,000.
I can see Smarkets effectively acting as agents for premium charge payers. I'm not sure whether that's by design from their part or not.
why would you have a department dedicated to the premium charge if it wasn’t about the money.and why add another premium charge just before you float on the stockmarket, call me cynical but i dont think it was in the best interest of the exchange.
lmlac 26 Feb 12 20:43
There is less variance and therefore it's fairer.
Fairer for who? It's certainly a lot fairer for Betfair shareholders because they are pocketing the money that would otherwise go to PC payers.
Fairer for everyone. And getting money from pc payers into shareholders pockets is something thatbbetfair management should be doing isn't it? What would your attitude be to a few consistent winners paying really low rates of commission if you were a shareholder?
There is less variance and therefore it's fairer.
Fairer for who? It's certainly a lot fairer for Betfair shareholders because they are pocketing the money that would otherwise go to PC payers.
Fairer for everyone. And getting money from pc payers into shareholders pockets is something thatbbetfair management should be doing isn't it? What would your attitude be to a few consistent winners paying really low rates of commission if you were a shareholder?
"On the contrary I think the pc is only disputed by those who either don't properly understand it or are annoyed because they have to pay it."
Disagree with this. You can most definately be understanding of some form of cap on the profit margin for long term winners/professional players but still think PC3 unfair. You only have to think it's wrong for companies to offer worse terms to long term customers/suppliers/business partners just because they have been doing business with them for a long time. I think it's generally accepted to offer a better deal to new customers the first month or the first year to attract new customers. But not to offer someone who has been a customer for say five years a better deal than someone who has been a customer for ten years unless the five-year customer is a bigger or in some other way better customer.
Imagine for example a small town with two Coca Cola retailers. One of them has sold Coca Cola for seven years, and the other for twenty years. Both of them sell roughly the same quantity of Coca Cola every month and have been doing so for the past few years. They also sell for the same price. Then the Coca Cola company suddenly contacts the retailer they have been doing business with for twenty years and tells him: "We have estimated that you now have made £250,000 profit selling Coca Cola. Therefore you will have to pay us 10p extra per can from now on. Your competitor will not be affected by this price change, but don't worry, once he has made a lifetime profit of £250,000 he too will have to pay us 10p extra per can".
Would that be fair?
Disagree with this. You can most definately be understanding of some form of cap on the profit margin for long term winners/professional players but still think PC3 unfair. You only have to think it's wrong for companies to offer worse terms to long term customers/suppliers/business partners just because they have been doing business with them for a long time. I think it's generally accepted to offer a better deal to new customers the first month or the first year to attract new customers. But not to offer someone who has been a customer for say five years a better deal than someone who has been a customer for ten years unless the five-year customer is a bigger or in some other way better customer.
Imagine for example a small town with two Coca Cola retailers. One of them has sold Coca Cola for seven years, and the other for twenty years. Both of them sell roughly the same quantity of Coca Cola every month and have been doing so for the past few years. They also sell for the same price. Then the Coca Cola company suddenly contacts the retailer they have been doing business with for twenty years and tells him: "We have estimated that you now have made £250,000 profit selling Coca Cola. Therefore you will have to pay us 10p extra per can from now on. Your competitor will not be affected by this price change, but don't worry, once he has made a lifetime profit of £250,000 he too will have to pay us 10p extra per can".
Would that be fair?
catfleppo, I actually think it's you who don't fully understand how PC may affect some customers.
All your comments are made with the view that only what's referred to as traders on here are the ones paying PC.
Plenty of punters/position takers are caught in the net and for them it leads to more variance and possibly to much to handle.
And I don't think even you can think it's fair that two persons with the same betting style and same long term profit are treated differently just based on when in their lifetime on here they were making most of their profit.
All your comments are made with the view that only what's referred to as traders on here are the ones paying PC.
Plenty of punters/position takers are caught in the net and for them it leads to more variance and possibly to much to handle.
And I don't think even you can think it's fair that two persons with the same betting style and same long term profit are treated differently just based on when in their lifetime on here they were making most of their profit.
The real problem with the 250k limit is it encourages people with winning systems to sell them on. The whole can of worms as to what is an 'entity' is then opened up. If lots of people use the same methods from the same teacher is the £250k limit split between them because they are the same 'entity'?
Have to be very careful about sharing systems or tips now.
Have to be very careful about sharing systems or tips now.
In business where you have one supplier and a thousand buyers, or one buyer and a thousand suppliers, the thousand will always get screwed.
Anyone aware of when the latest PC amendment is to be introduced?( Pre-race and in-running being treated as two divisions on the same account for PC purposes). It sounds like a mess to me, back to lays would be impossible to begin with.
Eddie, I have seen some of your examples and sympathise with the effect pc has on boom and bust profits. I think I have always expressed my disapproval of this and support a rebate system of some kind.
