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THE PREMIUM CHARGE MUST BE SCRAPPED
THE PREMIUM CHARGE MUST BE SCRAPPED
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So you don't think BF would have just presented a case that suited them?
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That is the concern. Because we have no access to the data behind these decisions we have very little idea what is going on. I imagine most people working and investing in Betfair have little idea too.
The same thing could have happened internally at Betfair to present the case for the Premium Charge to boost short term profits at the expense of long term viability. They really need an independent revenue into the Premium Charge. |
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* review (not revenue)
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what incentive is there for betfair to remove the PC charge ?
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In the short-term I don't believe there is one - at least not a carte blanche removal anyway. The fast pics boys will keep helping themselves regardless, and that would be an awful lot of revenue that BF would be giving up.
I don't know what the legalities of it would be, but given what BF is getting from PC-paying accounts (and given how few of them we're led to believe there are), I would have thought an argument could be made for considering each account on a case-by-case basis and making an 'offer' for what continued usage of the exchange would cost (%age terms) for some fixed period of time. The way it's currently calculated is archaic and, for many, will reflect their betting activities of the dim and distant past and not necessarily the now. Short of that, and short of picture delays being reduced naturally (highly unlikely since there are vested interests involved for many sports), I'm not sure what they can do. |
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Surely getting rid of the 40% rate Premium Charge is necessary to stop honest punters getting caught in the net with the big fish.
Having a 60% premium charge for the 5% and unders and 50% for the 10% and unders with the original 20% and unders in place is sufficient to catch all the no risk guaranteed profit merchants? The 40% grab all for 10.1 to 39.9%ers is an outrageously wide net and totally unfair to those who give a third or more to Betfair in basic commission out of their hard earned profits. |
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The precedent has been set for removing the PC from certain markets. Obviously the markets chosen are a waste of time because they are so small.
If the theory that PC is due to the fast picture players why not just put PC on markets like in play horses that are obviously unfair and remove it from football, pre-play racing etc? |
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If all the markets were fair then there would be no need for the PC. I would guess that insider trading and fast pictures are the main causes of people being on 50%/60%.
Market makers are being caught in the same net but make a completely different contribution to the Betfair ecosystem. |
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loper, yes the 40 percent is the where P/C become an unviable scenario for us day to day traders / punters. I currently pay 20 percent which is manageable, but at 40 percent or greater i would more or less break even based on what i currently do, so absolutely no point using betfair at that point. This, i believe, is where many of the early betfair traders / market makers are sitting right now and they will have some tough decisions to make, like myself
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I spoke to a friend at BF (was quite senior there at the time) when PC was first introduced and his quote was Ìf it survives a month they`ll never get rid of it.
Seems to me too many people have accepted it and therefore its here to stay. My style of betting means I`m not tied to bf for my betting so will never pay it through choice. I feel for all you guys that pay it but had you all been united and moved to purple (which I know is dreadful) then we may be looking at a different scenario. Unfortunately everyone looked after their own and now there isn`t an alternative for those of you that trade/Lay. |
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Phil, the premium charge is applied about 3 days after the end of the week it is calculated. therefore it is very easy for a form punter like myself to lose all your winnings in those 3 days. Also you may have had one big winning day on a Monday or Tuesday and effectively the charge for those bets is not imposed for 9-10 days later.
As for tote bets well often I might have laid a dog/horse on exchange as i thought it was too short and expect it to drift so i can trade but it doesn't however as i give it a winning chance so i back it on the tote. Problem with that scenario is that it loses and I win big on exchange and lose on tote giving me a premium charge bill. I dont lose every week on tote. My problem with the system is that it is too complicated and I dont have the time to can't keep track of my position to ensure i have enough money in account the cover the ridiculously high PC. What other gambling institution applies a charge 10 days after a bet? |
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not read this thread for a while. but the point about the 40% band threshold being the most unfair still seems to have the most force to it.
for long time users a static £250k lifetime threshold is effectively the equivalent of setting an annual tax allowance that shrinks every year. it is as if income tax went up to 40% once you'd earned a total amount in your life. so a 60 year old woman who worked in tescos for 40 years would pay a higher rate of tax on her weekly pay packet than a 23 year old investment banker two years out of uni and earning 10 times as much as her. that's indefensible on any level, including self-interest. discriminating against your oldest customers is just bad business 101. so my prediction is if any changes are made, that will be what is addressed. |
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Well put Viva, the fact is at 40 percent p/c account holders like myself who trade, punt, whilst creating liquidity in the markets, can not exist, the numbers just do not stack up, unless you are one of the fast pic boys or a bot as mentioned earlier who can absorb upto 60 percent.
