Betfair Charges

[Win2Win]

If you haven't heard Betfair will be charging winners an additional charge :splapme .....although they say it'll only effect 0.5% of people.....they class a professional punter in the 0.7% class....so basically 'Pro-Punters' will be getting charged an additional levy for winning!!

Then again, it is not as simple as that, my head hurt reading the info on Betfair....From what I gather it effects the people who win continously....probably those who use bots that seldom get it wrong & lose money, bookmakers, and people acting as bookmakers.

Anyone have any idea in simple English?

[Street cry]

Well it seems that if you are profitable over arolling 60 week period you give betfair 20% of your gross winnings to give you an idea someone who has made £8000 over a 60 week period will pay around £40 a week.
Shot themselves in the foot if you ask me , Betangels betdaq version should be ready soon and betdaq is becoming more liquid as people boycott betfair. Also if you switch to betdaq and mail them first they will offer you 2% comms, my mate said he wanted to switch and emailed them they offered him 2% for the next few months so worth doing.
Betfair are lying when they say it will affect a small number of people if someone making less than £200 a week is going to have to pay out £40 its obscene.

[mathare]

Betdaq did the same sort of deal when Betfair changed their commission structure before - that's when I jumped ship and haven't been back since. I am not dependent on bots etc so Betdaq is fine for me. Be nice to see more come over and lincrease the liquidity.

Don't try in-running betting on Betdaq though - you'd be lucky to see a few hundred quid matched once the race is off

[Win2Win]

Well it seems that if you are profitable over arolling 60 week period......

Is that defined as profitable every week for 60 weeks in a row, or if you win £1000 in week 1 from a £10 bank, and then lose for 58 and are left with £200 in the bank, and then win another £1000.....do you pay the 20%?

[wb]

An absolutely terrible PR move by betfair. I'd like to see how many have made the switch this week.

[wb]

Even though it won't affect most people, the thing that annoys me most is that it says should you become very successful, we'll punish you despite the fact you've already paid loads of commission. Who the hell thought of this?

Some examples from the site:

Example 1

You have won gross profits of £10,000 over the previous 60 weeks having bet in 800 markets. You have paid total charges of £980; all of which has been paid through commission generated. You have not been charged any Premium Charges over the previous 60 weeks although you have fully used up your annual allowance of £1,000.

During the previous week you won £500 and paid total charges of £80. You are therefore charged £20 in Premium Charges ((£500 x 20%) - £80 = £20).

Example 2 – Charge Allowance

You have won gross profits of £10,000 over the previous 60 weeks having bet in 320 markets. You have paid total charges of £1,050; £850 commission generated, £200 Transaction Charges and £0 Premium Charges.

During the previous week you won £500 and paid total charges of £50. In the absence of a charge allowance you would have been charged Premium Charges of £50 ((£500 x 20%) - £50 = £50). However, the £50 is offset against the £1,000 charge allowance meaning that no additional Premium Charge is paid. You then carry over the balance of your charge allowance (£950) to offset against potential future Premium Charges.

Example 3 – Excluding ‘big’ wins

You have won gross profits of £8,000 over the previous 60 weeks having bet in 500 markets. You have paid total charges of £1,025, all of which has been paid through commission generated.

During the previous week you won £5,000 from a single market and paid total charges of £125. As the win constitutes more than 50% of your total gross profits over the previous 60 weeks, it is excluded for the purposes of calculating the Premium Charge. However, the commission generated on the win does contribute towards total charges paid.

After the win is removed you have gross profits of £3,000 and total charges of £1,025 and therefore incur no additional Premium Charge.

[Win2Win]

Still non the wiser!!!

I'm reconsidering using Betfair now, and I pay 5 figures a year in commission.

[Street cry]

yes keith if you are in profit over 60 weeeks. So total of last 60 weeks p/l ie you made £100,000 we take 20k of it

[Win2Win]

Still confused

From the site: "If we’d had this charge in place over the last year less than 2% of those customers who were in profit (after commission) would have paid it."

Doing the maths that would mean a hell of a large % make a profit!! According to Betfair 0.7% of people make over £10,000/yr

...and I'm good at maths

Why didn't they just adjust the commission to make more profit?

[Win2Win]

From the Betfair Q&A on the 10th

• Why are you introducing the Premium charge?

Because we think it is the most sensible and equitable way to grow the Betfair Exchange.

The vast majority of our customers are completely unaffected. The likelihood of a “normal” sports punter qualifying for this charge is close to zero, even if he or she has a very positive ratio of wins vs. losses. The charge also doesn’t limit the amount you can win, so there is still the same attraction for customers to place their bets on Betfair.

Charges made to customers have never been equal: we have a sliding scale of commission, after all. This charge comes in a year after our last price increases – a year during which we have invested very heavily in the business; and we think it is fairest that the weight of that cost should be limited to those customers who we believe are gaining a disproportionate benefit from the service we provide.

The Premium Charge will only apply to customers who pay us less in commission than it costs for us to service them. The reason they do is because a) many of them use the Betfair infrastructure extensively, or b) they drain liquidity from the exchange by withdrawing their winnings faster than new funds are added back by other existing or new Betfair customers, or c) both of the above. Overall, these customers are a cost to Betfair, which means ultimately that they are a cost to the entirety of our customer base.

• How do I know if I’m affected by the Premium Charge?

If we haven’t already told you explicitly that you ARE affected then you ARE NOT affected. If you ever were to be affected in future, you will hear from us BEFORE the charge might take effect. As stated above only a very small number of customers are affected.

• Are you “too greedy” by introducing this charge?

No, we don’t think so. We balance the demands of all stakeholders in the business: customers, employees, shareholders, and industries which derive a percentage of our profit, like the racing industry. Our profit margins are not excessive (our full accounts are available on our corporate website, betfaircorporate.com), and our profits are a fraction of those of other large gambling companies . In fact, investment in the business has meant that our profit margins are lower than many other industry players in recent years. The goal of the Premium Charge is to grow our business and customer base overall for the long term.

• Why is it introduced now?
We have always been quite explicit that we run the business as efficiently and as equitably as we can. We believe that introducing this charge now helps us to strike the right balance between the stakeholders in our business, rather than having one group among stakeholders in the business deriving particular benefit from the exchange.

