General Betting
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27 Apr 12
13:39
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Date Joined:
10 Jan 02
Many of you will be aware of a recent decision by the High Court of Australia which upheld Racing NSW’s decision to impose a turnover based fee on wagering operators.
Due to the additional cost to Betfair associated with this decision and in order for us to continue to offer an Australian racing product to customers, it is necessary to implement an increase to prices on all Australasian racing markets.
From 1 May 2012, Betfair’s market base rate (‘MBR’) on all thoroughbred, harness and greyhound races in Australia and New Zealand will increase from 5% to 6.5%. Customers will still obtain Betfair Points on these markets in the ordinary manner and will remain eligible to receive a discount on the commission payable in accordance with their discount rate (the maximum discount rate remains 60%).
This price increase does not apply to any sport or overseas racing markets.
Betfair remains committed to providing our customers the best products and service in the market and despite this adjustment, Betfair’s prices will remain the best of any wagering operator on Australasian racing.
Due to the additional cost to Betfair associated with this decision and in order for us to continue to offer an Australian racing product to customers, it is necessary to implement an increase to prices on all Australasian racing markets.
From 1 May 2012, Betfair’s market base rate (‘MBR’) on all thoroughbred, harness and greyhound races in Australia and New Zealand will increase from 5% to 6.5%. Customers will still obtain Betfair Points on these markets in the ordinary manner and will remain eligible to receive a discount on the commission payable in accordance with their discount rate (the maximum discount rate remains 60%).
This price increase does not apply to any sport or overseas racing markets.
Betfair remains committed to providing our customers the best products and service in the market and despite this adjustment, Betfair’s prices will remain the best of any wagering operator on Australasian racing.
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Replies: 59
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How can the above work if they have to pay 1.5% of backers stakes to racing?
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Maybe there's not actually that much turnover thru the NSW markets and increasing the base rate throughout the whole of the AUs and NZ markets allows them to offset. Plus it allows them guage what effect an increase in their overall base rate will have especially if they want to increase to base rate when the sportsbook comes in' to herd people over from the exchange. Think of it like when the Government wants to try out a new tax they try it on the jocks first, feck :)
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6.5% aussie race commission ? is that right ?
as if it wasnt hard enough to profit as it was ....  |
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That's a 30% increase on the base rate of 5% commission. Not good. :(
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.. and what happens to the premium charge ?
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Joe, why wouldn't the NSW racing authorities just start trading massive amounts on the NSW markets?
lol re Jocks. |
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i.e. 100K lay at 2.0, 100K back at 2.0, they pay no commission but they receive 1.5K turnover fee.
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If there is as much ping pong money in Aussie markets as there is in the UK then I can't see how BF can make it pay on a turnover tax regime.
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mebbe it's charged on "net" back bets?
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My immediate thought was the opportunity for foul play under the 6.5% charge.
All it takes is for one user linked to Racing NSW, or one of Betfair's competitors (and therefore ememies) to back and lay the same selection for large amounts to guarantee the racing authorities high commissions. |
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Amazing decision by Betfair to accept the charges from NSW racing and the followers from Victoria. Now they have made the charge for all Australian racing I assume the other states and codes will follow in charging 1.5% t/o charge. Why didnt they shut down NSW racing on here last month to make a stance?
How long now before everyone else asks for 1.5% of backer turnover? I am sure the UK levy would like that. The EPL might be interested too. How can the Betfair model be expected to work with a 1.5% turnover charge when the whole ecosystem of the exchange depends on traders? Its a low margin product. |
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I expect you will find that betfair's creative management wontt have too much "backer stake" to pay turnover tax on. With cross matching I expect betfair will find most of the bets will be non-turnover "lay bets"
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Hazel, you perhaps have to hope so... The other disturbing trend is for sports authorities to get wise to the fact that they can impose variable fees (for data etc.) wrt which events are really popular and important.
