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frog2
15 Apr 13 11:52
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Date Joined: 01 Feb 08
| Topic/replies: 4,229 | Blogger: frog2's blog
The Premium Charge is a legacy of Betfair's former management team and hopefully the new CEO has an open mind to it.

Following the 1st charge UK pre-play racing volume, which has been growing nicely, started to fall. This is a key market in terms of real commission. Even now racing makes up over 40% of exchange revenues.

Following the 2nd premium charge both revenues and amounts matched on everything bar in play sports (where millions are traded for very little revenue) have gone from growing year on year to flat lining. At the same time group revenue growth has stopped. This is after growth in the sportsbook and mobile channels.

Its not difficult to see why this is happening. Betfair has a monopoly in some markets. Where people have to use them e.g. to trade on a test match cricket or a tennis match inplay they over no other option. They either play here or stop totally. Where people can go elsewhere e.g. pre-race horses or football they will go elsewhere. The charge is simply too high.

The problem is where Betfair has a monopoly it is making a low margin (trading) and where it does not (when people want an actual bet) BF makes a higher margin. Betfair is losing its higher margin business.

An outright punter winning just over 2.5% on stakes will pay the 40% premium charge if he stakes enough. This is a very marginal system yet he still falls into the threshold.

Even if Betfair acted now they have lost so much good will. I used to do 100% of my betting on here. I have never even paid the charge but slowly I am moving my betting elsewhere. I need to keep my generate commission rate high so I avoid high margin bets on here. I use it for lower margin bets and trading that I could not do elsewhere.

I hope Betfair see sense. In 2008 the exchange was not broken. It was still growing both in revenues and amounts matched across all markets. They refused to settle for this growth and are now paying the price and must scrap the charge before its too late and the decline becomes terminal. Otherwise they will just be left with a second rate sportsbook and casino.

average daily matched all horseracing and non inplay sports year to date   
   
Apr-07    £33,345,799
Apr-08    £45,879,142
Apr-09    £51,573,807 (1st PC 11/08)
Apr-10    £55,740,339
Apr-11    £61,204,673
Apr-12    £60,555,818 (2nd PC 06/11)
Oct-12    £61,014,819*

average daily group revenue year to date

Apr-03    £87,671
Apr-04    £186,301
Apr-05    £293,151
Apr-06    £400,000
Apr-07    £509,589
Apr-08    £668,493
Apr-09    £824,658  (1st PC 11/08)
Apr-10    £934,247
Apr-11    £1,076,712
Apr-12    £1,065,753  (2nd PC 06/11)
Oct-12    £1,090,217*

*averages half year

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Replies: 2,075
By:
Johnny The Guesser
When: 15 Apr 13 13:40
Turnover is vanity
Profit is reality.

Which business would you rather own?

One with Turnover of £10m or £100m?
By:
munkeyhorn.
When: 15 Apr 13 14:47
Turning off various jurisdictions will have accounted for the differences you've highlighted here.. not Premium Charge
By:
frog2
When: 15 Apr 13 15:05
Jurisdictions were 'turned off' at the same time the last six month data was released. i.e. only in December 2012.

Revenue and amounted matched have been stagnant for over 18 months.
By:
munkeyhorn.
When: 15 Apr 13 21:12
That's not correct. Cyprus, (c4% of exchange revenue) went earlier in 2012, as did nearly all marketing in larger jurisdictions such as Greece, Spain & Germany which would certainly have made a difference.

And stagnant isn't falling.. you over-simplifying by extrapolating and say it would have grown without PC. Where would that growth have come from? Fallen out of the sky?
By:
fixed
When: 16 Apr 13 03:05
he didn't exactly say that.....cause-and-effect is of course debatable, but his main statement "Betfair has stopped growing the moment the PC was introduced" is 100% correct
By:
frog2
When: 16 Apr 13 08:16
munkeyhorn.

Cyprus, (c4% of exchange revenue) went earlier in 2012, as did nearly all marketing in larger jurisdictions such as Greece, Spain & Germany which would certainly have made a difference.

Betfair left Greece Nov 2012, Spain, June 2012, Cyprus July 2012 and Germany Nov 2012.

Non of these exits were involved in zero growth 30th April 2012 to 30th April 2013. PC2 was introduced in June 2012.

And stagnant isn't falling.. you over-simplifying by extrapolating and say it would have grown without PC. Where would that growth have come from? Fallen out of the sky?

Well the growth was certainly there before and is not there now. Other online firms are still growing nicely. WH online revenues £406m 2012 up from £321m in 2011.
By:
frog2
When: 16 Apr 13 08:16
* i meant..

Non of these exits were involved in zero growth 30th April 2011 to 30th April 2012. PC2 was introduced in June 2012.
By:
frog2
When: 16 Apr 13 08:17
* will get it right eventually..

