Following recent developments, I requested a Premium Charge report from Betfair to show what charges I would have incurred under the new scheme during the the last 60 weeks. Below are the horrific results!
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Number of Markets : 438
Over the last 60 weeks I have already paid:
Commission : £1,069.51
Under the new charges I would have paid:
Commission: £636.17
Premium Charge : £2,336.82
Total Charges : £2,972.99
Difference : £1903.48
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An unbelievable increase!
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Let me make this clear - I'm not a bot user and I don't incur data charges. My only crime is that I'm a winner from backing high and laying low. I'm using the exchange in the way it was designed (to replicate the financial markets) and yet I'm being victimised because I'm successful at it!
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No matter what Betfair say - I don't feel welcome.
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In my Silver Linings post, I referenced my "hedge bet" on Harris, and I am
pleased to say it has so far paid off rather nicely. I wrote that:
...my bet on ...
11 comments:
As I mentioned before Mark, Betfair are about to get it up the backside at the same time having to swallow.
When the dust settles and the betting history books are written, Betfair’s actions over the last few days will be consigned to a MBA student case study on how to ruin a competitive edge built up over many years in one moment of greed driven by myopic decisions.
After reading their comments on the BF livechat forum Q&A I can honestly say that Betfair have taken defending the indefensible to new heights. Alistair Campbell would be proud!
www.slipperytoad.co.uk
The problem is perhaps one of definition. Betfair purport to be an exchange and yet they do not act like one.
Exchanges exist to lower transaction costs. They achieve this, through economies of scale, which arise when the cost per trade on the exchange declines as the number of trades that are executed on it increases.
In a posting on his own blog, Andrew Black seems to suggest that whilst Betfair enjoys near monopoly status, it is not managing to reap said economies of scale....Accordingly, one is left to conclude that the Betfair exchange model as applied to sports betting is flawed!
A second point worth mentioning with regard to exchanges, is that the core objective that all traders seek from an exchange is the minimization of their trading costs. In that the primary goal of all exchanges is to attract order flow, it is tautologous to note that it is in the exchange's interest to meet this need.
I am left to conclude that the real reason for this premium charge is that Betfair are scrambling around looking for ways to ensure that they hit their 30% growth target.
When announcing their results for 2007, Betfair said that that it was in a "Very strong cash position with 180m stg of corporate funds at the year end in addition to 174m of client funds held on trust in seperate ring fenced accounts."
One must assume that the 174m is now nearer 200m. 200m sitting in a bank for a year, would, with an interest rate of 5.9% would yield Betfair 11.8m.
Surely there would be enough there
to pay for these so called additional transaction costs that the company is incurring because of its super users!
Over the last 60 weeks I have already paid:
Commission : £1,069.51
Under the new charges I would have paid:
Commission: £636.17
Premium Charge : £2,336.82
Total Charges : £2,972.99
Difference : £1903.48
Your analysis is wrong.
You will still have paid £1,096.51 commission and would have had to pay a further £2,336.82, increasing both the total charges and the difference.
The 'Commission Generated' figure, the £636.17 in your case, is the average between commission 'earned' on your winning markets and those on your losing markets. Since you obviously have fewer losing markets your Premium Charge goes up even further.
It will take you over the 20% mark and is an important point that people have missed in the general uproar.
Hi Mike,
I think you may be right - this is a huge gamble for Betfair and one thing I'm sure they didn't count on was the 'losers' not liking this idea either.
They're ruining dreams and alot of people will end up saying, "what's the point?"
All the best,
Mark
Hi anonymous,
Exactly! Even the amount of customer funds held by Betfair should more than cover the cost of attracting new customers and servicing winners.
How they can discriminate against a percentage of their customers I don't know - it's totally against the original ethos of the company.
All the best,
Mark
Hi Anonymous,
Oh sh*t! Thanks for pointing that out.
This makes an already bad situation worse and just goes to show that Betfair have over complicated the issue so that users are baffled by the mechanics of it all.
I feel worse now about the situation than I did at the beginning of the week. The Q&A session they held was a joke and went nowhere near to allaying any fears.
All the best,
Mark
They don't want any winners! They keep on intoducing new charges, arb the markets for themselves with the bet matching superbot, are the dominant liquidity provider in the exchange games markets because of an unfair commission advantage over all others. Time to switch to betdaq, wbx, or ibetx.
Hi Anonymous,
I totally agree. I've already got a Betdaq account and will look to use it more in future.
I've found this week hugely frustrating as I need to get things clear in my mind how this will affect me and what I'm going to do about it.
I feel just as bad now as I did last monday (if not worse).
All the best,
Mark
Punter Power?
Betfair in talks as punters look elsewhere
Betting exchange Betfair are holding a crisis board meeting today to debate their unbelievably rash decision a week ago to charge high-rolling clients a 20 per cent commission on their winnings. This stealth tax has seen a sudden migration of punters from Betfair to rivals Betdaq, who report one of their busiest weeks ever.
http://www.dailymail.co.uk/sport/football/article-1055783/Clarke-wrangle-real-Hammer-blow.html
www.slipperytoad.co.uk
That's excellent news Mike!
I just hope common sense prevails!!!
All the best and fingers crossed.
Mark
I just wanted to say that I think everyone is over reacting with regards to the Betfair charges.
In my opinion I think Betfair is taking the right step in ironing out any corruption taken by people that are able to manipulate the markets.
It has nothing to do with bots because the development companies get charged £200 per month to get access to the Betfair Developers Program.
It has nothing to do with high refresh rates by the said bots because customers are being charged for data usage.
It is because of a small minority of people that undestand Betfair intimately and they are able to feed off of the majority of rule abiding punters. They just can't say it publicly.
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