The Melbourne Spring Carnival is already charging 2% over the odds compared to Victoria's state races (and they are popular enough). As tracks get more powerful in England, you can see the time when Royal Ascot apply directly to betting operators for fees. Imv bf royally botched the whole handling of the turnover tax in Australia. They expanded too quickly, didn't cultivate friends or political connections (thinking their partner had these in hand), then found themselves having to choose between accepting a protectionist decision or cutting jobs. |
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How can this work ?
Customer has 1000 @ 1.1 and wins. Turnover tax = 15 Betfair earn 6.5 in commission (assuming no com discounts)so lose 8.5. Will they claim the customer had 100 @ 11 for the selection not to win ? So now the turnover tax is only 1.5? |
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hazel, the cross matcher (i.e. betfair) would then be seen as the backer. If it wasn't then the NSW authorities would soon change the definition.
There must be something more to this or, as I said earlier, the racing authorities themselves could just generate massive turnover by trading. |
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Feck
Do you really believe that the NSW racing authorities would even consider, let alone be allowed, to bet and lay large offsetting amounts on BF to ramp up the turnover base on which they are to receive a 1.5 % commission ? It would be highly criminal to say the least and would threaten everything they have gained, if they did it and were exposed in due course. |
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What's to stop a disgruntled customer doing just that? On a big meet with plenty of liquidity they could quickly cost BF tens of thousands.
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Actually maybe not tens of thousands but loads of backs and lays at the same price would soon add up.
Surely there is some kind of netting per customer which Betfair can use to show what was the real turnover on an event? |
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FAFH, WALOFS. The Vis is right. There's a near endless supply of disgruntled betfair customers. I'm sure many pc payers / Voler La Vedette backers would be quite happy to accommodate the NSW racing authorities even at a small cost to themselves.
I do believe though that something must have changed since the original announcement as even the clowns at betfair wouldn't leave themselves that open. hazel, I should have added, if betfair were allowed to use the cross matcher as justification for everything being a lay bet why wouldn't the tabs / bookmakers be allowed to do the same? |
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Feck
When they ( the NSW authorities) would simultaneously gain from increased turnover tax ?. Somehow I don't think that would be legal. BF would be all over them like a rash, if nothing else. |
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You've lost me FAFH. Is it illegal for members of the NSW racing authorities to join betfair? Is it illegal for disgruntled bf customers to trade?
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Without knowing the details and NOT having thought through ... could betfair change it's terms and conditions to specify a bet/turnover as being the liability of the user at the point when the event starts i.e., the "suspend" appears. Bookies can cancel bets pre-event if they like which is kind of like trading out of a position..you see the direction I'm going with this? Not sure about in-play but pre-event I wonder?
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t&c section1.2
.....In particular you undertake not to (i) engage in any activity which has the purpose or effect of causing damage to or in any way hindering our business operations or generating or increasing a liability on us, including without limitation any tax, levy or duty collecting authority; or (ii) bet on, or manipulate any individual Market in a manner which we believe has the purpose or effect of adversely affecting the integrity of the exchange or any Market. |
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personally I am not so worried about how betfair cope with a turnover tax, I am more interested in how many punters continue to bet here with a 6.5% MBR.
I have long thought that Betfair will want to increase the MBR to facilitate growth. It tried 7% in some events a few years back, but was not strong enough at the time to withstand protest. It is a much stronger company now and has since introduced the premium charge without distress. Growth is Betfair's number one goal. Increased MBRs will happen sometime in the future, the Australian punters will determine how soon. |
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adversely affecting the integrity of the exchange
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Feck
Doesn't "NSW racing authority" refer to some sort of state Govt. regulatory body overseeing/regulating racing in NSW ? |
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Annoying things about this
(a) tax on turnover introduced to support an ineffictent operation - Racing NSW. The racing product there has been declining for years eg shrinking field sizes, unable to support Saturday class racing on public holidays (usually either have midweek prizemoney or a meeting at a second tier track). R NSW were the ones who bought the case in. At the same time Racing Victoria have been consistently maintaining and even improving their race strength and prizemoney. How can they do that under the "unfair" old commission that is not enough to pay the way according to R NSW. Hmmm (b) The High Court decision. As far as I can see it seems anti-competition, favouring the established less efficient players. (c) Punters end up paying for higher horse sale prices, that really helps the race clubs?? (d) BF's lack of fight once the decision was in. (e) BF once again shafting the easy target, it's clients. There's no other exchange for Oz racing. At least there's a number of other betting agencies in Australia. Against that the corporate bookies (mostly owned by UK firms now) continually ban cients and it galls to bet with the TAB's that feed the race clubs taking advantage of this decision. (f) BF imposing a blanket increase on all racing. Not all states or even codes have asked for the extra payment yet they slug clients betting on those "old commission structure" markets |
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Point (f) is a good one. How does BF justify this ?.