[Win2Win]

Stake & Chips 10 Sep 18:01


Is this charge being levied merely to increase your profits in the short term, in the lead up to a floatation?

No, we see this as a long-term benefit to the business. It’s bad business to have too many customers who cost you more than they deliver in revenue – this charge addresses that and is focussed on a very small minority of our customers. For the vast majority of our customers, it has no direct impact and they only benefit from the increased health of the business.




dogbolter 10 Sep 18:02


The implication is a 'normal' sports punter wouldn't qualify because he had 250 bets in a 60 week period? How is less than 5 bets a week unusually high volume?


It isn’t about the volume or the number of bets placed: those metrics are just in to ensure that people who are fortunate to get a few good wins do not get penalised (in other words, to reduce the number of people who might otherwise be included in the group charged). What really drives this is the winning versus losing ratio, across a broad range, and the relevant ratio is one which most of us can only aspire to. Most normal sports punters do not get close to the level of success that would put them into the premium charge group. They need a level of consistent success which is extremely rare.




Betfair Customer Services 10 Sep 18:02


Will Betfair be passing on to the Levy the profits from the increased charges of affected horse racing punters, or keeping all of the Premium Charges?

The short answer to the question is clearly yes: the Levy gets 10% of our profits on British horseracing.

We have always argued that the way that we pay levy, in line with other bookmakers, is the right one, and that racing getting a percentage of our profits means that their interests are in line with ours. In turn, we have always been told that we let people take money out of the system and that we could easily charge more.

The fallacy of that second allegation is clearly demonstrated by the furore of the last 48 hours, where it has been reported that we have lost mass groups of customers (incidentally, partly to sites not based in the UK which pay no levy at all). The former point, that people take money out of the system, has not been true in any meaningful way until recently. But of late, as we have grown, we believe that a very small number of people are benefitting disproportionately relative to other stakeholders in our business (two constituents of which are our other customers and the racing industry). We are therefore acting on that by introducing this charge.

We have always said that we are a business not a charity: our aim is to offer the best service at the best price, knowing full well that if we get the balance between the two wrong, then on one side punters will rightly vote with their feet, and on the other, there are other stakeholders (in this case the racing industry) who we would be unfairly taking advantage of for others’ benefit. We believe we have always achieved that balance: we charge what we believe to be the right price to attract the broadest range of customers from across the world to our product. That price may be dependent on their behaviour (we have a sliding scale of commission, for example). And we make sure that we invest heavily in the business to provide the best service. In short, we seek to offer the right product at the right price.

The bottom line, though, is this: racing benefits from that by getting 10% of our gross profit – so yes, before we take any of the money from the premium charge and do anything with it, the racing industry will get 10% of it.




gerard 10 Sep 18:06


You claim that you listen to the concerns of your customers. It will not (hopefully) have escaped your notice that the universal condemnation of this charge has united the forum in a way that no other topic has come close to. Are you really listening?

It is not unexpected that a price change would unite forum customers. However, it is also true that less than 2% of our active customers have posted on any forum thread in relation to this charge.

We are listening, to stakeholders across the business (which includes customers, shareholders, employees, the sports and racing industries, and regulators). As regards customers, we have contacted to and spoken to all those who are significantly affected by the charge, and responses from them have been mixed.




steady 10 Sep 18:06


Why 60 weeks instead of 52 ?

This was based on feedback from our biggest affected customers and it is to ensure that they will not be paying charges if they have periodical variations.




zebadei 10 Sep 18:07


Would it be fair to say that you are going to keep on increasing the charges to customers whilst you feel you can get away with it (eg the 2%ers, and the pro in runners have nowhere else to go)?

The short answer is No. We operate in a very competitive market and think very hard before making any changes to pricing – for the vast majority of our customers this particular change has no impact and its aim was to make the business healthier in the long-term, not generate short-term profit.




MarkyL 10 Sep 18:07


As dogbolter says, any winning punter who has more than 5 bets a week (and hasn't had an enormous win) WILL be caught by these charges. Isn't that true!

No, as a general statement, this is not correct. The punter would have to have an extremely high positive rate of wins vs. losses and also go above thresholds such as the deduction of his biggest win and the annual allowance to qualify for the Premium charge. It is therefore very unlikely for a ‘normal’ punter to qualify for this charge and this is why less than 0.5% of our customers will be affected. In addition, if you ever were to be affected in future, you will hear from us BEFORE the charge will take effect.




unsportingindex 10 Sep 18:08


It would appear that some big winners who provide liquidity in the markets may be looking to leave the site and due to the strain they put on the site are not being dissuaded from doing so.If so,and the amounts offering decrease significantly will one of betfairs malta companies seed the markets?

We don’t currently seed our own markets and have no plans to do so at present.




rodger 10 Sep 18:09


Betfair management have made the biggest mistake possible for the
future of the business by alienating successful customers.
I do not use bots or automated trading , only my own judgement
of odds.If I want to receive 4/1 after this charge as opposed to5/1
why use Betfair.
Perhaps the management are too young to remember the
lamentable state of Irish off course betting in the 1970s when
punters were taxed at 20%.

We certainly do not wish to alienate winning customers. As we have said elsewhere, just because someone wins does not make them subject to the Premium Charge. Instead, the charge is based on long-term success rate. As our business grows, we need to continue to invest in marketing to attract new users, in product development, and to make Betfair more attractive to our user base overall. We feel that this charge is the most equitable way for us to continue to grow the Betfair Exchange.




Smithers-Jones. 10 Sep 18:10


Are (& will) ALL betfair charges be applicable to all clients, including the large bookmakers and spread firm's accounts ?

Thanks


Yes




Betfair Customer Services 10 Sep 18:10


Chatname: Troy McClure

1) It has been quoted that this has been introduced because winning customers are more expensive than others. How is someone who provides liquidity WITHOUT using bots costing you money? If you're able to describe that accurately, it would be appreciated. And if its just the bots which cost you money, why not charge the bot users directly like you currently do?

