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llama1
27 Jan 14 00:09
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Date Joined: 13 Jul 00
| Topic/replies: 152 | Blogger: llama1's blog
I have never understood why people who pay the higher 40+% PC have never worked out the correct way to overcome the charge……

If you pay the 40% PC, then you are a person who always wins in the long run.

You are also a person who will not bet random amounts, but will risk a finite amount for each bet that they make.

So assuming the above two statements are true, then it is very easy to negate the effect of the PC.

If you are a person who would normally risk a bet of £30 on a trade, all you have to do is to increase your risk by a factor of 5/3.

e.g. If you normally bet £30, then increase your bet to £30 x 5 / 3 = £50.

e.g. If the bet was on a 2.0 shot, then when you win your £50 (Ignoring base commission for the moment), when the £20 PC is taken, you will be left with £30 which exactly equates to what you would have won, under the pre PC days when you risked your £30.

So all you do is bet £50 instead of £30, to allow for the fact that £20 will be taken via PC.


Now you are all going to say….”That is fine, providing the bet wins….What happens if you lose….You would have lost more than you wanted to….”

NOT the case……Every 40% PC payer should have worked out by now, that when a 40% PC payer loses £50, they actually only lose £30.

The reason for this, is because when the 40% payer wins their next £50 bet, they get to keep it all and hence getting back that extra £20 that they lost previously.

A couple of examples will suffice……

Remember…We are talking about 40% PC payers who will always win in the long run.

WE are also ignoring the base commission rate for simplicity……

A 40% PC payer plans to make four £30 bets……(Let’s say @ odds of 2.0).

If 3 of the bets win and 1 of them loses, then under the pre PC days, you would have 3 winning bets of £30 and 1 losing bet of £30…End result is +£60.

Using the new tactics, you would have 3 winning bets of £50 and 1 losing bet of £50…End result is +£100, but then £40 is giving up as PC….So the Final end result is +£60…The same as the pre PC days.


Another example.

5 Bets in the days BEFORE PC:

£30 @ 3.0
£60 @ 2.0
£90 @ 4.0
£30 @ 2.5
£60 @ 7.0

The first 3 bets win, the last 2 bets lose.

The winning bets make, +£60, +£60 and +£270.    The losing bets lose -£30 and -£60.   So overall the profit is +£300 and you keep every penny, because there is NO PC to pay.


Same 5 bets with PC introduced.

£50 @ 3.0
£100 @ 2.0
£150 @ 4.0
£50 @ 2.5
£100 @ 7.0

The winning bets make, +£100, +£100, +£450.   The losing bets lose -£50 and -£100. So overall the profit is +£500…You give up 40% of this (£200), leaving you with a final profit of +£300…SAME as before.

So absolutely NO change to your current Profits……


So why is this GOOD for EVERYONE……?

Because whilst the PC Payers are having to increase their stakes, they are adding more liquidity into the markets for everyone else to enjoy.

Bearing in mind the 50% PC Payers are having to DOUBLE their stakes to negate their %50 PC……

So Double Stakes = Double the amount of liquidity……

This can only be GOOD for EVERYONE……

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Replies: 60
By:
Still standing
When: 27 Jan 14 00:47
Take a look at a counter extreme example.  Let's say this 50% PC player ups his bets by 100 % to offset the PC as stated.  He has a run of 5 winning bets and 15 losing bets.  His bankroll is severely dented, so he now makes much smaller bets.  How is this helping BF and everyone else.  BF just killed off another golden goose, if this guy can't recover.
By:
rink rat
When: 27 Jan 14 00:48
If your edge is in limited Liquidity markets, it is impossible to double stakes without changing the odds drastically against you.
By:
TheInvestor2
When: 27 Jan 14 02:46
Unfortunately the reason this fails is that when you increase stakes, your margin tends to go down.

