Commission rate between 4% - 7.5% ??????

what does it say? link says i need to sign up for articles

Looks like they will want more money from their customers.Extending the market specific commisions for another 18 months.


Unveiling its full-year results, Betfair said the trial had been extended to a further 18 countries.
Breon Corcoran, chief executive, said exchange customers had an “emotional sensitivity” to changes in the commission rate, but that “some are more sensitive than others”.
He said: “We are trying to build this business in a sustainable way . . . The initial experiment went well, but we are very wary of extrapolating too rapidly.”
Betfair made an underlying profit of £38m, down from £52m a year earlier.

18 countries that should read.

TAKEN FROM TODAYS FT

Betfair has extended trials on varying the commission it charges betting exchange customers, as it looks to make up revenues lost from pulling out of unregulated markets.
The betting group, which takes a 5 per cent commission on the exchange, began the trial in five international markets, varying the rate to between 4 per cent and 7.5 per cent.

Unveiling its full-year results, Betfair said the trial had been extended to a further 18 countries.

Breon Corcoran, chief executive, said exchange customers had an “emotional sensitivity” to changes in the commission rate, but that “some are more sensitive than others”.

He said: “We are trying to build this business in a sustainable way . . . The initial experiment went well, but we are very wary of extrapolating too rapidly.”

Betfair made an underlying profit of £38m, down from £52m a year earlier.

The impact of its strategic shift announced last year, which involved withdrawing from markets where the regulatory environment was uncertain, had been a “significant drag” on revenues, it said.

It now has 75 per cent of revenues from regulated markets, and Mr Corcoran said he expected that figure to increase as Betfair reviewed markets “case by case”.

It is looking to attract new customers with a standalone website offering traditional fixed-odds betting, aping other high street bookmakers.

Ivor Jones, Numis analyst, said varying the commission rate “has the potential to materially enhance exchange revenue, but also to reduce it. We expect management to take some time before committing to a new pricing structure.”

The group posted a pre-tax loss of £49m, compared with a profit of £54m a year earlier. Sales were broadly stable at £387m. The loss per share was 65.1p (profit of 33.1p).

The loss was largely caused by an £82m impairment of asset values, including charges relating to the weaker-than-expected outlook for acquired businesses, as well as a writedown of the value of its technology.

The company also took a £19m restructuring charge and spent almost £3m on advisory fees related to the rejected a takeover approach from private equity group CVC.

Betfair promised shareholders it would devote proceeds from its cash balance of £168m to acquisitions.

“We have some capability gaps, we have a lot to learn about sports betting and gaming, and while we have good scale in the UK we are relatively smaller in most of the other markets,” said Mr Corcoran.

A final dividend of 9p per share has been proposed, making a total of 13p for the year, up from 10.2p a year earlier.

The shares rose 1.57 per cent to close at 843p on Thursday.

Separately, second-quarter trading at Playtech was slightly ahead of the 10 per cent increase reported in April, the gambling software provider said.

Bahaha there is no way I'd be playing at 7.5%.

The high street wins?

if it gets to 7.5% will the last person to leave please turn off the lights

Funny 7.5% plus up to 60% PC charge and spreads wider than the mersey tunnel.

Betfair promised shareholders it would devote proceeds from its cash balance of £168m to acquisitions.





you'll not get much for that,




7.5 % ? why not round it up to 10 % like the bookies used to do ?

My favourite bit is what Corcoran said - Breon Corcoran, chief executive, said exchange customers had an “emotional sensitivity” to changes in the commission rate, but that “some are more sensitive than others”.

IS HE FOR REAL.

All animals are equal, but some animals are more equal than others.

and big fleas have little fleas upon their backs to bite them,
and little fleas have littler fleas,and littler ad finitum

In Bulgaria the default Market Base Rate is 7.5%
In Indonesia, Malaysia, Poland, and Romania the default Market Base Rate is 6.5%
In Argentina, Belarus, Columbia, Estonia, Hungary, Kazakhstan , Luxembourg, Mexico, and Singapore the default Market Base Rate is 6%
In Norway and Finland the default Market Base Rate is 5.5%

http://en.learning.betfair.com/app/answers/detail/a_id/2684

With Corcoran's contract, it is logical for him to be desperate to push base rates of commission up.  There is a time lag between commission rates going up, and people stopping using the Betfair markets.  The time lag is probably long enough for him to do exactly the same as previous management have done, and window dress figures.  Underlying goodwill has been trashed because it had no allocated monetary value in the accounts.  If it had had value, different decisions would have been made.  Can't blame him at all for pushing for an increase in base rate commission.  What he should be doing is a targetted commission rate unique to each customer, perhaps 80% according to their predicted future betting percentage hit rate, and 20% according to their turnover. 