There’s obviously a technology cost met by Betfair in supporting our customers betting, but that’s not the issue we’re looking to address. Our existing schemes to dissuade customers from excessive transactions and data requests do that job perfectly well.
The rationale for introducing this charge is that our business has changed over time and continues to change. Our most sophisticated customers aren’t getting any less sophisticated, and we’re reaching an increasingly broad customer base with increased, and improved, marketing. Our most sophisticated customers are winning increasing amounts as a group, and a small proportion of them (less than 2% of customers who were in profit, after commission, in the last 12 months) win at such a frequency that when they win, we make less in revenue than we spent bringing that money in.
It’s natural to assume that money just arrives in markets of its own accord, and that if you populate a market with prices people will find them and take them, and that’s how Betfair (and other betting operators) acquire customers. But that isn’t how it works: it’s money spent on all aspects of marketing (acquisition, retention, reactivation etc.) and product development that brings custom in. If we spend £10 to bring in £50 of money to a market, and you generate £5 for us in taking that £50 away in winnings, then that £10 was poorly spent by us.
In the long term that situation can be addressed in a number of ways, including:
steering that customer away from our exchange towards products where we make a larger percentage of that £50,
not competing with other betting operators to acquire that type of customer at all, or
closing or restricting your account like other betting operators might do.
None of those potential solutions benefits you. The alternative is just to let you carry on winning as before, but requiring you to pay us at least what it cost to acquire the money you win, and that’s the purpose of this charge. In the short term it would be easier to ignore this and worry about it later, but it’s hard to see how, in the long term, any exchange could be run profitably without addressing this issue.

2) Is it true that this is paving the way for your traders in Malta to start providing the liquidity that a lot of us traders currently provide, and thus make you even more profit?

We have no plans to trade on our own markets, other than to hedge our liabilities that arise from multiples bets placed by customers. It has been suggested to us by a customer who’ll be affected by the charge that if we were just after short-term profit we should have done that instead of charging the appropriate price for our product, but this isn’t about short-term profit and we’d rather be open about what we’re doing and why.


3) If you implement this 20%, what is to stop it soon becoming 30%, 40% etc, until you completely drive away all the winners

We always look to set the pricing of our business appropriately, and by definition on a betting exchange where the operator doesn’t trade for their own book there will always be winning customers.

4) If I want a £5k bet on something at evens, without trading, I am now going to be subject to that 20% charge if I win. At which point, I would ALWAYS be better going to a bookie. How would you market "20% better odds at Betfair, unless you win, at which point you'll get 20% worse odds"

That’s likely to be a common misunderstanding. The Premium charge is on long-term profit, not on winnings on each bet. If you win on Betfair and you’re one of the 99.5% of active customers who don’t win at a very high rate then you’ll never pay the charge and all will be as before. If you are in the small minority affected then it’s your expected profit on a bet that you’re interested in, not the potential winnings. For example if you’re good enough to be able to spot selections that have a 50% chance of winning that can be backed at 2.2, then if you’re on 5% commission you’re already paying more then 20% of your expected profit, and placing that bet would be expected to reduce your potential Premium charge.
It’s only 20% of your winnings if you KNOW the bet is going to win, so we wouldn’t use your suggested marketing message any more than our competitors would use the marketing phrase “great prices, unless you win, at which point we’ll close or restrict your account”.

5) If I bet in 249 markets and make £x amount, is that GUARANTEED to be free from your tax? Or will you reduce that number in the future?

If you bet in less than 250 markets in the last 60 weeks then you won’t be considered for the charge, whatever you win and at whatever rate.

6) How do you react to those people who have said that this is just the next step before the Inland Revenue announce that they will be taxing full time gamblers? You're certainly making it easier for them to access the long term winners

This charge is not based on the amount any customer wins – it’s based on the rate they win at, and what they’ve generated in charges compared to the money they’ve taken out of the system. Whatever amount you would consider to be the minimum that could possibly be classified as an “income” there will be customers who win much more than that who aren’t subject to this charge (because they’ve generated enough in charges compared to what they win), and those below that level who will pay it (if they have an extremely high strike rate). In any event this topic has been reviewed again and again, and every time the competent authorities look at it they conclude that the appropriate way to tax betting activity is to tax us at the standard rate of GPT, just like any other operator.

7) What happened to "Winners Welcome". Should that now change to "Winners Welcome, because we'll be taking at least 20% of your winnings"

We’re not proposing to close the account of any customer just because they win, or limit their stakes. Nor are we limiting the amount any customer can win. The vast majority of our customers (and even our winning customers) already pay for what they take away and won’t be charged.




Innocent Bystander 10 Sep 18:10


given how complicated the calculations of this winners tax is, how will we know what odds we are getting?

This question has been answered above.




thechairman18 10 Sep 18:11


If you know the people who are costing you money, get rid of them.
Why upset so many loyal and faithful customers with this threatening e-mail

That was one of the options we considered when we worked on this charge but we thought it much better to find a way to work with them long-term and to introduce a set of pricing rules that applies universally and unambiguously to all (i.e. in an unbiased way). Targeting the price changes precisely would make them complicated and risk being unfair and discretionary in nature. So the premium charge applies a set of thresholds that if hit will apply to anyone – even though only .05% of punters are likely to be affected at all given the thresholds are so high. Our email to unaffected customers was intended just to get across that “this doesn’t affect you” and avoid explaining the complexity – we’re trying to clarify things in the follow up communication and this web-chat. As well as this, in the UK, it is a legal requirement to inform customers of a pricing change like this even if it doesn’t apply to 99.5% of them.




Baby Jesus 10 Sep 18:12


"many of them use the Betfair infrastructure extensively, "

I think the majority of us had assumed the data/transaction charges were already in place to counter any extensive use of the site. Surely, by allowing the data/transaction charges to be offset against the premium charge, this will just encourage these 'extensive users' or bot players to make even more extensive use of the site to ensure they're making best use of their charges up to the 20% ?

It is correct that we have a mechanism in place to prevent excessive usage and we also charge for heavy usage. But the Data Request Charge only kicks in above 20 data requests in one second, so there is quite a high threshold before this charge applies. So our statement above is correct, because the customers affected by the premium charge on average use significantly more resources than our average customers. If we find that ‘bot players’ are attempting do what you suggest then we will review our data/transaction charge structure.




