Betfair introduces 20% tax on winning players

[englishmike]

As for Betfair, they claim it will affect 0.5% of customers, implying 99.5% lose anyway.

[durito]

As for Betfair, they claim it will affect 0.5% of customers, implying 99.5% lose anyway.

It's more complicated than that.

You can win millions there and not be affected by this at all.

[englishmike]

''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. ''

If I read it correctly, how could you win millions and not fall into one of the above catergories?

And yes....I do accept it may be me that doesn't understand this rather than you.

[SBR Lou]

I'm already on the verge of giving this up if a book I was winning at told me they were going to tax me 20% on my winnings it'd be the best thing ever happened to me, I'd turn off my computer and quit right then.

Understood. Not their finest hour, but does affect a very small # of players, not that it makes the principle any easier to swallow, but even most regular winners have nothing to worry about.

It will be interesting to see how many big players jump ship, this is the kind of thing that will either work or won't. I suspect that most of them will ultimately decide to continue playing at Betfair because of the profitable opportunities.

[durito]

''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. ''

If I read it correctly, how could you win millions and not fall into one of the above catergories?

And yes....I do accept it may be me that doesn't understand this rather than you.

I don't understand it entirely as I haven't looked into it seriously, but from reading the betfair board, it specifically applies to traders who rarely have losses(see Santo's post above). If you are gambling and have lots of wins and loses, but a net win, it shouldn't apply.

I still think it's a terrible idea.

[bettilimbroke999]

Maybe this rule doesn't affect enough ppl to matter idk, I guess maybe I read it wrong, thought they were saying if you were a winning player you were gonna pay 20% commission, but now seems like some pretty complicated formula I don't care to think about since I can't even play there, but still sounds like a pretty fuked up rule

[englishmike]

http://blogs.guardian.co.uk/sport/2008/09/09/betfair_where_winners_have_jus.html

The article above which was mentioned previously in the thread does include an interesting piece of information and, some might argue more important than the 20% charge itself.

For those that don't know, the levy board is an organisation in the UK that collects a percentage of profits from registered bookmakers that is then redistrubted through racing for prize money and racetrack improvements etc. Betfair have always been able to sidestep the levy issue by claiming they offer a service whereby gamblers are playing gamblers and therefore don't qualify as 'gambling buisnesses.'

If Betfair can take 20% of those accounts deemed to be profitable, why shouldn't the levy board? For example, If you're laying horses to lose on Betfair for a profit, you are indeed no different to any liscensed bookmaker and in theory you should be liable for levy.

My point is, Betfair may just have opened a can of worms that could prove chatistrophic to their innovative and unique style of betting and they would have nobody to blame but themselves because overnight a20% deduction might actually have to be 40%

[Santo]

Let's take a simple example.

Win 180 bets at 2.00 for £500. Profit is £90,000. Commission is £4,500. Net £85,500.
Lose 150 bets at 2.00 for £500. Profit is -£75,000. Implied comission (what you would have paid if you won) is £3,775.

Net Profit is £10,500. Total commission £8,275 which is 82% (and way over 20% obviously). Thus most straight bettors will be well over the 20% figure when you sum commission and implied comission.

Now a trader might look more this:

Win on 230 markets, average win £59, Total Profit £13750, commission £687.5
Lose on 100 markets, average loss -£20, Total Profit -£2000, Implied commission £100.

Net profit: £11,062.50 (slightly higher than the last case).
Total comission: £787.5 (7.1%)
New fee: £1425

You can see the difference. The first guy is unaffected, the second just lost £1425.

[englishmike]

Good post Santo, thanks, I think i'm beginning to grasp it. lol

[tomcowley]

Anybody in danger should just multiaccount them. The only people they should get with this are the random guys who run hot (who they'll really piss off), not the big winners.

[Tevez]

This charge will affect all people, belive me

This is a bad new for us Bettilimbroke

[accuscoresucks]

what he hell does 250 markets mean

[Tevez]

Ej

1 market = Dallas vs San Antonio match odds
1 market = Dallas vs San Antonio over/ under

To reach 250 you only have to bet in 2 games per week

[kiwi]

This charge will affect all people, belive me

This is a bad new for us Bettilimbroke

At least many will be affected. The number '0,5%' is a joke and simply not true. Many serious traders are considering to change part of their volume to Betdaq sooner or later.
Betdaq still has the disadvantage of lower volume (especially concerning inplay). Also both fast funding methods, Moneybookers and Neteller, are not fee free there.

[Arilou]

It is possible that only 0.5% of all accounts will pay, because of several factors. First, any account that doesn't play enough markets never pays, and a lot of accounts will play 245 or so markets and then check to see if they are winners. Second, you have to be a winner. Third, it has to be by more than the standard Betfair tax and the standard tax is very high for those not betting in huge amounts. For those that do bet huge amounts it is merely large. When you combine these factors, 0.5% does not seem unreasonable for the % of all accounts that pay. Keep in mind that the majority of the accounts are likely tiny squares by count, just not by volume.

The problem for Betfair is that the accounts this strikes at are exactly the ones that keep the exchange running, and it hurts people who never have to pay it directly, not just indirectly by reducing liquidity. If you have to worry about paying this fee, you can't place the wager or wagers that would cause that, and if you're reducing the number of markets played to defend against this possibility that does the same thing. Either way, people who owe nothing extra are wagering less out of self-defense. 0.5% of accounts becomes 2% of accounts that would otherwise bet 250 markets, which becomes 10% of accounts that change their behavior because they are at risk, which together are 30% of the volume...