It is important to realise that the fast pic boys and bots do not create the inital market liquidity, this is vitaly important and under pins the betfair betting exchange. I know i can not operate at 40 percent p/c, so in truth your only option is to move on. I have never said there should not be a charge, however betfair could have a reasonable level of PC from me for life, like many other accounts, but they are closing us down with the 40 plus p/c, very short sighted IMO and clearly not sustainable in the medium to long term. |
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PTTT - why didn't you and the likes of you move to purple as a show of defiance against the PC charge then. If enough of you did, we'd have a competitor right now. I sure as hell won't be playing here if I get charged the 20% let alone 40%.
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As you will understand racing, i can not really say that i am or will move to purple, however i think you will gauge what moving on means. I actually do not mind paying a resonable, working amount to betfair, as it is a symbiotic relationship, i help to create liquidity they provide the platform, hence why i do not understand why they are killing account holders like me off
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PTTT - you like everyone else thought about the short-term for #1 and that's why betfair has you. You all needed to make a stand and didn't. Now they can 5crew as much as they want and you are helpless and will accept this obscene tax.
Yes no doubt you would have suffered short-term on purple. I actually felt gutted that you guys didn't move with your liquidity. I was on 26.7% in commission paid so nowhere near PC and moved over for 3 months plus but hardly any liquidity came over so I moved back and now I'm at 20.7% I'll move over again but no way I'll bend over backwards and let bf shaft me. |
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that's the thing. with a static allowance, it's a net that catches smaller and smaller fish.
which raises the question: who were you targeting? why are you targeting people now that you weren't when it was brought in? was the policy wrong then, or is it wrong now? somebody who started on BF in 2001 and became eligible for the 40-60% band in 2010 would have earned an average of about 28K a year in their time here. someone who started in 2001 and became eligible for it this year would have made about 19K a year. In another 5 years with no changes it will be about 14K. so, at what annual income threshold do BF think it's reasonable to start taxing people at a higher rate? they have no answer to that - just a kind of inverse loyalty scheme. if they ran a cafe, you'd collect nine stanps then your tenth coffee would cost double. |
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good analogy viva
what is flawed in betfairs business plan where they have had to implement this charge ? shouldn't the cost of advertising come from betfairs profits , which in turn come from commission on bets , so if they are not earning enough on commission from bets to be able to pay for advertising , maybe they need to raise the rates for everyone instaed of the few . a percentage or 2 on everyones bets may raise the same amount as what the PC does now |
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If pc were about providing a level playing field for the ordinary player, or protecting him against no-lose merchants, then there would be no need for a charge per se. The solution wd be a raft of individual, sport- and event-specific measures that negated most time and technical advantages.
This isn't the real rationale for the pc. The rationale was to present a rising profits trajectory for the flotation. Now it's to maximize profits, even at the expense of the long-term viability of the exchange concept. |
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I am enjoying playing the rugby union markets at the moment, which are free of the Premium Charge. In the last 4 weeks I have made an average of £10 per week. I know its eating into the eco-system by taking £10 without PC. For which I apologise.
And for all of you that go on about all the 60%'ers being fast picture merchants in no need of help, I can assure you that is not true. It includes the long service clients who took up Betfair training programs and were taught to green up the markets. (and some did it manually with no API) |
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Doesn't the Government have any laws in place to stop companies abusing monopolistic positions?
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Askari - I'm not saying that the initial rationale was not as you suggest, but I do think what BF rake from the fast pics merchants explains why they would be reluctant to implement a carte blanche removal of PC charges now.
Hazel - Similarly, I'm not saying that if you're paying 60% you have to be a fast pic merchant, rather if you're a fast pic merchant, you should expect to be paying 60% PC, and if you're not, you're doing something wrong! |
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i dont see why fast pic players should be targeted more so than anyone else . what they are doing is not illegal , they are just using the fastest pictures possible or betting live on track ( i am not one btw )
betfair should be using the PC income to invest in every popular sport to bring betfair users the fastest possible pictures using 4G , fibre optics , and not using it for advertising . new users are put off knowing they are a few seconds behind others , so it puts them off . if picture speeds were as fast as below 0.5 seconds ( or as quick as a telephone conversation ) then on course betting might become a thing of the past as everyone can bet from home with no one having an advantage . i doubt betfair want this though as they might earn more from these players on 40%-60% than the collective on 5% . but it's all these little unfair things that are stopping growth . there are many good comments and ideas on this thread , but when all that matters is share price , i doubt any of them will be considered . |
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It's not illegal, but I bet it's having more of a negative impact on the ecosystem than anything else (PC excepted).
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that's my point latalomne , it does have a big negative effect , which could be fixed , but do betfair want to fix it ?
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I'm not sure it could be fixed. You have to work with the respective governing bodies in order to make that happen and a lot of them have tie-ups with bookmakers, who, for the benefit of their own in-running products, would be averse to having delays reduced.