Betfair Customer Services 10 Sep 18:14


I wrote earlier today raising questions as to the legality of these new charges under the terms of the Unfair Terms of Consumer contract Regulations. Further to that question I would also raise the following point:

“The Competition Act 1998”

Chapter 11 of the Act and Article 82 of the Treaty prohibit a business which holds a dominant position in a market from abusing that position. A dominant Position in a market essentially means that a business is generally able to behave independently of competitive pressures, such as other competitors, in that market.

Conduct which may be considered an abuse by a business in a dominant position includes ;

• Charging excessively high prices
• Charging different prices to different customers where there is no difference in what is being supplied.

Betfair’s business product / service is to match bets and as such do not give an individual any more service than that afforded to a winner already paying over 20% or a losing account holder.

Given the above, especially the second bullet, I ask whether applying a retrospective charge to only a certain number of customers for no additional service is indeed legal.

I would welcome your comments.

Thank you for raising this question. We are aware of the provisions of the Unfair Contract Terms Act and competition laws and we are confident that the premium charges in no way infringe the applicable laws. Betfair is not in a dominant position in relation to the online betting market and even if it were we do not believe that that pricing changes proposed would constitute an abuse of dominance.

Any company is entitled to change its pricing from time to time. That is all we are doing and only a tiny portion of users are affected. Crucially it should be clear that the charges apply universally to all and anyone that hits the thresholds will potentially be affected. The thresholds for application are high however so the changes make no difference to 99.5% of users. Those that are affected are entitled to look elsewhere if they perceive value in doing so. No one will be charged without notification and at that point if they want to they can simply leave if they wish and not pay anything – the charge is not retrospective in its application. It is merely that it is assessed based on previous activity.




Betfair Customer Services 10 Sep 18:15


Chatname: rew

Hi. Some questions:

1. Why does Betfair not allow the full amount of commission paid to count towards the 20 percent figure? The formula:

Commission generated = (Commission + Implied Commission) ÷ 2
means that a customer who had only winning bets in a particular week and paid £1000 in commission on those bets would only be credited with £500 ‘commission generated’.

Every time we make commission at settlement of a market it’s because some customers lost, and others won. If we assign 100% of the commission generated to the customer who won that would suggest the value to us of the customer who lost is nothing, which would clearly be wrong. So we allocate what we make 50/50 between those who won and those who lost.
Clearly by doing it this way it puts the burden of the charge on accounts who have extremely high strike rates, while those accounts who are very profitable, but win overall by having large wins and large losses have lower charges or are removed from the charge altogether. We acknowledge that it makes the charge more complicated, but it’s fairer.

2. Will Betfair be adding to the functionality and figures available from the ‘My Account’ section on the site to let users see historical information for the previous 60 weeks and therefore let them assess their likely exposure to Premium Charges for upcoming weeks.

Yes, we would expect all the information that any affected customer would require to be available in “My Account” in a few weeks. In the meantime customers can get a report containing all the relevant details about the charge by emailing premumcharge@betfair.com

3. Does Betfair believe that the short term benefits to the bottom line won’t be more than offset by long term damage to its image and reputation, and the potential loss of customers including those who are unlikely to ever become liable for the new charges?

As we’ve explained above this isn’t about short-term financial benefit for us. We believe it’s the right mechanism to have in place for the long-term benefit of both us and our customers, both affected and unaffected by the change. Clearly it will be a challenge for us to communicate this to customers, and there is plenty of scope for the change to misunderstood or misrepresented. We’ll be working hard to get this message across.




the.mad.dog.man 10 Sep 18:16


betfair were to slow to respond to customers now a lot and i mean a lot have opened with other exchanges im not saying they will leave betfair but now they will be looking for value some will bet with them on some races but the sorry thing is now they are with other exchanges and that is not a good thing for betfair the last 48 hours has put betfair back 3 years i fill sorry for betfair all the hard work last in 48 hours




ratpack 10 Sep 18:17


Shouldn't there be a report function on the site to show the calculations and hence the impact on the current week?

Currently there is no easy way of proving any of the proposed deductions as there is no ability to go back beyond a three month period.
Surely a transparent audit trail is necessary given the complexity of the formula used.

We intend to provide all the information in "My account" before the end of the year. In the meantime any customer who wishes to know can get a report from premiumcharge@betfair.com




Betfair Customer Services 10 Sep 18:17


Chatname: lippy

1) This procedure seems very complicated , will betfair be providing a
detailed 60 month history for all those users who are affected ?

2) Given that there is currently lower liquidity on australian wallet events , would it not be
prudent to exclude this wallet from these changes ?

1. Yes, we’ll happily provide a detailed 60 month history for any affected customer. If you email premiumcharge@betfair.com we’ll send it to you.
2. If we excluded Australian wallet events that would be unfair on customers who had won on UK events and lost on Australian wallet events, and would result in them being overcharged, so we plan to include them.




Betfair Customer Services 10 Sep 18:18


Chatname: benny1945

Hi

I'd like to make a comment about the new premium charge. I think its going to have some consequences betfair didn't intend.

If you're a backer like me you'll have say 10 winning weeks a year and 40 losing weeks. Because the charge is 20% of profits (less betfair's other charges) in the winning weeks and there's no offset for the losing weeks, it's going to work out at more than 100% of total profits for the year. I don't think betfair intended this. I hope they didn't

If you're a layer or operate a bot and you win most weeks, then the new charge wil be 20 or 30 % of your profits and it might be possible to live with that.

If you have 10 winning weeks and 40 losing weeks it’s incredibly unlikely that you would ever be charged. If you have a winning week (and only if you won at a really high rate), you would still not pay a penny of the charge unless your long-term profit over 60 weeks was also at that same rate. The charge will NEVER make any bet that was profitable before the charge unprofitable after the charge. The charge will take you TOWARD 20% in the long term, and not by more than that in any single week either.

If you’re in doubt please email premiumcharge@betfair.com and you’ll get a report showing you how this would have affected you if it had been in place in the last year.




dario 10 Sep 18:18


As the much acclaimed revolutionary leader of outdating unfair and unjust bookmaking practices how can you justify introducing a system which would see you promoted to the premier league of historical high fees.