Non of these exits were involved in zero growth 30th April 2011 to 30th April 2012. PC2 was introduced in June 2011.
By:
Templeton Peck
When: 16 Apr 13 10:46
I can only speak for myself, but since becoming a 50% PC payer I've had to alter my strategy with the result being significantly reducing my liquidity. 

I've also moved over 10% of my balance to **** and am getting a decent amount matched there. 

Having seen how much I've had to pay today (the equivalent of two weeks average profit on here through 2012/3), this move over is only going to become more substantial.
By:
Stow_judge
When: 16 Apr 13 16:53
I think a fixed rate of commission is the way to go, perhaps between 3 and 4%
By:
jas1968
When: 16 Apr 13 18:12
All they do is talk about changing things , nothing ever happens. Its like being robbed blind every week , I detest Betfair.
By:
Ms Tilt
When: 16 Apr 13 19:10
Hi jas. I take it you are not using this site at the moment. Has anyone been it touch with you from the site since you left?
By:
Johnny The Guesser
When: 16 Apr 13 19:31
Maybe,just maybe,Betfair don't want your business.
By:
jas1968
When: 16 Apr 13 20:50
I use it for less than 10 % of my bets these days . I was told by my account manager 3 months ago PC was being reviewed , It would seem that was just more bul1shit
By:
CONER
When: 19 Apr 13 07:51
JAS,
   I also have cut right down on here,still use them a little more than you,but have stopped leaving money in markets now.Just not worth the hassle when at the end of week they steal money out your account.
                      The exchange has all but gone,in running on horses and football is at times pathetic,compaired to a few years ago.Why would any one(except bot users)want to spend hours and hours on this site,only for at the end of the week to have there profit seized.
Hope i am still around when the day comes,as it surely will,that someone challenges this joke tax in the law courts.
By:
stu
When: 19 Apr 13 08:28
I think a fixed rate of commission is the way to go, perhaps between 3 and 4%

Not much wrong with that idea IMO
By:
frog2
When: 19 Apr 13 12:21
A fixed rate of 3-4% would be great for traders and rubbish for outright punters. Anyone that bets big and is on 2% at the moment bringing real liquidity here would be crippled.

The 2%-5% commission rate is tried and tested to work. It took place (with no premium charges) for periods of great growth.

The decline in UK pre-race markets started just after PC 1.

The decline in everything else (and group revenue) started just after PC 2.

The PC makes Betfair peanuts in income and has destroyed revenue growth.

They spend a fortune on marketing and the cashout feature (that costs them commission) but they fail to see the massive PR coup if they apologise and scrap the PC. It would stop the rapid growth of Purple in its tracks.
By:
0%profit
When: 19 Apr 13 12:28
as i said in another post i told many friends about how good betfair was and at least 8 joined.now i curse and moan about them to anyone who will listen.no matter what betfair spend on advertising word of mouth will always be the best or worst advert for them and i am afraid at the moment i would guess at least 90% of word is BAD CryCryCry
By:
andyl
When: 19 Apr 13 13:04
still waiting to hear back from my account manager re: whether i could be offered an alternative pricing method for PC.....Blush
By:
bilbobaggins
When: 19 Apr 13 15:11
Totally agree with what frog and 0% profit are saying. Has anyone tried contacting Mr Corcoran to see what he thinks of this insidous tax.
By:
bilbobaggins
When: 19 Apr 13 15:11
insidious
By:
jas1968
When: 19 Apr 13 15:47

Apr 19, 2013 -- 8:04AM, andyl wrote:


still waiting to hear back from my account manager re: whether i could be offered an alternative pricing method for PC.....


Andy , I was promised the same thing some from my account manager some 2 months or so ago.  More lies from this vile organisation.

By:
henke
When: 19 Apr 13 16:22
jas1968 19 Apr 13 16:47 

    Apr 19, 2013 -- 2:04PM, andyl wrote:


    still waiting to hear back from my account manager re: whether i could be offered an alternative pricing method for PC.....


Andy , I was promised the same thing some from my account manager some 2 months or so ago.  More lies from this vile organisation.
____

it was mentioned to me when they rang to offer cheltenham tickets

i think it was something they were trialling about charging a higher %  on  commission
By:
CONER
When: 19 Apr 13 16:59
0%profit 19 Apr 13 13:28 Joined: 20 Aug 06 | Topic/replies: 525 | Blogger: 0%profit's blog
as i said in another post i told many friends about how good betfair was and at least 8 joined.now i curse and moan about them to anyone who will listen.no matter what betfair spend on advertising word of mouth will always be the best or worst advert for them and i am afraid at the moment i would guess at least 90% of word is BAD
                                                                                                                                                WRONG---NO ONE HAS A GOOD WORD TO SAY ABOUT BETFAIR ANYMORE.
EVEN SOME OF THERE OWN STAFF ARE AMAZED WHAT THEY HAVE DONE.
ONLY BETTING FIRM IN THE WORLD TO TAX WINNERS.
By:
jas1968
When: 19 Apr 13 18:02
Henke  I was told they would offer me a change in com rate. I excepted there offer only to be fobbed off with the excuse that they didn't have the technology at preseent to do so.  A more farcical way of running a business would be tough to create.
By:
viva el presidente!
When: 19 Apr 13 18:08
cannot imagine it being scrapped. re this:

"I think a fixed rate of commission is the way to go, perhaps between 3 and 4%"

as someone else said, that works best for traders - and worst for big positional commission players, which is not what they're interested in doing.

some version of scrapping the points-based discount for markets where you have opposing bets would make more sense.
By:
jas1968
When: 19 Apr 13 18:36
All Betfair do is talk , I doubt anything will change , They are a bunch of liars trying to rip as many people off as possible.
By:
andyl
When: 19 Apr 13 21:58
henke/jas same here was around chelt....know someone who was offered roughly a 1% higher rate for life yet no response received
PC is biggest scndal to hit betting
By:
kenilworth
When: 19 Apr 13 23:21
Why don't those who are unhappy with the Premium Charges
take their business elsewhere?
By:
chrisblues
When: 20 Apr 13 01:20
all   bets  are nill  on here  cant see the life out of me  paying 40% cut on winning bets of evens money shots  while elsewhere can be  just evens money

what are   betfair  doing   u just lost some  business by pushing folks away
By:
askari1
When: 20 Apr 13 09:16
There will be an internal debate within bf about the way to go.

Many managers, inc. those from a traditional bookmaking background, will believe that it is the business of a bookie to offer a constant stream of negative expectation bets--bets to give the punter a flutter. The commission add-on simulates this. They can't see why a bookmaker wd want to do anything else.

In this view, it is preferable to offer prices via a sportsbook and have the exchange only as a set of reference prices.

They cd even be like Bet3.65 and not own the exchange or ref. prices. That wd be the logical culmination of such a view.

But the vision of the founders--that bf is a place where the horse racing punter gets a better price--has gone. I don't think it's coming back, partly b/c the second generation of operatives of an innovative business are never going to be as good as the first.

We may see the original bf concept come back and dominate the betting space run by some entity like the Chinese govt.
By:
frog2
When: 20 Apr 13 11:11


henke 19 Apr 13 17:22
jas1968 19 Apr 13 16:47

    Apr 19, 2013 -- 2:04PM, andyl wrote:


    still waiting to hear back from my account manager re: whether i could be offered an alternative pricing method for PC.....


Andy , I was promised the same thing some from my account manager some 2 months or so ago.  More lies from this vile organisation.
____

it was mentioned to me when they rang to offer cheltenham tickets

i think it was something they were trialling about charging a higher %  on  commission


............

I am not a fan of any under the table deals for some individual. There is no point in someone at Betfair guessing at what the effect would be micromanaging things like this.

It needs to be looked at on the affect of charges on the whole exchange. I dont yet pay the charge but the fear of it means I am changing how I bet and moving away. They need a clearer pricing model that everyone can understand. The PC is slowly crippling the exchange.

On linkedin there is this:


Phil Jones' Experience
Pricing Manager
Betfair

Public Company; 1001-5000 employees; Internet industry

February 2012 – Present (1 year 3 months) London, United Kingdom

Responsible for team maintaining Betfair's global pricing strategy with 8 figure incremental revenue benefit in FY12.

- Managing a team of four responsible for maintaining and analysing the effectiveness of the current pricing setup.
- Overseeing regional reviews of current pricing strategy looking for areas of opportunity.
- First point of contact for senior management on strategic decisions involving pricing.
- Off site meetings with several of Betfair's largest accounts.
- Contributed extensive analysis to strategy for 2012/13 football season.
- Proposed, designed and monitored charging mechanism to offset alternative tax mechanism in Australia.
- Involved in strategic reviews of new fixed odds sportsbook product.
Senior Pricing Analyst
Betfair

Public Company; 1001-5000 employees; Internet industry

March 2011 – February 2012 (1 year)

The senior role took more responsibility within the team for strategic decisions and involved more internal consultative work in a variety of areas around the business. The role involved:

- Coordinating and presenting two "State of the Ecosystem" presentations to the wider company examining recent performance of various sports and the impact of pricing changes on revenues and losses.
- Presenting to EXCO on both the State of the Ecosystem and separately on other strategic analysis of the business.

