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Betfair head honcho Andrew Black posted these words on his blog on 8 Sept 2008.
He has since removed the item.‘I’m away from the company at present and have been for a while, but I did know about this change (although I’m not sure about the fine details).
Some Comments:
I’m told that this is a change that will affect 1 in 200 customers – a tiny proportion.A large number of those affected are running aggresive ‘bots’ that are collectively costing us millions each year in running costs.
I guess the majority of the remainder are traders, but to qualify they must be making a fair ammount and rarely lose.
The new charge has it that these consistent winners now have to pay 20% of their profits.
I’ts not much though.Betfair has enormus running costs- over 1200 people employed, massive technology costs, big marketing costs and a load of taxes and levy etc.
The trader has very few costs -basically access to the Internet which he would probably have anyway. I think the 20% is actually a very good deal- there are not many walks of life where you can get an 80-20 deal your way where the 20% side carry all the costs as well.
It is not such a good deal as you had yesterday but its still a good deal.
As far as the greed comments are concerned -It is normal business practice to change and optimise charges.
The betfair exec think they have been undercharging and this is a move to rectify the balance.’
Betfair claim that just 1 customer in 200 will be paying the new charges the true figure could be much higher.
If they have 500,000 customers there is no doubt many accounts will be lying dormant as either the member has died moved away or simply used the account a few times and lost money and left.
So the percentage numbers they claim will pay extra charges could well be wrong if they have based it on the total number of accounts rather than accounts used within the last 3 months.
They may be correct in thinking charges should rise. Since Jan 2004-2007 inflation has risen 9.3%. Betfair allow 1 point for every 10 pence of commission paid taking into account the inflation they are giving a point now for every 9 pence they earn.
I dont run a ‘bot’ and never have so why cant they either ban bots running or charge bot users the extra premium to take into consideration the extra charges betfair claim they cost them?
Betfair have at a stroke shown the Government that it would be simple to impose a betting tax and return gambling to the dark old days when we paid 9% in taxes.
In his blog Andrew Black admits he does not know the finer points regarding the new charges and it is complicated to work out.
When I joined Betfair it was a company that seemed to have substance and had many customers that endured many days when the site crashed but they stayed with it in the main.
All that customer loyalty has meant nothing to them they want to hit everyone for as much as possible.
The way I think the new charges will be applied are thus.
Calculate the gross profit and total charges for the previous 60 weeks.
If you are in a profit and the total charges are less than 20% of that profit you will become liable to be charged the lesser of
(a) The difference between the 20% gross profit of the previous weeks profit and the total charges paid during that week
(b) The difference between the 20% of the prevoius 60 weeks profit and the total charges over the 60 prevoius weeks.
The only exceptions are that the charge will be avoided if 50% of gross profits come from a single bet or that you bet in less than 250 markets in 60 weeks.
Graham Wheldon the Racing Post journalist calculates he has paid £13,779.12 commission in the last 60 weeks. If he was paying the new charges start this would have become £36,833.62 a rise of £23,054.50.
This is from a person who runs no bots and does not arb and makes his money solely from in running markets.Many of course will be paying far more from next week and I think it will concern a lot more members than betfair claim.
When I use Betfair at present I know what charges I will be paying if I win and this at present is easy to calculate but when the new charges come into place one will only ever know after the 60 week period has been factored in.
I compare it all to Tesco’s charging me more just because that is the only shop I may use yet a customer who uses the store on an infrequent basis pays a lot less!
Amazing how so many people who will never be effected by these charges feel the need to have a moan all the same.
I’ll say it again….high turnover low margin punters taking a view ie…not trading will not be effected by these new premium charges. The commission paid at the 2-3% end of the commission scale is still well in excess of 20% of total profit.
Amazing how so many people who will never be effected by these charges feel the need to have a moan all the same.
Well done people for moaning I say.
Amazing how so many people who will never be effected by these charges feel the need to have a moan all the same.
I’ll say it again….high turnover low margin punters taking a view ie…not trading will not be effected by these new premium charges. The commission paid at the 2-3% end of the commission scale is still well in excess of 20% of total profit.
You can say it as many times as you want, it still won’t be true. I’m a highish turnover lowish margin punter and my non-racing betting will be crippled by these charges. I don’t trade.
You can say it as many times as you want, it still won’t be true. I’m a highish turnover lowish margin punter and my non-racing betting will be crippled by these charges. I don’t trade
Scratching my head with that one Glenn. Whats the difference between racing and other sports when it comes to high turnover low margin punters taking a view?
On racing I have thousands of little bets that help net each other off. On footie I have one or two thumping bets a year. These don’t net themselves out.
At present I am on the 20% commission paid to profits borderline for my racing bets, so if I have 100k on Man U to win the premiership @3.9, I will pay over 60k commission if it it wins but won’t save any charges (at present, things might have changed come next spring) if it loses. So I’m only getting 9/4 net. I just can’t bet on such terms. I’d get a better deal being one of these guys that walks into the big three with a carrier bag full of cash and taking the 5/2.
I am more surprised at how many people are not affected by this super tax, I didn’t realise there were so many losing punters.
Seagull, the figures are misleading 1 in every 200 refers to users paying every week, they won’t always be the same people. Myself for example, borderline, will pay it on very good weeks but not on an average week and I can’t offset the poor weeks against the good ones.
The speil from Bert about agressive bots is just pish, nothing more and nothing less.
I agree with Glenn, big bets that don’t net out are the problem.
Glenn
Isn’t there some "big individual win" clause that would help you in this case?
There’s probably something in the Byzantine structure, but what if I want 100k on Rangers as well? What if I’ve backed one at 1000 in running and it knocks that out or is usurped by it.
Well it’s not just “one individual bet” – it’s Any single win that constitutes more than 50% of your gross profits over the previous 60 weeks will be excluded from the calculation so in theory, all 3 of those bets could fall out of the premium charges loop.
Have you actually received a letter saying that you would have been charged over the last 60 weeks Glenn?
Glenn
Isn’t there some "big individual win" clause that would help you in this case?
There’s probably something in the Byzantine structure, but what if I want 100k on Rangers as well? What if I’ve backed one at 1000 in running and it knocks that out or is usurped by it.
Yes. You are right
All in all this is a dreadful move by Betfair and the most amazing thing about it is that they haven’t reversed the decision already.
If my auntie had balls she’d be my uncle.
I’ve just run a spreadsheet on a 3% commission for every bet I’ve had his year. On the 9.12% per cent gross profit I’d have paid 30.2% back in charges. I havent been effected and still wouldnt be effected, even at a relatively low commission all year.
Betfair is not a bookies.
Lucky old you CR .. !
Looks like your strategy works fine at the minute, so f*** everyone else, hey?
Don’t come bleating when you can’t get matched.
The biggest effect on this will be liquidity, as the major firms (who pump millions) through the site will no longer do so as it is not now financially viable.
A massive own goal for Betfair.
I still disagree with you there Black Type
I don’t really see how big bookmakers are going to be any more affected than a large-stakes backer.
dave jay
I think what Cav is basically trying to say is that most people will not be affected by this new charge – and I’m inclined to agree.
There is a massive storm in a tea-cup regarding these new fees – but as far as I can see very very very few people will be affected by them.
I’ve asked Glenn if he received a letter and have yet to get a reply.
If Traders are charged then fair play to Betfair I say – in fact they should be charged 50% not 20%.
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