If you have a problem with bots, and costs, then address that issue and dont penalise 'normal' players. Most would accept reasonable increases in charges, but hikes of approx 8-12% is totally unacceptable.....and i am one of your biggest fans, imagine what the others are saying!


We simply couldn’t agree that in practice this represents “historical high fees”. If you genuinely believe that then we haven’t adequately explained what we’re changing and why. As we’ve said this isn’t intended to address a problem with bots, or any particular aspect of customer behaviour.

If by “unjust bookmaking practices” you’re referring to customers who win consistently having their accounts closed, stakes restricted or winnings limited then I don’t think you can compare that with what we’re proposing. We’ll do none of those things and any customer who was winning before this charge will still be winning after its introduction. Anyone who is affected most certainly wouldn’t be considered a “normal” player by most of our competitors, who would go to great lengths to avoid doing business with them at all.

What we are saying is that any customer affected by this charge takes money out of Betfair, while paying less than it costs us to replace the money they’ve won. It’s hard to claim we’d be overcharging for changing our pricing scheme to ensure we’re selling our product to them for at least what it costs us to provide.




Betfair Customer Services 10 Sep 18:21


Question:


Can Betfair provide users with a breakdown of what they cost Betfair. I have received an email today stating:

"Put simply, we are introducing this charge because as a business we spend more on the customers that will incur Premium Charges than they generate in existing charges"

If Betfair can provide this I can actually see if your new charges are justified.

So is this true you can provide this detailed breakdown, yes or no?


No - we can’t calculate the exact cost (to us) of each customer. We can calculate the applicable premium charge exactly and provide it to those affected and we assume that this is what Helpdesk meant.




Betfair Customer Services 10 Sep 18:22


Hi,

Nobody likes increased charges/prices whatever so Betfair`s Premium Charge always faced a tough future !
What bothers me particularly is the charge when applied to pure gamblers as opposed to bot users and traders actually opposes all the principles of gambling. The quest is to profit...that applies to us bettors as well as you who provide the platform. But to actually penalise someone for winning too much ? It is unheard of in any other branch of the industry. That includes bookies who cut stakes...that is their choice, but they are not actually cutting the winnings after the fact....merely cutting the amount you can win. What you are doing is setting a very dangerous precedent and the ethics are questionable. You are about to shatter the dreams of every gambler on this site....to become A WINNER. It is no comfort to offer us 80/20 I`m afraid because that 20% is enough to shatter all hopes. Even the government only used to take approx 8% tax and levy !
It is unworkable...and it signifies the greatest crisis Betfair will ever face. This is THE one thing that will drive us away from your site...the competition must be licking their lips....and it hasn`t cost them a penny. I implore you to reconsider or at the very least refine this charge...failure to do so I believe will lead to mass exodus from the site thereby affecting even those that this charge does not apply to.
My question to Betfair is simple...Are you brave enough to stand up and say you`ve got it wrong ?

The respect you earn by this will be incalculable and I also believe you need to get round the table with a number of users that represent ALL types on here. From the smallest gambler to the biggest...and from the daily trader to the most refined bot user. Action like that will enlighten you to where increased charges should be applied.

I speak as someone who is in the 0.5%, but who would not have been affected in the last 60 weeks.

Regards,

Duncan Disordorli

Hello DD

I’m surprised by your view that “it is unheard of in any other branch of the industry” to penalise winners – not that that is what is happening here. I would suggest it is well-known that traditional bookmakers close down accounts that win, which genuinely does penalise them.

We are not doing anything like that. We are also not proposing to cap winnings; still less to shatter the dreams of people to become a winner. On the contrary: you only pay this charge is you are so consistent in your winning that you are in a winning class almost of your own.

I don’t believe we are setting a dangerous precedent. We are ensuring that there is a correct balance between what people gain from the exchange, and what they pay for it. I think that once the charge is operational, people will see that it is a charge which affects a tiny proportion of people, and those people are currently enjoying a disproportionate benefit at the expense of all other stakeholders, including the customers who do not fall into the group charged.


Duncan Disordoli, one additional response to your question... You say, “I speak as someone who is in the 0.5%, but who would not have been affected in the last 60 weeks”. You cannot be in the 0.5% if you had not been affected in the last 60 weeks. By definition, the two groups are one and the same.




Jungle 10 Sep 18:23


'The Premium Charge will only apply to customers who pay us less in commission than it costs for us to service them' - how much are customers expected to pay for the betfair service? if you are currently paying over £20k a year in commission surely this is enough, from the figures provided i would be paying over £5 for every market played under the new system. Surely betfair have no right to take a share of profits as well.


Servicing customers also includes the cost of replacing liquidity that has been taken out by customers with an extremely high success rate. Unfortunately, the cost to acquire and retain new customers continues to increase and we want to ensure that the Betfair exchange continues to thrive by being vibrant and liquid.




Innocent Bystander 10 Sep 18:25


I dont use bots, i just use the normal bf interface on firefox and the excellent firefox extras add on), but i am told i would be liable for a charge cos I win. Yet you are saying that only people using extreme methods would end up paying the charge

what is extreme about using just a web browser?

The charge is not relating to useage, it is related to the cost of replacing the money which you have won.




A.Knutsen 10 Sep 18:27


Actually, I'd like to congratulate betfair on pushing through these new charges and being brave enough to do so. If I won consistently enough to qualify for a premium charge I'd happily pay it!

Thank You.




Betfair Customer Services 10 Sep 18:28


chatname: red lorry ~ yellow lorry

with reference to premium charges , what is your forecast regarding the actual number of your clients who will be affected on a weekly basis :

a] less than 200
b] 200 to 1000
c] over 1000

Had we had this charge in place over the last year the answer would have been (b).




spyker 10 Sep 18:30


Whatever the rights and wrongs of this charge, it's implementation has been handled appallingly. For a company that prides itself on PR are you more than a little surprised to the reaction by pretty much everybody - press and customers included?