Shoving up the base rate is akin to selling the family silver, thousands of pounds worth for a few tenners.  Worth it in the short run, but not really a great idea.

betting on french racing, in france the deductions are about 30 %

thats all tote isnt it? or pari mutuel or whatever its called

where is it 4%?

Bit coy about revealing where they are offering less than 5% base rates aren't they?

18 countries in the scheme, 16 mentioned above by Mr Anderson (from bf help section) - so two countries are left off, which presumably get the 4% rate

Who would they give that to, and why?

Have to think it's an Asian jurisdiction where they are allowed to operate?

BF really are trying to get every last drop out of the system as quick as they can.  As expressed above this can only lead to further tumbleweed and bigger spreads as more customers decide not to bother.

The only conclusion is that the increase from 5 countries to 18 means the UK will follow suit probably this time next year on a 6-7.5% rate.  That has to be their goal.

The CEO needs to change commission to operate in a U-shape, high for the biggest winners, and high for the biggest numskulls who will take any price.  But in the middle, for many reasons (some long term ones), is where it needs to be lowest.  Squeezing every last penny out of a marginal winner/loser, who is aspiring to reach the top table, isn't wise.  A 6-7.5% rate wouldn't hurt the biggest winners, or the biggest dimwits, but the ones in the middle, with high commission payments, but negligible overall wins or losses, would be severely harmed by this rise. 

Betfair can think "**** 'em", and view them as expendable.  But in the exchange ecosystem, you need some people trying to give the top dogs a run for their money, or else the prices will become a lot less efficient.

TheVis, Betfair don't have one goal.  The shareholders want an increase in equity value, perhaps an increase in dividends, and sustainability.  The CEO's contract looks like it favours short termism.  It does seem logical for the CEO with that contract to increase commission sharply, and never look at ever moving any price down, but it also seems logical for non-burger flipper shareholders to be far more wary of the time delayed dampening effect upon revenues which the higher commission rate will unarguably lead to.

What has Bulgaria done wrong to deserve to be the one suffering 7.5%?

Bulgaria deserves to be punished, after the incident on Wimbledon common with Madame Cholet and Miss Adelaide.

operation yewtree?

im beginning to lose interest now.

give it 2 or 3 years and the exchange probably wont even exist. they seem hell bent on killing it.

Ex Bookie now runs BF and it looks like it only has a couple of years left until it becomes a bookie.
Bookie now owns the other exchange that they bought for peanuts and have done sod all when it comes to taking a massive slice of BF trade.

conspiracy theory maybe??

Is this the FOBTS Mobsters trying to kill the exchange?

If I have to pay 60%, it's only fair that the rest of you dimwits have to pay at least 7.5%. 

Another weird one is that in Holland the max comm discount is 50% rather than 60%, wonder why that is.
http://en.learning.betfair.com/app/answers/detail/a_id/2486

Hazel, You will be paying the same as us in two years when we have no exchange. A BIG FAT 0%

I thought with the fixed odds, betfair would have created some sort of 'rebate' against commission or points.  Thus saying x % of your commissioned paid gets matched against any fixed odds bets you make. 

It keeps the money in the pool, takes away betting from their competition, boosts figures and puts more in the pot for internal hedging.

They won't have any customers left.

"Analysts say the challenge for Ladbrokes is turning Betd@q into anything resembling a rival to Betfair, which is 20 times its size" - The Telegraph, jan 2013

Hurry up boys its now or never you'll not get another chance.

7.5% is ok if they got rid of the PC.

for the premium charge payers it would be a great alternative but for most of the rest of us it would be the death knell

5% was too high. 7.5% is just plain insulting.

From 2004-2007 95% of my betting was on here. From 2007-2012 I reduced it gradually down to less than 20%.

Today it is 5%.  There must be tons of people like me jumping ship. They are cutting their own throats slowly with a rusty knife. It is business suicide.

