Oh dear, oh dear, a possible high of 60% tax on winnings?
This is on the site:
From 18th July 2011 Betfair will be making some changes to the Premium Charge. The current Premium Charge mechanism will remain in place but higher rates may now apply to a small number of customers (less than 0.1% of annual active customers).
Full details of the changes can now be found on the Betfair Charges page under the About Us section of the website. However, the changes can be summarised as follows:
• Customers will only be subject to Premium Charges at higher rates if they satisfy all of the following conditions:
o Lifetime net profits* exceed £250,000
o Lifetime commission generated less than 40% of lifetime gross profits
o Bet in more than 1,000 markets
• Customers that satisfy all of the above conditions will be asked to pay Premium Charges at rates between 40% and 60% on all future exchange activity.
All customers that will be affected by these changes have already been contacted.
And many people have got this too:
The Premium Charge rate applied to each customer that satisfies these conditions is dependent on their lifetime commission generated to gross profits ratio. The exact rate will be determined by the following table:
Lifetime commission generated
to gross profits ratio Applicable Premium Charge rate
< 5% 60%
5% - 10% 50%
> 10% 40%
-----
Because of my age, I've not reached €250k from Betfair yet - although one day I hope to, that'll probably be the same day I'll have to leave. I'm also sure (being realistic) that not many will have won €250k net profit, they do point out its less than 0.1% of annual users.
The main issues will be it is unbelievably bad PR, and the biggest issue is how will liquidity be effected because obviously the big players will be effected (the 100k lumps we love to see).
I'm not really sure how it will turn out myself. We shall see.
(Hello Betdaq, if youre reading this, can you please get off your fucking arse and create some competition, thanks!)
Betfair Chase Day 2024 (Haydock)
3 hours ago
they will kill the golden goose before long
ReplyDeletei fucking hate betfair just greedy bastards, big players come on pull togther and lets fuck off once and for all
ReplyDeleteIf I've understood this correctly: ALL traders that are successful WILL pay PC sooner or later. The 20 % PC pretty quickly, and the big new PC after a few years. Is this correct?
ReplyDeleteSo bringers of substantial liquidity WILL pay this. Will they keep playing, or go somewhere else? And how is this not a golden opportunity for competitors?
Well it all depends on how much "lifetime commission generated" as to whether you incur the charge.
ReplyDeleteYou obviously have to win €250k too so people could provide liquidity but not have won that much - naturally over time you would expect them to win that though, say a pretty standard €25k every year in 10 years or something.
But pretty much youre right. It all depends on whats available where to go - I honestly dont know what will happen.
My suggestion: we should coordinate a massive stop of operations; kind of a strike. Starting on July 18th.
ReplyDeleteAt the same time, we should move 50% of our bank to Betdaq, with a signed agreement that we will keep a fixed 5, or 4,or 3% commission for a period of minimum 3 or 4 years. Yeah, you can't compair Betfair with Betdaq, but we DO need urgently to create some competition here. As long as Betfair has the monopoly, they can dictate the rules.
We are only a few people, we dont have contact with each other... And that allows them to abuse....
Myself and most of the cricket forum did that for one game after the first PC was brought in. It worked out great, but then everyone went back..
ReplyDeleteAlso you have to think how hard would it be if you had 200-500 sharks going into the small Betdaq pool youre betting against - it would make life far more difficult.
Betdaq need the infrastructure and the small/medium punters to make any mass exodus work. Unless they launch a massive investment in marketing, the latter is never going to happen. All the smarties moving across will defeat the purpose of the move in the first place...
ReplyDeleteIt's clear that Betfair have lost their way - all this guff about not closing winners and betting as it should be is just that, guff. It's small consolation that the City thinks so too and have halved the company valuation since IPO. Their results tomorrow might give some indication why they've had a go at the 'shoot ourselves in the foot' strategy to grow the business.
ReplyDeleteDesperate times for the lads in Hammersmith if this is the best they can come up with.
What I don't understand is why people aren't challenging this under anti-monopoly, fair trading, advertising standards. Even if they don't win, they will cause bf a lot of pain, bad publicity and hit the stock price, which is what the pc is all about.
ReplyDeleteI'm in Australia, where bets are legal contracts and contract law applies and I'm pretty sure the pc will be found to be illegal here.
Right now I'm churning to keep the pc at bay and I'm nowhere near 250k profit, but if I were I'd be siccing lawyers on bf.
Hopefully someone will soon.
There is a very simple fact behind this move, it only affects extremely profitable traders & punters. The likes of whom Betdaq (or any other exchange for that matter) do not want to see on board.
ReplyDeleteBetdaq seeds their markets, why would they want all the top sharks ripping them off? If you want to make hundreds of thousands a year you'll have to pay the marketing budget needed to keep the cash coming in and some extra to make your business interesting for the company. It's as simple as that.