The reaction has been very close to what we expected it would be. Whenever a business decision of this sort is made, there is always a reaction that appears to be universal. The reality is that less than 2% of our active customers have posted on the forum on this subject, but the forum is very public, and the press is always likely to reflect the publicly-available reaction.




inner city sumo 10 Sep 18:31


If traders are so expensive for you, why have you spent four years with the Betfair Education programme trying to teach people to trade and green out their books, and therefore not lose regularly enough for your liking? Maybe this is one operational cost you can get rid of for a start.

Betfair Education 02 Sep 16:06
Looking to improve your betting knowledge? Don’t understand what laying is? Want to learn how to trade and achieve a green book? Or just want some hints and tips about the site? Well, these sessions are for you!

It’s a very good question.

The answer is that in reality, trading into a green book consistently is not as simple as all that. We are not trying to stop people from winning, and having people win some and lose some is what makes the exchange good for everyone. We absolutely stand by the phrase ‘winners always welcome’ in a way which we do not believe is true of traditional bookmakers, and we are happy to show people how to win, because winning is something to aspire to.

However, it is clear that If the exchange consisted purely of winners, then there wouldn’t be anyone to win money off. Equally, if everyone lost everything to us very quickly and therefore left, we wouldn’t have any customers. There has to be a balance between wins and losses.

On the whole, there is. Where there isn’t, we need to ensure that the balance of charges and incentives is right. Introducing this charge now will redress what has become an imbalance between a small group of people who in our view are benefitting disproportionately, and other stakeholders in the business discussed already in other answers (including other customers not in the most successful group).




afmfifgh. 10 Sep 18:31


If new customer has a new account would any charges be applied in the first 59 weeks? If they then stopped using that account for 2 years before using it again for 59 weeks would they face any charges under the new Premium charges?

You are eligible for the charge once you have bet on 250 markets in any 60 week period




sterre 10 Sep 18:32


You keep on saying this only affects a minor group of clients (winners). But not only for them but also for others you take a big part of the incentive away to become a frequent winner. Have you thought about this and estimated how this could cut the amount of trading/liquidity in the longterm?

We are not restricting the amount people can (and hopefully for them will) win. So we believe that the incentive and motivation for punters is still unchanged. We also know this from many of our customers with whom we’ve discussed the charge and many have stated publicly that it doesn’t affect them. The charge only applies to customers who win at a very high rate, compared to their commission paid and even for many customers in this group, we hope Betfair will remain highly attractive.




Betfair Customer Services 10 Sep 18:33


Chatname: no chatname

You could always replace the current Commission Structure, Transaction Charges and forthcoming Premium Charges with a simple fixed 3.5% commission on all winning bets! Not market profits but individual winning bets. Its so simple and would make the markets more efficient. Traders would have to adapt.

We believe that our current pricing structure is correct for all bar a very small minority of customers, and I would re-iterate that less than 2 per cent of winning customers would have paid this charge had it been in force before now.

Chatname: johnt

do you not want traders on your site?

this will force them away.

traders add liquidity and volatilty, and without them, you will become just another bookmaker.

A betting exchange does indeed thrive on liquidity and volatility and opinion, but it also does so by our customers using a vast different array of betting techniques.

All of these groups of punters are welcome – indeed, all punters are at Betfair – and this is not a charge addressed simply to traders, as you infer. The charge will apply universally and impartially to those who hit the thresholds – but the thresholds are very high indeed. Traders have a integral part to play on a betting exchange and clearly the vast majority of them will not be paying the Premium Charge. We re-iterate it will be business as usual for over 99.5 per cent of our customers.

Chatname: Steeplechasing

Since the start of the flat season the thread entitled Clerkwatch 2008 has been running on the Ante-Post forum. It holds over 800 posts and has been featured in the National Press. The thread campaigns against the management of, and the reporting of the going by Clerks of the Course. The going is almost certainly the key external factor in deciding a horse's chance in a race. Yet the accuracy of reports is regularly highly questionable. According to the major bookmakers horse racing's share of the betting market has dropped below 50%. Part of the reason for the decline is almost certainly unreliable going reports. What punters buy when they choose to have a bet before racing starts, is not what they get come the time to use the product. Bets based on going reports are racing's equivalent of sub-prime package purchases by banks - nobody knows what's in the package or how financially toxic it will prove to be.

How often would you keep buying something like that?

The arguments about why the going is such an issue - watering, overly optimistic/pessimistic interpretation of weather forecasts, trying to please owners and trainers, open disregard for the off course customer - are too numerous to list here.

Bookmakers might not make much noise about this situation as inconsistency/inaccuracy, in this case, helps their profits. But Betfair has no excuses and I'm asking you to consider your duty to your customers in helping give them a public voice in this campaign. The trade media seem disinterested in offering a proper platform for debate. Will Betfair step up and provide such a platform by way of a live online debate featuring nominated forum members and representatives of the BHA and the trade media?


The debate regarding the inaccuracy of going reports is something that the Racing P & L Team is fully aware of. It could well be that Betfair Radio is the ideal forum for a debate of this nature with the relevant bodies represented; we will pass this on to the appropriate people at Betfair.


chatname : the bank man

good evening,

having spoken to various people around the country that have in turn spoken to various people within betfair the general consensus is that there is virtually nobody in betfair barring a few top directors who believe this new commission is a good idea. care to comment on this?


Betfair has made a business decision. This charge only affects 2 per cent of our winning customers, and is highly likely never to affect more than 99 per cent of our customers. But of course we understand that our customers will have specific concerns, and the purpose of this Q & A this evening is to address these.

Chatname: luanne

would it not be better if you were to do a first past the post rule for all inrunning bets as there have been several recent events where people who have made a bet on what they see visualy have lost in the stewards room Horse weighed in light at lingfield won the race./Jockey failed to weigh in when he was placed in ireland all place backers lost/Photo finishes results called then stewards inquiry after then this weekend lewis hamilton won the race then 3hrs later is placed 3rd this looks like it has caused you a major headache on what is moraly the rightthing to do.You do not allow a market if the stewards is for the placed horses who are affected why??

If the rule for inrunning changed to first past the post and everyone knew this rule then i think it would remove alot of problems for the punters and yourselves you could still open a market for the outcome of a stewards inquiry if one is called but it would be much fairer for everyone who bets inrunning if what we see is what we get.