The alternative, as frog has highlighted, is to increase the bet placement delay. There are pros and cons to that, particularly in a fast moving sport, and, while that would offer protection for layers, it wouldn't necessarily improve things for price takers. |
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Put simply Betfair should be running no markets that it will not be willing to act as a counterparty for themselves. e.g. inplay horses has to go.
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the mystery to me is, who continues to be on the other side of the fast picture merchants trades? I've never seen that plausibly explained.
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People 'keep bets' and also put up lay off bets at various prices to hedge their original bets pre race bets.
They do this because they are fed up of backing horses that trade at 1.1 or whatever and then get beaten. What they fail to realise is by the time a lay of 1.1 they left up is taken by the fast picture people the true odds should be more like 1.05. The lay will only be matched if it is bad value. Its bad for business for these guys to be winning as the losers are winning too fast. It is completely different from a market maker also paying 60% PC because the market maker probably makes less than 1% on turnover compared to 20%-90% the fast picture guys make. The market maker or trader provides instant liquidity at a very low margin. It gives the losers a good run for their money. The fast picture people just drain money from the ecosystem too quickly and the losers leave. Betfair now make 60% of the money the fast picture guys are draining from the ecosystem. How is this good for long term growth? |
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I can understand why people might do that once or even twice frog. but why do they keep doing it?
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Because they are risk averse and think they are being clever?
They are not doing it so much now anyway. Last time I checked the figures inplay on horses was in a big decline. Betfair are the GoldStandard for inplay football with the delays and managing they do of the markets. Far better than any other company. But they let themselves down by having other markets that are so obviously unfair. Tennis is an interesting one. If you want to know who is going to win the next point watch the Betfair market rather than the TV or the livescore boards. Huge sums are matched but very little revenue generated. Again a liquidity draining 60/40% in Betfair's favour from the courtsiders who are allowed to continue. Its a real shame they don't drop the unfair markets and really concentrate on pushing the fair ones. The more I look at the available data the more it becomes obvious that unfair markets are the root of the problem. No one should be making a high enough ROI to pay 60% PC. If the markets were fairer it would be impossible. |
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Lots of talk about the 60% PC. If I were such a consistent winner that I might become liable for 60% I would adapt and churn my way to the 40% bracket. Churning to avoid 50/60% is trivial since you are happy to break even BEFORE commission. It will probably only be some retarded relative of a jockey and two or three other guys who actually pay the charge at the 60% level. I'm sure almost all insiders/courtsiders etc will be intelligent enough to avoid the 50- and 60% brackets. Some will have found themselves in the 50 or 60% brackets when the charge was first introduced, but by now almost all will either have churned their way to 40% or quit.
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As you say, its not difficult to churn your way to 10.1% if you are a potential 60% no losing weeks long term winner.
What about the poor sods with a comm rate of 33% who have paid betfair a third of their lifetime winnings in 2 - 5% deductions on every winning bet. In order to have a 33% lifetime comm rate these poor sods will have plenty of losing weeks yet have to pay 40% Prem Charge in their winning weeks. It is the most bizarre and unfair penalisation of longterm loyal customers one is ever likely to see in the commercial world. |
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It's good to see some realism has crept into this thread, even if it is only a trickle. You'd think it must have been fairly obvious to the betfair cheeses that going down the route they chose would lead to a haemorrhage of the customers they should have been valuing most. Even if they thought the marks for nomarks scheme was the way forward, having a pc charge that took no account of the user's M.O. was a big mistake. The push button divisions were never going to go anywhere but if gambling involves becoming a virtual recluse, studying horse racing 12+ hours a day, it's a lot easier to pull the plug.
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As you say, its not difficult to churn your way to 10.1% if you are a potential 60% no losing weeks long term winner.
What?? It's extremely difficult to churn your way from 60 to 40% on 10+ years of trading history (unless you're botted up to the eyeballs) let alone get down to 10%. If any courtsiders operating on original accounts weren't paying 60% I'd be amazed. |
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There might be some honour in cutting off your own nose to stop surefire winners & pool-drainers from playing, but there's none in imposing a turnover tax on these people wh/ incentivises them to play more intensively, since you're taking 60% of their winnings.
Nothing is likely to drive away the customer you want faster. The new player is in effect attracted by the good prices then alienated a few days or weeks later after betting on a horse tanking along just before it finds nothing or falls. |
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B) Generate £150,000 in commission and pay no premium charge
i thought that once your are 250k in profit , no matter how much commission you have paid , you will pay between 40%-60% on any profit  |
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No, if a 60% player a certain week generate more than 60% of his profit in commission he pays no charge that week. It's the same as for 20% players except it's 60% instead of 20%.
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On 2% commission rate you would need to "churn" £12 million worth of bets for £150,000 in generated commission. Not that easy I wouldn't have thought.
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