Bit difficult though to have different commission structure for races in different states I would obviously guess. |
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Why not FAFH. That was supposedly why they brought in market base rates in the first place although that & betfair holidays were a smokescreen for increasing the commission point bands.
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A ridiculous move by Betfair to have a blanket increase. Why penalise they punters who bet in the states, that have a gross profit system ?
I'm not sure how big a drop in liquidity the increase, will cause. I guess we will just have to wait and see, but if there is a significant drop, the states working on gross profit will notice the dip in Betfair's contribution. |
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Very concerning that the statement gives no particular details rather just blanket statements.
By applying the 1.5% levy across the board for all AUS markets, they are offsetting the traders and market makers because the position takers are the one's being hit hardest. As the levy applies to Racing NSW, all other States including New Zealand are a cash cow at this moment in time. Does the 60% maximum apply to 6.50% or 5.00%? Does the commission point structure change for AUS wallet? Will the Betfair points schemes be seperate for each wallet? These are just a few of the questions left by a blanket announcement with little detail included. When I rang Betfair, the operator had no idea how to answer. How about some clarification please, this is a major structural change for those with high turnover but low profit margins. |
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racing's not my thing, but I tend to agree with the point made some way above; BF should just pull out of NSW racing.
doing things this way just risks incentivising other governing bodies to go after more money the same way. as things stand they appear (I may be wrong) to be subsidizing a bigger payment to one state by higher charges across the board, which will actually decrease the take of other states by decreasing turnover. if that's the case then it's plainly not sustainable as all states will go for the same model. and if it takes 6.5% base rate across the board to subsidize one state's rake, what's it going to take to do the same for all of them? |
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Viva
Betfair have missed the boat. Victoria have already indicated that they will move to the turnover model after August, albeit on a 12 month trial. NSW and Vic are by far the largest states when it comes to betting on horse racing. They would have at least 70% of the national turnover. |
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viva el presidente!
Date Joined: 10 Jun 06 Add contact | Send message When: 28 Apr 12 20:11 Joined: Date Joined: 10 Jun 06 | Topic/replies: 11,723 | Blogger: viva el presidente!'s blog racing's not my thing, but I tend to agree with the point made some way above; BF should just pull out of NSW racing. doing things this way just risks incentivising other governing bodies to go after more money the same way. as things stand they appear (I may be wrong) to be subsidizing a bigger payment to one state by higher charges across the board, which will actually decrease the take of other states by decreasing turnover. if that's the case then it's plainly not sustainable as all states will go for the same model. and if it takes 6.5% base rate across the board to subsidize one state's rake, what's it going to take to do the same for all of them? Turnover will drop and they will get less money out of Betfair than they did before. |
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'daq hasnt increased their aussie commission have they ?
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They don't bet on Aus racing anymore (only did for a short time before they got in trouble)
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More changes to the pricing structure for betting on Australian racing, was announced yesterday by Betfair.
A 1.2% charge on all back bets, if you meet the criteria. See the Aussie Forum or check this link. betfair.com.au/turnovercharge/ This surely is the death knell, for traders on Aussie racing. |
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Thanks Castiron.
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What do you think Feck ?
Plenty on the Aussie forum saying the heavens are about to fall in. I know your opinion of the Ferengi. |