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Agreed a TOTAL PR disaster from Betfair. These new charges have been explained very badly indeed although I believe its no more than Betfair escalating its war on traders. I do believe they are correct when they say the vast majority of customers will not be effected but it sure doesnt come across like that. Whats also surprising is how slow the other exchanges have been in taking advantage of this.
I turnover between £100 – £200 a race on every race in the UK every day operating a high turnover low profit margin return (less than 10%) and I’m paying well above 20% of gross profit in commission. I take a view and leave my position open. The new charges wont effect me at all. I suspect many of Betfairs highest rollers operate in a similar fashion and provide the company with the majority of their annual profit in the horseracing markets. Betfair will not want to piss these customers off and have not on this occasion imo.
You will only be considered for the Premium Charge if, over the previous 60 weeks, you satisfy the following criteria:
* Your account is in profit;
* Your total charges paid are less than 20% of gross profits; and
* You bet in more than 250 markets.Two further conditions reduce the likelihood that you will be required to pay the Premium Charge:
* Any single win that constitutes more than 50% of your gross profits over the previous 60 weeks will be excluded from the calculation; and
* Each customer will have a 60 week allowance of £1,000 against the Premium Charge.Each week the customers who meet all the conditions set out above will be charged the lesser of:
* The difference between 20% of the previous week’s gross profits and the total charges paid during the week; and
* The difference between 20% of the previous 60 weeks’ gross profits and the total charges paid during that period... this is a summary of the changes from the betfair site. What Betfair are saying is that if you win more than £1000 in a 60 month year and you don’t pay 20% in charges then you will have to make the difference up to 20% on a week to week basis for every winning week. Is that right?
250 markets is one bet every other day and the £1000 is £16 a week profit. That’s going to catch almost everyone at some point.
Omg .. what are they thinking !! This has to be some sort of corporate suicide pact.
Close but no cigar Dave. You will make up the difference between implied charges (which will invariably be less than actual charges if you qualify for the charge) and 20%, not the amount you have paid and 20%.
For example, you make two bets that week, they both win netting you £10k. You will be charged £300@3% commission, but they will ask for £1850 on top of that not £1700, as they claim you have only ‘generated’ £150 in commission.
That may be so, but they’ll take the money all the same Dave.
Lots of very nasty small print below the headline claims here.
I think that this may affect me, from time to time. I’m in no way a big stakes gambler and pay 5% commission, but I would be liable for the charge in line with the rules laid out above.
It takes the incentive out of trying to win.
I was looking at Betdaq today and the prices offered there didn’t seem to be any different to Betfair, maybe it’s time for a change.
Glenn – you make the claim earlier in the thread about somebody who backs 100 even money shots and has a 53% SR will pay the charges.
Have you got calculations to back this up cos I don’t get that at all.
Per my workings at €100 level stake, you would need a 57% SR to start paying the charges and even then the Charge would only be approx €2,000 on a profit of €84K over the 60-week period.
I have assumed a 5% Commission charge for the win bets and a 4% "implied" commission on the losers.
Dave,
Not sure someone winning 84k would be paying 5% commission but I can’t be bothered to work it out. The implied commission is likely to be a lot less as well.
At 2% you’re genereating £1000 in charges over 100*£1000 bets. You would be making £6000 profits at 53% straike rate, so the charges would kick in: £200 worth (20% of 6k=£1200 less the £1000 you have already paid).
The real bar might be higher but you can’t assume when striking your bets that implied commission would be any higher than 2%.
davidbrady, in the example, the fellow that Glenn mentions would then be subject to this tax on a weekly basis, until his bottom-line over 60 weeks changes. So, he gets taxed on his winning weeks but he isn’t compensated for his losing ones, on a week to week basis.
Glenn is using big numbers and low commission rates but suppose you make more than £1K per year and pay 5% commission you will still get clobbered.
Anyone who isn’t affected by this should seriously think of giving the game up and getting involved in something else.
You can only think that betfair want to push out the winning punters and replace them with themselves. They must hate the idea of wide boys mooching about the living room in their pyjamas all day. It goes against the whole ethos of going to unni and all that.
Anyone who isn’t affected by this should seriously think of giving the game up and getting involved in something else.
Simply not true. I know personally at least one betfair customer that has won more 7 figures on there in the last 12 months but isn’t required to pay the charge.
The major fallout from this (that I don’t think has been touched on yet) is the huge effect this could have on liquidity.
The amount of money hedged through Betfair by other firms/organisations could very quickly dry up as it will now not be worth their while.
This surely will affect everyone eventually.
dave jay
I don’t think those figures are correct.
Suppose you make £2K a year by winning £10K and losing £8K
You will have paid £500 in commission and your implied commission @ 3% will be £240.
Therefore your Generated Commission is (£500+240)/2 = £740
So the 20% Premium Charge of 20% on your £2K profit is £400 but you have already paid £740 so you will pay no extra charge.
And this is before you take into account that the first £1,0000 doesn’t have to be paid.
To be honest – it doesn’t really matter whether my figures are correct or not – it’s the perception of the reality that will cause Betfair problems, not the actual reality of the charges.
If people are afraid of something, whether that threat is real or possible or neither, they will take steps to eradicate their fears. And that is what the real problem is.
The amount of money hedged through Betfair by other firms/organisations could very quickly dry up as it will now not be worth their while.
I disagree as firms looking to hedge will be more likely to be predominantly backers on Betfair and therefore the Premium charges shouldn’t really affect them.
Anyone who isn’t affected by this should seriously think of giving the game up and getting involved in something else.
Simply not true. I know personally at least one betfair customer that has won more 7 figures on there in the last 12 months but isn’t required to pay the charge.
Naylor?
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