You are only winning off someone else who then can't afford to do something else so it makes no difference anyways.  At best you can say you help keep the wheels of finance moving.

All the money I win comes from people who would otherwise use the notes to light cigars.

Thank  you for calling my name @coachbuster, @viva.
Just reply to one question please:
are you paying a charges ,and are you happy with the service betfair provides?
If Im a full time succesfull trader(never had a "negative" per month) and Im doing this hard job then comparing myself to those who doesnt need a brain(Cleaners)to do their job and we have same amount of money after the month, something isnt right than. I have no problems to start cleaning- no ressponsibilty- can be drunk on weed, marijuana etc. Trading is dying here. Trading!

in London ,cleaners earn less than  half the  average London wage - insulting to say the least

siwa, you seem to have developed a sense that you are doing something useful, you have a right to a better living than a cleaner, and that betfair owe you it. all bewildering ideas.

I remember this on cleaners in the city.
http://www.guardian.co.uk/business/2006/nov/28/8

perhaps their actions were successful if they are now on £10+ p/h.

Its taken some digging for the data but it appears that Betfair's revenue from 'non-risk sports' has been growing over the last few years (even since the PC came in!). The stagnant revenue has infact been due to all the other rubbish they been peddling.

average revenue from 'non-risk sports' year to date

Apr 2008    £431,534
Apr 2009    £507,551
Apr 2010    £569,975
Apr 2011    £616,986
Apr 2012    £685,205
Oct 2012    £723,288*

*averages half year

So while poker and games are not growing the core exchange is in terms of revenue. I guess this is either due to the PC collecting more and more as the total matched on here stagnates or I underestimated what they make from inplay sports (the only area total matched is still growing).

It still is questionable where it is going. IF the revenue growth is merely due to the increase in tax there will be a tipping point where revenue starts to drop.

The IPO prospectus stressed the importance of Betfair's 'Heartland' customers.

The success of the Betting Exchange depends upon maintaining liquidity.

Betfair’s Betting Exchange product operates with, and its success is dependent on, high levels of liquidity and a significant proportion of this liquidity is created by transactions generated by Betfair’s Heartland Customers. A significant reduction of this liquidity could have a material adverse impact on the attractiveness of Betfair’s key products as well as eroding one of its key competitive strengths. The occurrence of any of the risks relating to the operations of Betfair and/or those relating to the online betting and gaming industry may have an adverse impact on liquidity levels on the Betting Exchange, which in turn may have a material adverse effect on Betfair’s operations, financial performance and prospects.

Looking at their customers:

Customer segmentation

Betfair classifies the addressable market into three broad customer segments:

• Heartland Customers are regular, well informed and sophisticated customers who understand and
make use of the core Betting Exchange differentiators such as lay betting and trading capability. Heartland Customers are motivated principally by the functionality and value offered by the Exchange Platform and typically are high volume customers who generate high levels of ARPU. Many of these customers can only use Betfair’s Exchange Platform for their betting activities. The Directors estimate that Heartland Customers comprise approximately 20 per cent. of Core Betfair’s customer base.

• Recreational Customers are regular sports betting customers who bet primarily for entertainment (for example, because betting enhances their enjoyment of sports events). They are motivated by the strength of Betfair’s brand, the usability and value of the Betting Exchange, and sometimes by promotions and incentives. ARPU from this group varies significantly as do their levels of sophistication, but on average they generate lower ARPUs than Heartland Customers. This customer segment is believed by Betfair to be responsible for the substantial majority of the revenue of Betfair’s traditional bookmaker competitors. Betfair is increasingly targeting this customer segment.

• Casual Customers are infrequent online gamblers who typically are low value and have low levels of loyalty. These customers are motivated by promotional offers and tend to gamble only on high profile events, making payback rates low. As such, Betfair does not actively target this customer segment.

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

Betfair is currently attempting a two pronged attack at destroying the exchange.

Firstly they are going after the 'Heartland' customers with the PC. These are the people that create the majority of the liquidity. Betfair say the sportsbook is to fill in liquidity gaps. The same gaps that the PC has created? If Betfair really wished to fill in the liquidity gaps they would offer prices on the exchange on lesser markets rather than have a sportsbook.

Secondly Betfair are trying to move the recreational punters into the sportsbook. Thats why you go straight to the sportsbook when u go to Betfair for the first time. After seeing the wonderful adverts of Betfair value you are sent first to one of the worst value sportsbooks on the internet.

The exchange is very profitable. It is a fine balance and could reach tipping point and spin into terminal decline. As a standalone business returning to its core principles I think it would thrive again.

Its a shame that the company cannot be split up. Those who want to use the sportsbook, poker, games etc could use one company (paddy p0wer clone if you like) and the exchange could be sold off and run as a free market exchange.

