If you are buying a house they say the key thing is "location, location, location"

This type of site it's all about "momentum, momentum, momentum"

I'd say I'm suffering from "Betfair Fatigue".  and I suspect that applies to most long standing punters on here and to long standing punters not on here who have left.  There's nothing new, fresh or attractive to give me a new lease of inspiration, generally only bad developments.

As you can see I've been here nearly 13 years and the best advertisments are the one's like the National Winnner. My 19 year old daughter asked me to put a bet on for her and she still boasts to her friends that she got 128/1 through her dad and thus paid for her holiday. So Betfair why put the exchange on the back-shelf, cos her friends struggle to find the exchange. Another missed opportunity to get on board new blood ??

yep, TP.

if you can sell the same baked beans as everyone else but cheaper than them, your task is to

a) make people know
b) make them try
c) wait

true, but to the recreational punter, it's the same beans.

this is what they seemed to have grasped when they dumped the awful betfair front room embarrassment and shifted to the far better "let's have a look shall we?" campaign... only to then inexplicably start herding new customers towards a worse value sportsbook.

UNLESS THE TAX IS RECINDED NO HOPE ATALL

It's a shame this moved away from the jokes on to the serious stuff again.

CoinFlip, the prob. w/ any charging period is presumably that it wd allow a winner and loser in cahoots to reduce any liabilities to a charge just before the period ends.

They cd avoid this problem w/ a rolling pc--or better, freeze out many excess winner and scrap the charge altogether.

How many more terrible results are Betfair going to present before they realise that they must scrap the premium charge and allow the exchange to grow???

Betfair revenues are down to £387m for the year to april 2013 (£395m yta 2012). Second half is around £187m compared with £200m for first half. This is with the new sportsbook and blue square customers.

Their plan seems to be to cut costs as way of increasing profit. But where is the real growth going to come from??

The company is flatlining. They must scrap the premium charge to allow the exchange to thrive. They need to reduce basic commission for preplay events to compete with the bookies.

The company seems to hate the idea of anyone making money on here. They have got rid of the 'free lunches' (overbroke robots etc) so surely its now time to let the market take over.

Only loyal customers can provide the prices that make Betfair competitive. Yesterday I put almost £500,000 through the exchange on horseracing risking thousands of pounds a race. I paid £1084 in commission on a profit of £4161. That is not a high rate of return. Betfair sportsbook would not have offered the bets I offered or taken the bets a took. This is new business.

But my commission was only around 27% of my gross profit for the day. Betfair want a minimum of 40%. So I take all the risk, pay over £1k in commission and yet they still want more. I can why people are playing less.

Whoever devised the Premium Charge has singlehandedly destroyed the growth potential of the exchange. They are probably long gone from Betfair now hiding behind a rock somewhere seeing the damage they have done. The new management has got to be decisive and act now before it is too late. Get rid of the PC and allow the exchange to grow and grow or tinker at the edges to grab short term revenue as you destroy the exchange?

When they rejected the takeover bid I thought that they had a rabbit in the hat and were going to announce great figures. In fact its negative growth.

The CEO of a small company I used to work for once jokingly said to me: "when the chief accountant leaves for another job that is the time to start looking for another job yourself".  Though it was meant in jest, it made me chuckle recently when I saw who had recently left BF, long termer Stephen Morana :D

Maybe I need to start reducing my BF balance :S

The 'commission generated' figures dreamed up by Betfair are completely misleading.

Lets take an example of what a very good/sucessfull market maker does for the exchange.

Lets assume:

1. There are 10,000 horse races a year
2. Each race has five horses each with a 20% chance
3. The market maker manages to lay every horse at 4.99
4. There are five backers who each like to back the same horse number (1-5) every race for £1000 at the best price they can get immediately.
5. Everyone is on 3% commission.

So in this simplified view of the world the exchange needs a market maker. The punters are all backers and bet at different times so they cannot be match against each other.

In order to attract the punters to use Betfair rather than go to other bookies the market maker has to offer the best odds available. If he doesnt they will go elsewhere.

So every race every the market maker manages to lay each of the five horses at 4.99 for £1000. His total take is £5000. One horse wins so he pays out on the losing lay 4.99 X £1000 = £4990

The market maker makes a profit of £10 on the race. He pays 3% commission so 30p to Betfair.

There is always on winning punter who made a profit of £3990 on the race. On 3% commission he pays £119.70 to Betfair.

So over the 10000 races Betfair make £3000 from the market maker and £1,197,000 from the five backers. Total £1.2m

But Betfair are not at all happy with this. They look at the market maker. They see he made £10 a race for 10,000 races. This is £100,000 for the year.

So Betfair say why is this guy making £100k and only giving us £3k. We want more. So they take another £57k from him.

So Betfair now think they have the £1.2m plus the £57k extra. Total now £1.26m. Revenues up 5%.

BUT....

The market maker was happy to do the work for £100k. It covered his £40k costs and left him with a £60k clear profit a year. Now Betfair have taken that £60k the market maker is left with nothing.

So the market maker leaves Betfair. Then another one reaches £250k lifetime and he leaves and so on and so on.