If I placed exactly the same bets I currently do for double the size, I would expect to make a bit less than I currently do.
By:
Latalomne
When: 27 Jan 14 08:21
LMFAO!  If only it were that simple!
By:
llama1
When: 27 Jan 14 10:28
Still standing,  Surely if you are a 40% PC Payer and have won in excess of a quarter of a million pounds on here, it is unthinkable that someone could have 15 losing bets on here.....lol

rink rat, If EVERYONE was educated on this strategy, i.e. everyone DOUBLES their stakes, then even the limited Liquidity markets would have DOUBLE their normal liquidity......

TheInvestor2, If you are able to DOUBLE your stakes and still get the same price, then mathematics says that you will win double the amount....Even in the long run....If anything, your margin will go up due to the small decrease in your base commission rate......

Latalome, If everyone thought this way, then it is that simple......
By:
mardock
When: 27 Jan 14 10:50
Higher stake in most of cases will not match on the same prices and even if it will then later it could be huge problem for traders to trade out especially to cut the losses, just like TheInvestor2 said in general higher stake = worse ROI %

15 losing bets in the row for 40% PC payer is very likely. I paid 50% and I had many times loosing strikes like 8 - 12 markets in the row.

In my opinion users with 60% are likely to have loosing weeks, 50% payers are likely to have loosing months, 40% payers are likely to have loosing years.
By:
Llamedos
When: 27 Jan 14 11:08
One other option is to take your liquidity elsewhere making a slightly lower gross percentage but only pay a flat commission rate of say 3%. Liquidity is therefore reduced on here so Betfair then have to increase their commission rates to compensate for the short fall in lost revenue.
By:
Latalomne
When: 27 Jan 14 11:38
If PC payers are "adding liquidity for everyone else to enjoy" yet they are also expecting to win, who, pray tell, are they supposed to be winning from?  The problem presently is that, particularly in the side-markets, there are no backers, or very few.  No amount of putting more money on one side of a bet into the pool is going to miraculously generate a matching bet on the other side unless, as has already been pointed out, you start to ask for odds which are no longer value, and thus it becomes self defeating.
By:
curlywurly
When: 27 Jan 14 12:03
Firstly I thought he must be on a wind up.
But reading it again, I actually think he's serious.

Where's that head in hands man?
By:
CLYDEBANK29
When: 27 Jan 14 12:24
Wow OP has a joining date of 13 Jul 00 which is intriguing in itself.  Just over a month after Betfair launched.  Why not just increase your bets from £30 to £3,000 and £50 to £5,000?  Then you will make 100 times as much.  There is a reason why £30 at 3.0 was bet rather than £60 at 3.0 and that's because the OP thought £30 was the optimum stake.  He'd have upped to £60 already if he was confident that was more profitable.

Enough said ... the opening post is pure bollox.

There is a reason why the premium charge and the secret cross matching bot has greatly harmed the exchange product and that is because it stopped Betfair being the punters champion.  That is why Betfair was such a success, that's why it grew at such a rate and that's why it wasn't like any other business I can think of.  If you market yourself as the punters champion and then you mug off your most vocal advocates who champion the whole ideology on which you have prospered, you are going to suffer.
By:
Still standing
When: 27 Jan 14 13:26
Right on Clyde.  And now we see what every entity who has the ability to tax their citizens does.  It's the same old plan from people who are out of ideas.  They have a smaller tax base because of past increased taxes, so they tax who's left at a higher rate.  The downward spiral has begun, and like water going down a drain, the spiral is so much faster as it's nearing the bottom of the basin.  If BF keeps up what they're doing without offering any extra value, they will be out of business.  Then they can kiss are arse as much as they want, but the rot would have set it, and another exchange will be the new established choice.  It will happen.  History says so.
By:
katverrat
When: 27 Jan 14 13:31
If you pay the 40% PC, then you are a person who always wins in the long run.