In general the commission system/pc isn't fair and nor should it be. It is a tool for the optimisation of betfair's profits and has to be tweaked accordingly which involves annoying people from time to time. Naturally, one consideration is the alienation of customers and I guess their is a balance between this and clawing in as much money as possible.
Note I have always used (I hope) the word "fairer" to describe the situation post pc rather than "fair".
Mr. Anderson, your analogy is flawed because the retailers are in an equal position to begin with which is not the case for Betfair users pre pc.
In general the commission system/pc isn't fair and nor should it be. It is a tool for the optimisation of betfair's profits and has to be tweaked accordingly which involves annoying people from time to time. Naturally, one consideration is the alienation of customers and I guess their is a balance between this and clawing in as much money as possible.
Note I have always used (I hope) the word "fairer" to describe the situation post pc rather than "fair".
Mr. Anderson, your analogy is flawed because the retailers are in an equal position to begin with which is not the case for Betfair users pre pc.
I didn't doubt that you would find my analogy flawed, but I don't think it's that bad.
The retailer who has sold Coca Cola for twenty years must have had it good until seven years ago when he got a local competitor. Probably had a bit higher profit margin back then? Some might argue that it's only fair that he gets a lower profit now since he made such a big profit in the early days? Others might argue that the Coca Cola company shouldn't hold that against him and instead be happy that they had someone willing to sell their product back then? There's no denying that the long time retailer has made a greater lifetime profit though. In a way they are in an equal position, but in another way they are not imo. But let's make them a bit more different. Let's say the old retailer now sells 10 percent more Coca Cola per annum than the new retailer, and that he sells them 3 percent cheaper and has a twelve percent lower profit margin. The difference isn't great, but the old retailer actually makes a slightly lower annual profit now despite selling more. He is still way ahead on lifetime profit though since he has sold Coca Cola for so much longer. Now you can't say that the retailers are in an equal position. Yet the Coca Cola company calls him and tells him: "We have estimated that you now have made £250,000 profit selling Coca Cola. Therefore you will have to pay us 10p extra per can from now on. Your competitor will not be affected by this price change, but don't worry, once he has made a lifetime profit of £250,000 he too will have to pay us 10p extra per can".
Would that be fair?
If you still think they are in an equal position then it's certainly no more equal than many winning Betfair customers who mostly differ in how long they have been customers or business partners as you might call some of them. There are bound to be quite a few Betfair customers who make roughly the same annual profit and have the same profit margin (maybe somewhere in the 20-40% category) year after year, with just some random variation and the only real difference being how long they have been on Betfair.
The retailer who has sold Coca Cola for twenty years must have had it good until seven years ago when he got a local competitor. Probably had a bit higher profit margin back then? Some might argue that it's only fair that he gets a lower profit now since he made such a big profit in the early days? Others might argue that the Coca Cola company shouldn't hold that against him and instead be happy that they had someone willing to sell their product back then? There's no denying that the long time retailer has made a greater lifetime profit though. In a way they are in an equal position, but in another way they are not imo. But let's make them a bit more different. Let's say the old retailer now sells 10 percent more Coca Cola per annum than the new retailer, and that he sells them 3 percent cheaper and has a twelve percent lower profit margin. The difference isn't great, but the old retailer actually makes a slightly lower annual profit now despite selling more. He is still way ahead on lifetime profit though since he has sold Coca Cola for so much longer. Now you can't say that the retailers are in an equal position. Yet the Coca Cola company calls him and tells him: "We have estimated that you now have made £250,000 profit selling Coca Cola. Therefore you will have to pay us 10p extra per can from now on. Your competitor will not be affected by this price change, but don't worry, once he has made a lifetime profit of £250,000 he too will have to pay us 10p extra per can".
Would that be fair?
If you still think they are in an equal position then it's certainly no more equal than many winning Betfair customers who mostly differ in how long they have been customers or business partners as you might call some of them. There are bound to be quite a few Betfair customers who make roughly the same annual profit and have the same profit margin (maybe somewhere in the 20-40% category) year after year, with just some random variation and the only real difference being how long they have been on Betfair.
Ok, I can see that you are highlighting the discrepancy in commission between someone on pc and super pc. My point is that a bigger discrepancy already existed between users paying, say, 10% and 50% commission.
To illustrate my point using something like your analogy there would need to be several sellers selling coke at £2 a bottle. They all sell roughly the same amount yet the supplier charges seller a 50p and all his other sellers between 100p and 150p. The supplier notices the glitch and raises the price charged to seller a to 100p who is then bitterly upset at the unfairness of life the universe and everything despite the fact that he is still paying the lowest rate available.
To illustrate my point using something like your analogy there would need to be several sellers selling coke at £2 a bottle. They all sell roughly the same amount yet the supplier charges seller a 50p and all his other sellers between 100p and 150p. The supplier notices the glitch and raises the price charged to seller a to 100p who is then bitterly upset at the unfairness of life the universe and everything despite the fact that he is still paying the lowest rate available.
The whole model of 'fairness' can be discarded, as it does not help to predict future changes in the PC.
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