Using the following period when there was only the minor adjustment to the original PC (which they said decreased the overall PC take, yet perversely increased the number of people paying it) I'd say you can deduce that "in play" volumes have increased in line with non in play markets.  Along those lines therefore, you can deduce further that the increase in revenues from Apr 11 onwards is entirely down to higher rate PC as matched volumes have flatlined.  Further, I would deduce that the last figures were boosted by Euro 2012, so that actually that points to an adjusted decline in matched volumes.  Further still, since the last figures Betfair have pulled out of Germany and other jurisdictions which should make that trend fall even further....

average daily matched all horseracing and non inplay sports year to date   

Apr-09    £51,573,807
Apr-10    £55,740,339  inc 8.1%
Apr-11    £61,204,673  inc 9.8%

average revenue from 'non-risk sports' year to date

Apr 2009    £507,551
Apr 2010    £569,975  inc 12.2%
Apr 2011    £616,986  inc  8.2%

The fact also that you state poker and games "The stagnant revenue has infact been due to all the other rubbish they been peddling." is I believe at least partly due to the PC effect and the loss of goodwill.  Whereas the exchange has withstood the charge because there isn't a viable alternative, those products where there are plenty of viable alternatives have suffered, because Betfair is no longer the punters champion it once was.

interesting post, frog.

it's slightly unbelievable that they recognise the key importance of maintaining liquidity on the exchange in the IPO, yet have developed such a cavalier attitude to it in their strategy over the last couple of years.

it's as if a nuclear power company floated with a document saying "safety of the power station is paramount to profitability going forward", then appointed management whose strategy was to progressively cut safety spending and divert the savings to shareholders and building a few random wind farms.

the ridiculously low level of £5k lifetime profits

Many small winning punters (like me) are well into six figs. of lifetime profits yet are in no way dependent on winning on BF. I'm not sure that without a team of placers / accounts / accnt. finders you can make a living through betting w/out the exchanges, but if you are a basically recreational player w/ a job or other business interests who is just determined not to lose, finding a winning BF strategy wd not be yr first port of call.

I agree w/ Clydebank that they've got into a downward liquidity spiral through discouraging marginal business and alienating standing liquidity providers. This has happened as the same time as their marginal gains from increased marketing and promotional spend (in the UK) are grinding to a halt.

They need to understand their own business better. A good first step wd be for the CEO to look at the activity and maybe even phone up their most/least profitable 500 clients and see what accommodation they cd make w/ them.

yes, i think that may well be right.

long time no see on the forum 'the man'. At last a face from the early years of the community. Where is the magician, feck, morris, getting better, troy, djsunset, probet and the other posters who made this place?

Do you mean that people that leave prices/cash up should pay no commission?

Do you mean that people that leave prices/cash up should pay no commission?

Yes that's what I mean

I currently put roughly £250,000 net a week in the exchange covering virtually all markets as a market maker. I'm averaging about 1% net profit, so a nice wage but hardly a fortune. I reckon I've given Betfair well over £2 million in the last ten years in direct commission. I know it sounds selfish but if that had been in my pocket I'd be turning over a million per week for sure, probably a lot more, as my stakes are relative to my pot size (kelly)

the man .. Are you saying people who leave unmatched orders should pay no commission and no Premium charge?

Yes, I'm saying that. Admittedly it might not stimulate every market and I also wouldn't put money in overnight horses even if I was on negative commission. However, I do think a lot of sports would take off.

PAY UP AND STOP MOANING

4% doesn't work well, because hooverers etc. would pay way too little.

I would say:
PC capped at 30%, except for players deemed to have an unfair advantage, hooverers and the like.
Rebates for PC payers who overpay after losing some or all of their winnings.
Reduce commission massively for everyone.

--------------------------------------------
Reasoning:
Currently Betfair is best price on big markets like match odds less than half of the time. People who are not price sensitive don't care. People who are somewhat price sensitive might not be overly enthusiastic about placing all their bets on Betfair, as it isn't 'obviously' best value. People who are super price sensitive, will send a massive amount of their volume to places like Pinnacle.

It's pretty ridiculous that a sportsbook can beat Betfair fairly regularly on price for the big markets. If it was the case that Betfair was obviously best value almost all the time, volume would skyrocket here.

Pinnacle is a big sportsbook, and Betfair could literally take them out, as they compete on price only. It would be more difficult to convince customers of the UK books like bet365 and betfred, as they also offer bells and whistles (better in play stats and streams and 'bonuses/cashback' gimmicks).

There's no need to think in terms of 'if we decrease charges here, where do we increase them to make the money back', the massive surge in volume would take care of that.

It's troubling that the exchange isn't growing massively (even with countries pulling out).

It's never going back to what it could have been.  The brand is too damaged.  Being seen as the punters' champion is/was the key to that and offering better value is just part of that.  Momentum is huge re public perception and they lost it with the PC.  Regaining it is miles harder than building on it.

problem is, they've already shown they are prepared to declare war on their biggest customers and advocates once they've locked in a monopoly position on the exchange.

the only thing that could come close to guaranteeing they wouldnt do the same again is some proper competition in the betting exchange arena.

they used to get huge amounts of free word-of-mouth marketing from their army of advocates. they either failed to understand that, or simply didnt care. that kind of unconditional loyalty will be very, very hard to get back.