Also, if winning exchange users were bad for the exchange and company overall, why wouldn't they just close accounts?

It is a fundamental paradox at the heart of the business. They need PC to maintain their revenue stream, but it is something that is slowly but surely asphyxiating the exchange.

To me, it's symptomatic of the short-termism in today's business world. No CEO or board member wants to be the one to cut revenue for the sake of long term viability. After all, it will affect the share price, and thus their bonus and future employability. Many of the business' executives are likely to have jumped ship when the chickens come home to roost.

Would betfair and their shareholders be better off currently without the premium charge? I really couldn't say.
Will the exchange revenues keeping on falling and eventually bring down the value of the company? Almost certainly.

I've been complaining about the side markets rapidly declining in terms of liquidity/number of participants but it appears main markets are now declining.  For example, in this week's PGA golf, £1m was matched before the start versus £2m for same tournament last year.  Euro 2016 QF match odds been £5.3m and £7.3m whereas in Euro 2012 the lowest amount for a QF was £10m. 

I have asked for some clarity for all of us as to what's happening and what the future holds and they've taken that on board.  Hopefully we'll start seeing some positive news before it's too late.

I've spoken to a couple of people at Betfair recently and both saying there are positive developments in the pipeline.  They've just set up an exchange team/department and recently hired a head of exchange.  What they're going to do, I have no idea though.  Knowing them, it'll be more interference such as XMXM or seeding markets themselves.
Well befair seeding there own markets no chance they would only strike a bet when they made a rick.

If liquidity is decreasing because the customers are going on the sportsbook
it's very unlikely Betfair are going to worry too much about it.

Intresting stats by Templeton Peck about the Euro QFs.

There is no shortage of money available to back/lay on these markets,
which suggests that there are a lot less punters using the exchange
than 4 years ago.

I doubt very much that this has anything to do with the PC.

On tonights game the bookies 2nd best price on each selection comes to 101.86%.

IMO the way to improve buisness is to lower commission and increase PC.

PC needs to be more targeted than it currently is.  I still find it utterly absurd that a lifetime figure (which for some of us is 15 years plus) is being used as the basis for the calculation.  BF is a VERY different place to what it was even five years ago.

TB, just realised Canada was kicked out a few months back when the merger took place.  I reckon it must be that.

'On tonights game the bookies 2nd best price on each selection comes to 101.86%.'
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Surely that's your answer .

If liquidity is decreasing because the customers are going on the sportsbook
it's very unlikely Betfair are going to worry too much about it.

They will worry about it, because it will hammer the stock price as I explained below.

FYI, the Aus and USA regulators don't allow bf to trade on their markets. Thus they cannot seed markets in these places.

As said above, it's the backers that are most noticeably absent....  They return, so do the market makers.

Why will the stock price get hammered if the new customers they attract go to the more profitable sportsbook?

The stock market valued the exchange as being worth 4 times a sportsbook.

The exchange is hugely more profitable than a sportsbook. Although it's unclear as to how much bf's sportsbook is in fact one, or a thin layer over the exchange. Judging by the fact people get limited, I'd say it was intended to be the latter and morphed into the former by people who simply didn't understand the exchange model.

Sample system showing impact of commission

BETS 9178 over two years UK racing
Odds  2 to 20
Bet size 10 pounds
Profit with zero commission = 4000 pounds
ROI 4.35%
Steady growth pattern

But with 5% commission factored in
Profit = -368 pounds
ROI - 0.4%
Huges swings up and down touching -1200 pounds a few times   

So two things punters face due to commission stripping out profit:
- extreme difficulty making profits
- huge volatility over time with plunges and peaks that would stress out anyone who tracked them - on a graph they look like an earthquake tremor zipping up and down.

This is the environment today where the pros, bots, crossmatching and thousands of eyes studying the markets looking for edges strip out value to low levels over the long haul.

Hardly attractive compared to the early days.  Premium Charge is a side issue for most.  It is normal commission rates that are too high in today's marketplace. Stock market online brokers have driven down commission. BF is increasing it.

The last Q&A on the forum was Jan 2015. I think it's only fair for BF to explain whats happening to the ever decreasing levels of liquidity, what's in the pipeline to get it back, empty sub markets and the crazy high levels of PC.

Just re reading the last forum chat these 2 questions regarding the premium charge stand out for the ridiculous answers given. Its probably best they don't do another one or if they do ignore any pc related questions.

Why is the higher rate charged on the basis of lifetime P&L, rather than on hitting annual targets? It means you get stuck on the higher rate regardless of how you do in the future and punishes those that have been with the site a long time. It seems a strange way to treat loyal customers.
Congratulations on your success – Winning £250,000 is no small feat. We use your lifetime net P&L (after all charges) to measure how successful you have been on Betfair. Annual performance goes up and down so it isn’t a good indicator of just how well you have done.

Have you considered changing the premium charge period from a week to a month?
This is something we’ve talked about – the problem with charging premium charge monthly is that the monthly payments will be larger, which means that you will need to keep a higher account balance to cover the charge at the end of each month which we understand many customers are not keen to do.

they probably shouldn't answer at all.  the rules are clear and there are no questions


hundreds of thousands of people lose gambling on sports and then look for excuses...best to ignore them and leave them alone to post and post and post in some internet forum to let off steam

Are most punters paying more commission under the new system than the old one then?
Would presume yes, otherwise why change it?

If you have a particular edge that works well and gives you a good percentage of wins as I do, then you will pay more in PC than regular commission. I was in that situation for several years, and I only got regular commission higher by betting on a lot of stuff that I knew was only marginally profitable. But then I got bored/fed up with doing that and I am now back on the edge of paying the PC again.

As soon as I pay the PC again, I'll probably leave. It irritates me too much.

I have reduced the amount I bet now as Coner says side markets wide spreads zero chance of any edge.
Many USA harness racing tonight had £85 matched in total for the full race.
Really fed up of Betfair taking raiding my account at noon every Wednesday and putting next to nothing of that money
back into promoting the exchange.
I would like to know where that money goes ,as I have their original mail they sent me to say it would go back into the exchange.
Do the impotent Gambling Commision know anything about what's going on on Betunfair?

Ask yourself - when was the last time you recommended a friend to join betair?  For me it was probably over 5 years ago.  It is a hard and frustrating way to make money. The small number who are making money would probably know that their friends would not have a hope these days.  Those making no money would not want to inflict the risk or pain on their friends.  This equals NO word of mouth promotion.  The exciting early days are gone.  Now it is a hard slog against the established sharps and the very high commission.

The average punter does not expect to win (deep down) and is happy with the ease of a sportbook where they can blame the bookie not themselves if they lose. On betfair, sharp minds are supposed to win so if you don't, it rubs salt in the wound.  A mug punter would prefer to not be made to feel even more of a loser by being on BF.  I see no change in the trend to decline - unless maybe they reduce commission radically - but they won't.

If you trade the stock market, liquidity is endless and emotions drive stock to do crazy stuff.  Markets are full of imperfections as no-one can really say what they price of a stock should really be within a wide margin (unlike the extremely accurate sports betting markets).  Far more scope than BF for trading these days.