downfall of the argument
By:
Still standing
When: 27 Jan 14 14:17
40 % PC payers are those who HAVE won in the long run.  A bad run, and you're now a 20 % payer .  I guess they HAVE always won.  One more bad month or two, out you go.  Been there, done that.
By:
CONER
When: 27 Jan 14 15:10
The PREMIUM CHARGE is GOOD for EVERYONE......
ITS THAT GOOD NO ONE PLAYS ANYMORE
BECOURSE THE TAX PLAYERS ARE SICK OF IT THEY DO NOT PUT THERE MONEY ON OFFER
WHICHT LEAVES THE SMALLER PLAYERS NOT BEING ABLE TO GET ON
SO THEY GO ELSWHERE FOR A BET
YEP AS HE SAYS The PREMIUM CHARGE is GOOD for EVERYONE......
By:
Coachbuster
When: 27 Jan 14 15:26
What a mental example from the OP  Crazy
By:
YOMOMMA
When: 27 Jan 14 16:18
I think it's good darlo bantam but they needed to give the excess back to the customers.

They could have solved the problem by reducing the tick sizes on the new website but they didn't so it continues to make them a mint for doing absolutely nothing.
By:
bingo bongo
When: 27 Jan 14 16:27
On markets with more than 2 outcomes I believe it still gives bf free runners. On stuff like in running horse racing it must be a gold mine.
By:
YOMOMMA
When: 27 Jan 14 16:32
Matchbook exchange has a similar cross matcher in place but their odds are to 3 decimal places so it doesn't skim shed loads from the customers. Betfair tick sizes are no good they go from 2.00 to 2.02 to 2.04... (2 decimal places and increments of 0.02 from 2.00 to 3.00, and increments of 0.05 from 3.00 to 4.00 etc)
By:
TheInvestor2
When: 28 Jan 14 00:12
llama1 27 Jan 14 10:28 Joined: 13 Jul 00 | Topic/replies: 91 | Blogger: llama1's blog

[...]

TheInvestor2, If you are able to DOUBLE your stakes and still get the same price, then mathematics says that you will win double the amount....Even in the long run....If anything, your margin will go up due to the small decrease in your base commission rate......

[...]

Yes correct, but that is not what happens on a betting exchange. If you simply always bet by taking whatever is on offer, and the markets you bet in always have enough liquidity in the first place to bet double the amount, then your strategy works, although it still begs the question, why stop at just making up for income lost to PC?

I'd wager that somewhere not far off 100% of PC payers offer on here as well as taking prices.

When you are wrong with your bet you get a higher % of your stake matched than when you are right on average. If you are betting £2, you may barely notice this effect. As you increase stake, this becomes more and more of a problem, to the point that increasing further will actually start to reduce profits.
By:
llama1
When: 28 Jan 14 00:56
CLYDEBANK29, the reason why the OP staked £30, was because a Prudent/Rational PC Payer should either be using Kelly for a staking plan or just a straight forward % of Bank calculation to determine their stake......To bet either £3,000 or £5,000 would just be irrational and would go against the grain of a 40% PC Payer.

All I am saying is that if the Current Bank size is say, £3,000 and you are the kind of methodical person who bets 1% of their Bank i.e. £30.....To compensate for the PC, they should now be betting £50 since when you bet £50, you are in fact only risking £30 i.e. 1% of your Bank......
By:
fixed
When: 28 Jan 14 03:12
nobody has ever gotten anywhere near Kelly-staking, it's just one of those pretty useless theories that's easy to talk about

it's 1) of course impossible to identify your edge in every situation with any kind of precision and 2) also not possible to get matched the exact bet size from cell T65 of your multi coloured Kelly-Staking For Winners Excel Sheet
By:
CLYDEBANK29
When: 28 Jan 14 16:05
llama1 TheInvestor spells the reality out in as succinct and as simple a way as is possible.

As far as Kelly theory goes it would need to be adapted to account for the super premium charge.  As a guiding characteristic of the Kelly plan is to avoid wiping out your bank when bad runs go against you, I think on the balance of probability, an adapted Kelly would actually advise reducing your stake, because of the sequential nature of the charge, and the subsequent lack of a refund of premium charges paid, when losses follows a win.