If a horse is trading at 50/1 before the race starts then is leading with 50yds to go it will be trading at about 1.01 that same horse might be 20 lengths behind with 50yrds to go and will be trading at 1000/1 the point is the bet is stuck on what you see form/weight does not come into it anymore so why should you be penalised on events that are not in your control??

hope you veiw this mail as serious as possible, i have lost alot of money in the past few months to the stewards and it is in my EYES not playing ball

Backing a horse that loses the race in the stewards room is always galling, and particularly when the clerk of the course objects to a rider weighing in light, or failing to weight in at all. But we have no plans to operate a first past the post settlement for in-running betting on horseracing.

We have both backers and layers to consider here, and we have to settle our markets as per the rules of horseracing, as does every other bookmaker. And that is the official result at the weighed-in signal.




Jd007 10 Sep 18:33


One consequence of this charge will be to make any strategy where opposing bets are placed on different platforms (BF being one of them) far less attractive or unviable. Don't you think this will have a severely detrimental effect on liquidity?


This would only be true if the opposing bets usually resulted in a profit on Betfair – in practice, if that’s the strategy you use, it’s more likely that many of your bets would be losing bets on Betfair and winning bets on the other platform. In that case, it’s extremely unlikely you’ll ever qualify for the charge. In fact, a number of accounts who will be affected by the charge have told us that they intend to minimise or avoid completely any charge they might otherwise pay by arbing more.




Jd007 10 Sep 18:35


0.5% of your customer base is 90,000 accounts according to the latest corporate report. Why are you describing this as a small number of users?

Your figures imply we have 18 million active accounts which is sadly not the case. Over 1 million accounts have registered with Betfair since we launched, but, of course, far fewer have been active in any recent period. Therefore, the number of customers subject to the Premium Charge is far, far less than 90,000. In fact, we expect between 200 and 1,000 customers will pay a Premium Charge for a given week.




steady 10 Sep 18:38


Are you able to confirm whether or not it is actually a disadvantage to be on 2% rather than 5% ?

Are "Betfair Holidays" now redundant ?

Can my wife open an account ?

No that is not fully correct. Generally the Premium Charge is separate from the commission ladder, so even someone on 5% could qualify for it. But this is more unlikely as their commission paid vs. winning is likely to be higher. And we expect that basically no one will qualify for the premium charge every single week it is charged, so in the week when premium charge doesn’t apply it will be beneficial to be on the lower commission rate. So it’s still worthwhile to take your Betfair Holidays.

And on the question with your wife: she absolutely can, and should . But her account will be ‘linked’ to yours.




sddfr 10 Sep 18:38


Why can't you implement podium finishes as a result for F1, before the next race, instead of waiting to review the rules before next season.
You are leaving yourself in a position where the fiasco that happened at weekend could happen again,,leaving you open to ridicule again..

We aim to settle all markets on the official result and the podium finish is not official. However, we will be reviewing the rules at the end of the current season.




JPG 10 Sep 18:41


Would Betfair be kind enough to furnish the forum with their definition of an "active customer" relating to their own site?

Yes, it’s any customer who has placed a bet on the exchange in the relevant period. Whichever period we look over the proportion of those who would be affected is approximately 0.5%. If we look over a year the charge will affect about 0.5% of customers who bet during that period. At the other end of the scale if we look at just a week then clearly the number of customers who’ve placed a bet will be less, but then so will the number of those who would be affected by the charge in the period, and the proportion is still about 0.5%. Any customer who doesn’t bet with us during a period isn’t included in the active number.




**** N. Eejit 10 Sep 18:41


Do you not feel that the commission system has now become so complex that it will deter new customers from joining? We already have 'sharp mind' that now think they're being charged 20% when it's 3% elsewhere.




jeff & the Mutt 10 Sep 18:43


What about the interest that you earn on deposited money and instead of the Premiom charge why can't you just standardise the commision rate at 5%?

We looked at a very large number of possible changes. The one you suggest would have had a far larger impact on a far greater number of people. We believe that the charging mechanism we have introduced is the fairest and most equitable, in that it redresses the balance between what people get out of the exchange and what they pay for it.




Betfair Customer Services 10 Sep 18:43


Chatname: chrisb7

- how are partially settled markets handled? Are charges only
applied when the market is finally settled or are charges made against partial settlements?

As with the calculation of commission, charges are only applied based on final market settlement. Any profits or losses from partially settled markets will be consolidated to minimise any charge.

- do you use a standard implied commission rate or is my current commission rate used?

If you win we collect commission at your rate, but if you lose in a market the rate of commission we make is the average market rate. We will use the actual rate that we collected commission on a market when calculating the amount of implied commission to allocate to your activity.




Captain Banzai 10 Sep 18:43


Is there anywhere on the site with examples showing how the premium charge will be calculated? If few are affected, surely this is the most transparent means of allaying widespread concerns rather than emailing those affected.


There are already some examples in paragraph 5 of the Betfair Charges section (click on ‘About Us’ on our homepage or copy and paste http://content.betfair.com/aboutus/ into your web browser and then select “Betfair Charges”). Please contact premiumcharge@betfair.com with any specific questions.




deltaform 10 Sep 18:43


If you want to charge winners excess on there winnings, then betfair must pay every client the interest they rightfully earn on there own funds held in there individual accounts?

If we were to pay interest on account balances,it would require us to be FSA regulated. There would be a significant cost associated with this. If we wanted to give money to customers this would probably be the least efficient method.




Canary1 10 Sep 18:45


When you keep mentioning 99.5% of customers I can only assume this includes dormant accounts and very small occassional punters who are never likely to be effected? Would I be right in saying about 15% of customers "could" be effected ?

The numbers we’ve quoted do NOT include dormant accounts – looking back, if we had had the charge in place, roughly 0.5% of our active accounts would have been affected in any given period. We don’t expect that to increase over time.




jamaicanlady 10 Sep 18:47


I have read the answers to the questions that Betfair have carefully picked and i strongly feel that we have been lied to.All we want as users of Betfair is honesty.Can someone from Betfair please be honest to us.

If we were lying to you, the regulator would sanction us and possibly withdraw our licence. We operate in a tightly-regulated industry, licensed in a number of jurisdictions worldwide, including the UK.