I can't see them increasing comm. for straight backers in the UK when there's so much competition from licensed bookmakers.

They might even use pricing flexibility as a way of cutting the base rate for one-way bettors i.e. to 2.5% and increasing it to 7.5% for traders.

Other Exchange 3% flat.

Sales were broadly stable at £387m.
what do betfair sell,i thought they just collect commission from other sellers and buyers

hazel.

First they came....

First they came for the courtsiders
and I didn't speak out because I wasn't a courtsider

Then they came for the fast pic boys
and I didn't speak out because I wasn't a fast pic player.

Then they came for the most loyal customers,
and I didn't speak out because I hadnt been from day 1.

Then they came for the dimwits,
and there was no one left to speak out for me

lanza

5% is very hard to overcome.  7.5% is too far for all but a handful punters.  So often with approaches I get 2-3% in my favour but can't get over the hump to profit.  Not sure who they expect to want to join.  How would word of mouth ever happen when the hurdle gets that high?  Normal bookies can hide their overround but with betfair you see very clearly what is killing your profits - so 5% - 7.5% is not an issue of emotional concern - it is a black and white profit killer.

anything more than 5% and they can go and do one.

So where is the commission rate going to be 4% ?

From next week commission for Serbia will be 7% , they increase commission without giving any explanation, very bad business.

Dear ....
We are writing to let you know that the base commission rate for markets in Croatia is to be increased to 7% from 07/08/2013.

mxrmaster and bobo will you carry on betting with betfair, go elsewhere or stop betting completely?

Well, not much of a choice really. In Croatia all bookies take 5% of your gross turnover so 7% of your winnings still beats that by far. I will continue to use both Betfair and locals as before.

i see big shift to smarkets and daq

Probably I will use bf until daq become stronger with their markets liquidity, and if they keep 3 % commission that is much better than 7 %.

Matching up a backer and a layer on an exchange, and having no cost of employing a trading team to set prices, should not be a service worthy of a massive 7.5% commission.

You are right, it is not worthy of 7.5%, neither is it worthy of 5%

If their intention is to remove the exchange option altogether in order to focus purely on fixed-odds betting at their embarrassing overounds, then they are doing a pretty good job of it.

If their intention is to keep the status quo of the exchange clients whilst maximizing profit for themselves, they are in for a very nasty awakening.

If you fancy a giggle, check out their fixed odds prices for Tennis compared to Pinnys. It is laughable.

The whole bookmaking industry outside of Betfair currently benefits heavily from the tissue prices generated by Betfair customers (not Betfair itself).  Betfair now want to "benefit" in the same way, by offering poor value, and hiding the exchange.  Existing exchange customers face up to 62.5% Premium Charge Tax, plus having their prices copied and frontrun by Betfair itself.  The real Premium Tax is getting higher and higher than 62.5%, as bets that would have been matched had customers been sent to the exchange are now frontrun and picked off by Betfair itself, using their own prices.  How long can this go on for?  Who knows.  But Betfair look more and more like the Myspace or Bebo of the betting world, and not the FaceBook of it.

It's a disgrace.I am 90% out of this company and doing fine elsewhere where I pay between 1% and 3% comission.Looks like liquidiy is
picking up fast at these places too.I give betfair 5 years max.

I would have thought this discriminatory pricing by betfair would be illegal.

YOMOMMA is spot on it is discriminating.The premium charge is exactly the same it is discriminating against winners when the reality is every customer should be on the same level no matter what country they are in or whether they win or lose.

PC won't be allowed in Italy when the ring fenced exchange is launched there.

TheInvestor2, is there a ring fenced Betfair exchange opening in Italy?  Or a ring-fenced other company/government exchange?

Such a shame they have to be so greedy. Ruins the concept of fair exchange betting.

Betfair will launch there ballabrigs.

Where did you hear about the premium charge on italian exchange? I know they have to pay 20% of gross profits from providing the exchange but havent read anything about restrictions on pricing

they = Betfair to Italain goverment

Remember the bookies charge 0%.
If you put a tenner on at 7/1 you get £80 back.It's very simple.
On here who knows you could get £40 back if you are a winning punter.

pmbets,

Just a 'slight' misrepresentation of the premium charge. It's effectively a tax on long-term net profit. If you don't make money in the long term, you will never pay it. The bookies, on the other hand, won't let you win long-term in the first place!