That said Kelly is redundant in your argument for the reasons theinvestor points out.
By:
Coachbuster
When: 28 Jan 14 18:08
the biggest scandal isn't so much the premium charge - (pay that through gritted teeth )  but the deceit that is THEFT from the customer

that is ,making a customer pay the charge for winning above the threshold ,but NOT repaying it once the customer loses the following week
By:
Coachbuster
When: 28 Jan 14 18:09
surprised no one ever mentions it - what's more, i'm surprised it's actually legal to do this ?
By:
bongo
When: 28 Jan 14 20:30
At least you're told by Betfair about the PC affecting your betting in a timely manner:

i.e. They tell you in advance that you're subject to it or at worst you find out within a week

Betfair won't tell you in a timely manner if you're affected by courtsiders breaking this site's own rules to mug you off, oh no, you have to wait 3+ years for the Australian police to inform you that your betting has been affected by scum like Steven High, Martin Pendlebury and Simon Allen.
By:
GQ100
When: 28 Jan 14 21:13
come on guys he cant be serious he just had wayyy to much vodka..either that or he works for betfair
By:
YOMOMMA
When: 28 Jan 14 22:16
LLAMA must have the HUMP or would that make him a CAMEL.
By:
BigglesFlysUndun
When: 29 Jan 14 11:12
I'm a losing Betfair customer........but have previously payed the premium charge

How is that good for me?
By:
Handles
When: 29 Jan 14 12:11
Coachbuster: But they do refund pc in a losing week. Not directly but as a reduction in the following week's potential pc. Over the course of a year for example it's impossible to pay more than 40% (or whatever your figure is) of profits in commission/pc.
By:
curlywurly
When: 29 Jan 14 15:13
I thought llama had won stupid post of the year, then handles goes and beats it in the same thread
By:
Handles
When: 29 Jan 14 15:52
Please explain curly. So am i the only person that this applies to? If i lose £1000 in a week the following week my first £1000 of winnings are immune from pc. So in effect i receive back 40% of my losses. If you know any different please enlighten me.
By:
Coachbuster
When: 29 Jan 14 15:52
Coachbuster: But they do refund pc in a losing week. Not directly but as a reduction in the following week's potential pc
_____________
that's not the same

that's like Sainsburys offering half price wine ,but when you get to the checkout you get charged full price and given a half price voucher off your next bottle .

I'm pretty certain that if i lost 60k in a game of football i very much doubt i'd want to visit again .

So thats 12k i've also had  from me in the name of extra commission
By:
Coachbuster
When: 29 Jan 14 15:52
taken
By:
Coachbuster
When: 29 Jan 14 15:55
see handles,it flies in the face of what BF are trying to impliment - a charge based on fairness and protecting this precious eco system - you can't be a winner if you're giving it back at a later date
By:
Handles
When: 29 Jan 14 15:56
Of course i'm making the assumption that as a pc payer you are fairly successful and continue to bet and continue to be profitable. If you decide to walk away after a big win and a p.c hit then yes you won't receive a 'refund'.
By:
Handles
When: 29 Jan 14 16:00
I agree it's not fair and as a 40% payer i've done my fair share of 'soul searching' to continue here but just wanted to make the point that anyone thinking that's it's a one way street where they only take is wrong.
By:
curlywurly
When: 29 Jan 14 16:04
It doesn't really need explaining does it?
To use your example of 1 year
Jan to nov I win 100k pay 50k premium charges
In dec I lose 50k. I have now won 50k on the year and paid 50k in pc and I doubt very much if I'd be coming back.
It's wrong - and yet another squeeze that's never in your favour.
By:
Handles
When: 29 Jan 14 16:08
I get your point curly. But using your example after losing 50k in december you'd be mad to walk away because your next 50k of earnings are pc free.
By:
curlywurly
When: 29 Jan 14 16:17
I get your point also handles, but what if I lose another 50k in January, what then?
There must be loads of winners who have walked away in these circumstances, or worse.
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