- Increasing the prominence of a losses based reporting approach within the company.
- Detailed investigation in to several highly suspicious customers yielding c. £500k incremental EBITDA.
- Responsible for load-managing charge mechanism worth £300k per year. Within this, overseeing trials testing responsiveness to reductions in the price.
- Identifying widescale rounding fraud on website and arranging suspension of accounts and all communication
- Regular meeting with high commission customers around the rate of charging.
- Modelling the implications of tax changes.

.....

Why dont they publish these two "State of the Ecosystem" presentations? So we can all make an assessment. Have they really done extensive modelling as to what happens if the PC is removed or is it just the case of someone being paid to write a report?
By:
chrisblues
When: 20 Apr 13 11:28
i think there  must be a sliding scale  while  paying pc  year by year not in the past only seems right

5k a year   pc 5 %
10k a year  pc 10%
25k a year pc 20%
50k a year pc 25%
100k a year pc 30%

250k a year pc 40%
1 million a year 50%

it  seems crazy  that  5 k a year can be  pay the same as 250k to million a year   0n 40% to to 60%      that not on       hope  there  changes   to  the low level on 5 to 10k  a year and  they   do pay 40%           that   not  right
By:
chrisblues
When: 20 Apr 13 11:36
just saying    those who makes 5 k a year  are paying the  same 40% as the  high rollers  who makes 250k  up to 1 million   

and  and betfair saying   the pc  is for  who taking too much out          but look at the levels   on 5k to 10k a year  and that not much  and  why   are they paying 40%  it crazy
By:
TheInvestor2
When: 20 Apr 13 11:45
kenilworth 20 Apr 13 00:21 Joined: 04 Nov 05 | Topic/replies: 11,369 | Blogger: kenilworth's blog
Why don't those who are unhappy with the Premium Charges
take their business elsewhere?


For many that's not viable. It's more a question of put up or give up and do something else.

I can live with the 40% charge, although I think it's too high (I am biased of course). If I was on 60%, I'd probably just run bots and forget about 'working' on here. It's already the case that the 40% hits me very hard. I keep about 30% of what I make gross after paying all my costs, so Betfair get more of my profit than I do.

andyl 19 Apr 13 22:58 Joined: 28 May 02 | Topic/replies: 1,818 | Blogger: andyl's blog
henke/jas same here was around chelt....know someone who was offered roughly a 1% higher rate for life yet no response received
PC is biggest scndal to hit betting


I think that must be a misunderstanding. Betfair were going to run an experiment (perhaps they did) where they would give people a higher comm rate for a set period instead of paying PC. However, they would then adjust at the end of the trial period taking money or giving money back, based on what you would have paid. So it wasn't really a change in charges at all, just a change in when it was collected, so that people didn't feel bad about losing a big chunk every week. From a rational viewpoint it didn't make any sense to agree to this, as you end up paying PC sooner (every time with commission).

I told them I'd rather have it the other way around, charge PC every month or quarter. I'm not gonna be sad about losing a big chunk in one go, the longer I hold on to the cash the better.
By:
Mr Magoo
When: 20 Apr 13 12:16
What do people think of the daq's varying commission rates based on price makers (offering a bet) vs price takers (taking an offered bet). IMO it seems (in principle) a great system, it encourages liquidity by offering lower commission to people putting money into the exchange.
By:
mja
When: 20 Apr 13 13:30
I asked about this at the end of 2011 in the community question and answer session :

My Question :

With regard to the recently introduced premium charges at higher rates (40% to 60%) why do you ignore the type of exchange activity for each customer and its impact on market liquidity?  A customer that provides greater liquidity by offering best prices, particularly in thin markets, must be more valuable to Betfair than a customer that generally takes offered prices thereby continually reducing the available liquidity. Your main competitor recognises this and offers very low commission rates to customers that primarily offer prices rather than taking those already available.

The Response :

Betfair’s exchange wouldn’t function without a critical mass of users both putting up bets and taking them down.
With regards to the premium charge, the only relevant factors are the profits a customer wins in the long-term and the commission he generates in the process.  Whether a customer is consistently profitable by offering prices or taking prices doesn’t affect the underlying cost to Betfair of providing the service.  Very few consistently profitable customers are solely price-makers or price-takers so promoting one behaviour over the other would be impractical even if it was desirable.
Tom, Pricing Manager
By:
Mr Magoo
When: 20 Apr 13 13:56
Ah, Betfair's Q&A sessions. I remember those. Did they ever take on board any suggestion or improvement from them?
By:
Johnny The Guesser
When: 20 Apr 13 14:47
I'm thinking of starting a business with a partner.

My partner will

- obtain all customers
- manage and maintain all IT systems
- ensure all customers pay immediately
- ensure zero bad debts
- also arranged zero tax status

All I need is a laptop and internet connection. I work when I want servicing the customers.

What is a fair way to split the profits ?
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