So the backers look at Betfair and they can nolonger get on at 4.99 (4.85ish after commission). The process takes too long to place their £1000 bets and they are getting worse odds. These punters then leave Betfair also.

So for the sake of taking £57k from the market maker Betfair give up on £1.2m in commission by being able to offer best price to decent immediate liquidity.

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

Think of what happens without the Premium Charge. More and more people have a crack at betting on here. The prices get more and more efficient. Recreational punters get great prices to decent liquidity. This can be advertised. The sportsbook can offer the best prices and hedge on the exchange commission free. This can be advertised. Betfair could destroy the opposition. But they can only do it by handing the risk over the individuals in the market. Those same horses on the BF sportsbook at the moment would not be 4.99. They would be 4.0 with a huge overround and they would not allow £1000 bets.

Please management do something before its too late. Seriously what is the point of grabbing the extra £57ks and giving up on the millions of extra revenue you could have? its madness.

Exactly Eddie, in addition to what frog said, the following applies:

Let's say Trader A is willing to work for £20 net per hour (in expected profit, we are talking about betting after all).

If this person grosses:
£25 per hour on 70% of activity
£50 per hour on 20% of activity
£100 per hour on 10% of activity

and then goes from paying 20% of GP in commission to topped up to 40% of GP in commission and PC combined, net profit, which used to be £20 per hour for 70% of activity, now drops to £15 per hour for 70% of activity.

When this person starts paying PC, 70% of their activity is gone. Liquidity obviously drops, and Betfair lose not only the commission that this person was paying, but also the commission of the leisure punters on the other side of these bets, who may divert funds to bookies instead.

This is a massive problem, as when the leisure punters that can't bet to decent overrounds in obscure markets because market makers have disappeared, then this affects other markets they might have bet in. The profits of pros in these markets drop with fewer retail punters around. Then perhaps they give up low profit stuff too.

The effect of it all is that large pros will only bother 'working' on big events. This doesn't apply to people running bots of course, only manual players.

For instance, I've found the untelevised EPL matches have become noticeably poor in terms of liquidity recently (I trade over/unders mainly). The televised matches like the Chelsea v Spurs match tonight are fine though.
If this was to become a permanent pattern, I would probably stop trading the 3pm EPL.

When there is less fun bettor money flowing through the markets, it's a double whammy of crap for pros, as 1) liquidity is low, meaning there is less money to be made
2) the ratio of pro and bot money to fun bettor money is such that it is more difficult to make money.

I reckon liquidity is being propped by the recession too.

TP - I tend to agree. the original PC in its revised form I can work with. in fact it's arguably benefited both BF and me.

but if/when I hit the higher 250K+ rate, I'll pretty certainly stop bothering. the net result for BF will be:

-ve:

1) they lose the commission I currently "generate", which by their measure will be about 10K a year.
2) they lose the interest they make on my bank, a few hundred quid a year.
3) they lose the customer acquisition/retention value of the markets I work, both in terms of liquidity and price (as what I do tends to drive overrounds down rather than up).

and more arguably:

4) they lose the less obvious "churn" benefit of better prices, in terms of it increasing the number of times it takes losers to play through their money, which increases the number of "fee events" (ghastly phrase) per deposit. 
5) they possibly lose further business to the competition, which I'd at least try and make a go of.
6) they lose the word of mouth advertising they get from me - admittedly largely gone since they brought in PC1, but still worth something. (even now I regularly find myself explaining what BF is, and how it's different to normal bookies, just to people who are curious about what I do.)
7) there's probably a multiplier effect that needs working out, in terms of illiquidity driving out liquidity. what I call the liquidity cliff, and I2 calls the liquidity spiral.

+ve:

...well, what? I can see a couple of potential positives:

1) some people in my position will carry on and pay up, so I suppose they could count me as a fraction of one of them, even though I've gone.
2) the markets I worked may be taken over by someone else paying the higher rate.

both those points are arguable without descending into desperate reasoning, and probably someone can come up with others, but do they outweigh the negatives? really?

It's just a good job Betfair don't run a lottery.It would be scary
how much they would want from the winners.

The exchange is a natural monopoly.  It can't be broken unless something fundamental changes.  It's just withering because the people with that natural monopoly got greedy and the place lost it's soul.  If this place withers, the other place doesn't pick up, because it doesn't work like that.  People lose interest and impetus and walk away from exchange betting, they don't up sticks and decant themselves over there.

hopefully new owners  are   understanding  and  make growth and  if they   do   it  will  grow   x5   over the years  due to high tech   and beat   bookies hands down  if do it right

yes. if what they say about richard koch is correct (attention to detail, understanding of the exchange model), I can more imagine them tweaking the higher rate PC and looking to raise equivalent revenue another way. but just scrapping it and going back to the status quo ante I can't really see.

more significant would be what plans they had for the direction of the business. specifically, whether they were willing to continue with the current contradictory business model (whereby BF is essentially cannibalising its own core business imo), or whether they re-emphasised the exchange.

Isn't that just basic common sense?

In any event he ain't taking over

What about the part time market maker who makes a few quid a year playing at evening and weekends? He has no intention or desire of ever going full time.

He's many years away from paying PC.

He's now getting more bets matched.

Do you think the PC hits him or is he now more profitable?