The premium charge is a subsidy on long-term net profit.

It pulls up the drawbridge by making it harder for up and coming future shrewdies to build up the necessary capital to compete with the existing winners,.... ;)

It pulls up the drawbridge by making it harder for up and coming future shrewdies to build up the necessary capital to compete with the existing winners,.... ;)

Why?

They have a 250k buffer before they have to start paying.

They have a 250k buffer before they have to start paying.

before paying between 40% - 60% yes

but you may be paying 20% within a few weeks if you are successful

Just playing devil's advocate Contrarian 2.  Suspect that the odds of the 250k buffer still being there in 5 years time,... 1.25 no 5.0 yes. A smaller buffer will remain so people don't instantly pay PC on new accounts, maybe 50k.

Unless you're hoovering, commission generated is likely to be > 10% of gross profit, in which case the bump up to 20% is not that onerous - certainly not enough to put off a newcomer building up a capital base if they have discovered an edge.

ballabriggs,

Sadly I think you're probably right. What would be more tragic, of course, would be a hike in the 40-60% rates.

Instead of building a completely new (/separate) Italian Betfair, why not just do the sums on the amount of activity backing and laying from Italian customers, and allocate profits in percentage terms to Italy's relative contribution to the overall pot?  Having a completely separate exchange could leave it looking like the purple site liquidity-wise.

Contrarian2, logically they will want to keep the exchange on just above life support, whilst running a 365/PP style bad value high margin bookmakers in its place.  Betfair probably don't even want the exchange itself, they'd happily give it to someone else, in return for a market share of the pie from the dimwits, and the ability to use the exchange as tissue.

The real PC people are now paying is much higher than 60%, many bets that would have been matched against PC payers lays/backs are now unmatched, gobbled up by the sportsbook.

The real PC people are now paying is much higher than 60%, many bets that would have been matched against PC payers lays/backs are now unmatched, gobbled up by the sportsbook.

Personally I don't feel this is the case. I think it has filled a gap in early/low liquidity markets but not at the expense of the exchange. Talks with my account manager suggest the exchange is very important to them. The abolition of the transaction charge confirms they want us to bet more through the exchange, even though this will likely compete with their sports book. It is still their core product.

"my account manager" LOL - towing the party line is their job mate

"Such a shame they have to be so greedy. Ruins the concept of fair exchange betting."

Agree, a big change in the ethos of betfair, and if they do put it up, it would surely be another own goal and play right into the hands of B D, a lot of players would most likely just go over to the other site.

Got this e-mail yesterday...

    Dear nnnn,

We are writing to let you know that the base commission rate for markets in Brazil is to be increased to 7% from 07/08/2013.

One of the problems with **** is that they are not accepting customers from Serbia, Slovenia, and some other countries.
I can understand when Betfair wants to earn more money. But I can`t understand why **** doesn`t want new customers.

Can someone answer this?????????

the ***** in above post are for second largest exchange BD.

I'm always amazed how glowingly people speak of BD.  I gave it a good go at the end of last season.  The commission rate was great, UK football markets were good but for any other top league  couldn't get near the price on here even factoring in commission.

You have to work so hard to get a bet matched if you don't want what's on screen but I guess this is what happens when you charge less for people making prices.

Bookies - I reckon a solid portfolio of accounts and you can get better.  That said, I find them reluctant to take my bets and I'm not even a PC payer.  You have to be prepared to cocnentrate much more.

it's all bullsh it unless you use multiple id's. i'm going to move on soon and do something else.

worst thing about it: many customers that pay PC now have an incentive to bet less as 'commission payed' moved farther away from the so called 'commission generated'


just one more corporation that puts on endless layers of complexity (commission, commission payed, implied commission, commission generated, country XY commission base rate, discount rate, premium charge 1-3, data charge, transaction charge) to put it's own staying power to the ultimative test

fixed makes a good point above. The converse is that if you are paying LESS than 3% commission then the difference works in your favour.

Commission on Asian Handicaps is 0.75%, overriding the regional rate. Strangely, this was not announced on the Football forum. PC payers got an email, but not football betters or Bulgarians. You might have thought that 0.75% rate would be of more interest to a Bulgarian paying 7.5% than to a bot operator paying 2%. But it was marketed to PC payers.