What most of the affected users fail to see is that they are not valuable users for Betfair at all. You see the commission paid and forget that the only reason why you can generate that commission is because Betfair feeds your business. It's harsh, and no one likes to pay more for a service they used to get nearly for free even if it's a great service (ask lastfm and the likes...).
Many of you say Betdaq should take a step forward and attract you (aka feed you), the truth is they tried when the PC was launched, but you are no good business for an exchange...
I dont see how you can defend 60% tax?
ReplyDeleteFrom the point of view where there are many of clock beaters etc - I can happily say I dont mind them paying PC, as they cannot lose, and it is something that Betfair should try and deal with it - which would make the markets more "fair" for everyone. Thats all everyone wants really, a fair market.
I know many people who pay PC and they dont have a 'cheating' edge, no inside information, no clock beating - how on earth can anyone defend that Betfair are "entitled" to 60% of their hard earned winnings?
I mean you can sort of understand 20%, but 60% is this down right immoral.
When you have a normal job for a living, you earn a set amount and get taxed fine, but were here every day putting are own money on the line (and losing is very possible).. you can have a winning week of €2,000 get taxed 60% then next week lose €1,000 and where do you end up - in the poor house thats where.
Its basically an underhand way of banning winners - exactly like the bookies do.
i got letter saying, thats the deal, if u dont like it go somewhere else!
ReplyDeletethey just dont want the winners thats it!
Anonymous at 9:06 on June 29th looks to be not very anonymous at all, given the party line being towed!
ReplyDeleteThey say "There is a very simple fact behind this move, it only affects extremely profitable traders & punters. The likes of whom Betdaq (or any other exchange for that matter) do not want to see on board"
Funny.... I don't see NYSE or LSE banning Goldmans, UBS or such from trading... what sort of exchange do Betfair actually run? It's life Jim but not as we know it. It's appears to be an 'exchange' only for losers and small winners churning commission into their coffers. Sound Familiar?
Many might think this is a storm in a teacup of big-boys (or 'sharks' to use another word from the 9.06 post) complaining. However all Betfair customers would do well to take note that this is a drastic acceleration in Betfair's modus operandi towards that of a normal common or garden bookmaker. Their assertion that it only impacts 0.1% of registered customers is disingenuous... it's 0.1% of 'registered customers' (some 3.8m users, mainly inactive ones). It's more like 0.5% of active users and who's guess what percentage of users having a decent number of bets (say 200 per year or more).
This is the tip of the iceberg as they aim to drain any profits going from those who develop successful strategies. Large trading houses such Goldman's must be quivering in their boots that the other exchanges and bourses around the world follow suit!
Nobody would expect Betfair to provide the service for free - but from their marketing a lot of people might have mistook them for an exchange who might set appropriate and fair charges. I really feel for those who have developed strategies good enough to chuck in the day job and depend on the 'fair for a living - only to get 3 weeks notice that all is to change and change dramatically.
Do not pass go, take a Chance card, advance token to the nearest Railroad and pay owner twice the rental to which he/she is otherwise entitled.... What game is this - i thought it was sports betting but it turned out to be Monopoly all along.
I posted the previous comment - unfortunately i have a factual error in it! The 0.1% of customers impacted by the new charge is of active customers only (not just registered ones). In fairness, Betfair have not been disingenuous on this issue as I have mistakenly asserted. My bad!
ReplyDeleteAs Scott correctly points out the biggest winners effected by this new layer of Premium Charge will be even less welcome at Betdaq, what's more without a mass migration of losing and commission only players they would only be playing against themselves (and Betdaq would almost certainly stop seeding markets). Liquidity is king and that is why there will always be a de facto monopoly, whether that is Betfair or not. The amounts involved on the LSE aren't comparable to any sports exchange if liquidity was split 50/50 or even 60/40 between two exchanges the majority of markets would be even more dead than they are now. Where liqudity is limited it makes sense to have it all in one place.
ReplyDeleteThat being said the jump from 20-60+% is a little extreme :)
Nice blog, I've added a link to mine. I did follow this blog during your original challenge - nice to see that you're still going.
I'm the founder of Smarkets (http://smarkets.com). We're trying to offer the marketplace a viable competitor. Let me know if there's anything we can do to make a better trading platform for you.
ReplyDeleteJason Trost
I think betfair are relying on there monopoly card heavily too pull this one off, a possible undertone for such a badly implemented and steep rise in the premium charge to treble its rate could be that with the date coinciding with a £50 m investment by them into there own shares has forced them to relieve paying out revenues that need to be paid to its exchange winners, such an action would underline there finacial fragility in respect to over investment into otherwise unseen large scale growth for the investors, the long term implications of the premium charge may be a loss in growth as market forces from players eager to look for better value and investors looking for real growth companies may one day prove that sporting exchanges need to beware of imbalancing the margin profit company slow growth factor over the market percieved dominace via market fairness to players factor equalibrium
ReplyDelete