We’ve given honest, straightforward answers to the questions asked and sought to answer as many questions as was practically possible. Many questions duplicated ones asked, and where we haven’t answered a direct question it’s because we believe that we had addressed it in a previous answer.




Betfair Customer Services 10 Sep 18:49


Chatname: Tinkers Rucksack

Will bets already placed, but not yet settled, eg Premiership Winner market 2008/9, be subject to the tax?

If so, is this legal to backdate it to bets that were placed under different commission rules?


Bets placed but not settled may impact upon the overall assessment of the charge – if it applies. In the same way as you may be a 3% commission punter at the time you place a bet but a 4% commission punter at the time it settles you will have charges applied to you as at the time the bet is settled (i.e. not based on the charge rate applicable to you at the point of placing the bet). Charges are not therefore “backdated” they simply apply at the rate relevant at the time the market is settled. In any event no one will be charged unless and until notified.


Chatname: Tinkers Rucksack

Do you realise that in actual terms this tax is greater than 20% for many winning accounts?
eg. If I win 2k one week and lose 1k the next, I would be paying 40% tax on my net profit over the 2 weeks. Would it not be fairer (if you go ahead with this stupid tax) if the P/L was taken over a longer period, say quarterly?

We look at the rate you win over each week, and also over 60 weeks, and the charge is based on the LESSER of the two figures, so it will only affect you if you are winning, and winning at a very high rate, over the long term. If you are in this category any losing week will make it that much less likely you’ll pay any charge in future.




nairda 10 Sep 18:51


isn't it just the case of betfair spending for to much money on non betting stuff that has added far to little alue to the Betting exchange customer.

Sustaining and growing our exchange relies on us acquiring new customers, which is expensive in a competitive market. We have also invested in expanding our product range to offer a broader choice to all of our customers – that’s been a great success judging by the number of customers using the new products.




Betfair Customer Services 10 Sep 18:55


Thank you for your questions. The forum is now closed to questions, but we will endeavour to answer the questions we have already recieved.

Please note that there are further questions and answers being posted above.




Betfair Customer Services 10 Sep 19:10


The Calculator

Isn’t increasing prices from 5% to 20% outrageously high?

You can’t compare commission with profit. The vast majority of Betfair’s winning customers win in some markets and lose in others, and as a result they already generate commission that’s greater than 20% of what they win. As a result, although they win, and many of them do better on Betfair than they ever managed before, they wouldn’t pay the charge. With what we make from their activity we can afford to replace what they take out of the site. Those customers effectively subsidise those who pay less than this amount in the long term, and we need to address that.



Betfair Customer Services 10 Sep 19:10


Chatname: TedButler

One thing that infuriates me when betting on football correct score market with Betfair, is the fact that you only allow people to back teams to win by a score of 3-0.

Why can't we back teams to win 4-0, 5-0, or even 6-0?

Correct score markets are a balancing act between offering a confusingly long list of options and offering the right choice for a specific match. Most of the time, covering all the options to 3 goals either side is plenty but this is definitely a fair point for imbalanced matches. The recent batch of internationals, have included a number of fixtures where one team has been a particularly short-priced favourite, skewing the prices available for many of the Correct Score selections. Going forward, in fixtures where it is obvious markets will be similarly lop-sided, we will offer 4-0 and 5-0 (to the favourite) as Correct Score options and see how that works – we hope that will improve your betting experience with Betfair.




Betfair Customer Services 10 Sep 19:39


Chatname: Nebs.

Hi. Good luck with the live chat today. I have to say that it it very brave of you to offer a live chat so soon after the new commission charges were announced. Anyway, here is my question.

With less than 2 weeks to the end of summer, are you in a position to give us an update on what is happening regarding the return of Californian horse race markets?
Thanks

We expect to have news on this in the next few weeks. Watch this space.




Betfair Customer Services 10 Sep 19:42


Chatname: jockathan1

Dear Sir -
I would like to see the return of the 'Full Screen' option when watching a game at 'BetFair Video'. Will it be coming back?

Unfortunately, we had to remove full screen functionality from the player as the rights holders will no longer allow full screen broadcast on the internet as it infringes on TV rights deals – i.e. it competes with them with a similar quality product available through a different media.




Betfair Customer Services 10 Sep 19:42


Chatname: Innocent Bystander

Poor service for Cricket customers

There is a feeling amongst the Cricket trading community that we get a second class service from Betfair when compared to other sports.

Numerous times this season markets for matches (particularly county games) were not put up until prompted, often not until the morning of the game less than 2 hours before the off. Also, when a live game is concluded the market is frequently left open - particulaly is the live match conflicts with a soccer game on at the same time, prompting a feeling that we are second class citizens to betfair.

Recently on 3 seperate occasions markets have been left suspended at the off, and have need a phone call to get them to be turned in play.

Is there a standard within betfair for providing markets? Could markets be provided at least a week before games for county games, and sooner for marquee international games?

Apologies for any poor experiences you’ve had – our cricket team certainly aim to provide a good service that should not be affected by the schedule of other sports. To date we haven’t had a set standard for the loading of matches and sometimes they have only been available on site close to the start of play. This is certainly an area where we can do better and looking forward to the remainder of this season and forthcoming seasons we will make sure markets for all matches are on site in line with the timescales you suggest.

With every match offered in-play and an increased range of markets on all televised games compared to previous years (16 markets for domestic T20, 25 for IPL games, in excess of 70 separate markets for test matches in England) please be assured that we are always trying to offer the most comprehensive coverage possible to our cricket customers.




Betfair Customer Services 10 Sep 19:43


Chatname: good value losers

due to the changes in tour schedule there will be fewer wta tournaments.
will betfair look into offering markets for the top challenger events?

It’s a good idea and we have looked into the possibility of offering some or all of the Challenger Tour but have found it very difficult to get reliable information on start times of specific matches without which it’s hard to offer a decent service. We will be assessing the situation very closely throughout the forthcoming season and if we see improvements in the data then we will certainly look to offer Challenger Tour events where possible.

[Win2Win]

Simple

[Street cry]

Why didn't they just adjust the commission to make more profit?

Probably because they have now only alienated a small % of Betfair usersby charging the biggest winners.