[SBR Lou]

It is possible that only 0.5% of all accounts will pay, because of several factors. First, any account that doesn't play enough markets never pays, and a lot of accounts will play 245 or so markets and then check to see if they are winners. Second, you have to be a winner. Third, it has to be by more than the standard Betfair tax and the standard tax is very high for those not betting in huge amounts. For those that do bet huge amounts it is merely large. When you combine these factors, 0.5% does not seem unreasonable for the % of all accounts that pay. Keep in mind that the majority of the accounts are likely tiny squares by count, just not by volume.

The problem for Betfair is that the accounts this strikes at are exactly the ones that keep the exchange running, and it hurts people who never have to pay it directly, not just indirectly by reducing liquidity. If you have to worry about paying this fee, you can't place the wager or wagers that would cause that, and if you're reducing the number of markets played to defend against this possibility that does the same thing. Either way, people who owe nothing extra are wagering less out of self-defense. 0.5% of accounts becomes 2% of accounts that would otherwise bet 250 markets, which becomes 10% of accounts that change their behavior because they are at risk, which together are 30% of the volume...

That's an excellent post.

[kiwi]

That's an excellent post.

... but nevertheless wrong (not meant offending). The ideas in the post are not wrong but I simply know too many people who are affected by the fees (also smaller players) and additionally in some german forums there are detailed discussions about the mathmatics behind the fees plus a broad agreement that far more people than 0,5 % are affected. Believe it or not I don't have the time here to repeat everything in English again.

[chemist]

It's more complicated than that.

You can win millions there and not be affected by this at all.

You can be a break even player and be affected.

[Arilou]

No offense taken, kiwi. I wasn't saying that I strongly believed it was 0.5%, instead I was saying that it was possible that it was that low... and that even if it was that low that it was still a huge impact even if it doesn't sound like it at first. It wouldn't shock me at all if 0.5% was simply wrong, or if it counted accounts that haven't been active in years.

[twister]

I'm unconcerned with this new ruling of Betfair, as I'm not a trader. I'm a straight bettor who doesn't need a high strike rate to profit.

For my previous 60 weeks, I made a profit of £38,595 betting in 2445 "markets", but didn't pay a penny (cent) extra in commission. If you are a straight-bettor, you will encounter the same as me.

My overall record was 1290-1156. My 1290 winning bets gained me £616,595. My losing bets cost me -£578,000.

£616,595 x 0.03 (0.05 for most customers, but if you earn enough betfair points your commission charge goes down) = £18,497.85. This was around what my commission paid was.

£578,000 x 0.045 (the avg. commission paid by ALL customers) = £26,010. This was approximately my implied commission. Implied commission is commission betfair earned from winning customers on my losing bets.

Total Comm. = (Commission + Imp. Commission)/2. Thus, my TC = (18,497.85 + 26,010)/2 = £22,253.925.

22,253.93 (my total commission)/38,295.00 (profit) = 57.6%.

My commission was more than 20% of my profits, therefore no Premium Charge.

My bets were all 1u bets of £500 a unit. Assuming I have the exact same record next season, but bet £1000 a unit, I will have an approximate profit of £78,000 and once more, will pay no extra commission.

Only people that should be concerned with Betfair's premium charge are those that rely on high % strikerates (65%+) or those that trade.

[acw]

You can be a break even player and be affected.

How?

22,253.93 (my total commission)/38,295.00 (profit) = 57.6%.

In my case at some stage 75%.

I still think this new commission rule does not go far enough. 40% would be better. Still best would be if the whole trading part goes out of their system and customers are being charged for every trade like on the stock exchange.

[noyb]

How?


In my case at some stage 75%.

I still think this new commission rule does not go far enough. 40% would be better. Still best would be if the whole trading part goes out of their system and customers are being charged for every trade like on the stock exchange.

is it that difficult to understand without any traders there would not be any liquidity and nothing for you to bet on?

without traders and the likes, betfair markets would be just as dead as every other betting exchange out there.

[acw]

is it that difficult to understand without any traders there would not be any liquidity and nothing for you to bet on?

Those traders need BetFair as much, so them paying a little extra will not make them disappear. With a bit of luck BetFair will from now on lower its commission for the straight gamblers. That place is so fvcked now that I no longer play there.

[Santo]

Those traders need BetFair as much, so them paying a little extra will not make them disappear. With a bit of luck BetFair will from now on lower its commission for the straight gamblers. That place is so fvcked now that I no longer play there.

No, they need an exchange. The big trading software companies are releasing lots of software for Betdaq currently, who are keen to attract the traders.

[acw]

Santo,

You just do not want to know how many were still betting on the Over/Unders at 5% commission while they used to offer 1% commission on the Total Goals market!

The real gamblers will remain with BetFair.

[fingas]

Santo, can you give me some links for those softwares since i didn't know any?

[Santo]

Santo,

You just do not want to know how many were still betting on the Over/Unders at 5% commission while they used to offer 1% commission on the Total Goals market!

The real gamblers will remain with BetFair.

I know there were a lot, but the masses (who are uneducated) will go where the liquidity (provided by those who are educated) is. A few big players move with the new exchange software, and critical mass can change.

fingas: Google Bet Angel, RacingTraders or Gruss.