[cyberinvestor]

As a US gambler I am trying to understand how the premium charge works. Hopefully someone can help me get this.

Question #1: It says you will be charged a premium charge if you make over $250,000 betting at BetFair. Is this per year?

Question #2: If I am understanding correctly, some people have a 60% premium charge. So if I win $500,000 at BetFair I would have to give $300,000 of that to BetFair? God I hope that isn't true.

Question #3: It says a person is subject to premium charge if they wager on over 250 markets. Is this per year and is a market considered a game/wager (i.e. Arsenal versus Man U is a market) or a sport (i.e. soccer is a market so you can bet 1000 games but that is just 1 market)?

Appreciate everyone and anyone who can help me understand this whole setup. Thank you!

[noyb]

you do realize hardly anyone pays the charge, right? the hype about it doesn't reflect the chance of it actually happening to you

[Maniac]

Thats the thing with me - I use Betfair every now and then and typical bet rarely gets higher than £50-£100 at the most (I am not as big a high-roller as most seem to be round here) so have a very very long way to go before I start to worry about the Premium Charge !

[cyberinvestor]

I guess that is why I ask the question. Let's say I am a big player who moves $100,000-$150,000 a game on British soccer (where BetFair has the most liquidity). If I win two games at that level then I am already subjected to a premium charge? So, If I go 5-0 on my "$100,000" bets in soccer for a profit of $500,000 does that mean I only get $200,000 and BetFair keeps $300,000?

That seems outrageous to me and I am not sure how a player (a big player) can ever make money at BetFair. Since I am wagering maybe $1,000,000 to win $500,000 which after premium charge is $200,000?

If I bet $50,000 at Pinnacle I might have to deal with a higher line BUT I don't have to give up 60% of my winnings.

I am sure BetFair is great for smaller players but I am just wondering how these guys who are pulling out $3,000,000 or $2,000,000 do it when they lose 60% of their winnings>>>if I am understanding correctly.

[Maniac]

http://www.betfair.com/aboutUs/Betfair.Charges/

If you scroll down it has explanations and examples of the Premium charge - as far as I can see there are 2 charges, a normal one and one for a higher premium for the big players...

[Art Vandeleigh]

I guess that is why I ask the question. Let's say I am a big player who moves $100,000-$150,000 a game on British soccer (where BetFair has the most liquidity). If I win two games at that level then I am already subjected to a premium charge? So, If I go 5-0 on my "$100,000" bets in soccer for a profit of $500,000 does that mean I only get $200,000 and BetFair keeps $300,000?

That seems outrageous to me and I am not sure how a player (a big player) can ever make money at BetFair. Since I am wagering maybe $1,000,000 to win $500,000 which after premium charge is $200,000?

If I bet $50,000 at Pinnacle I might have to deal with a higher line BUT I don't have to give up 60% of my winnings.

I am sure BetFair is great for smaller players but I am just wondering how these guys who are pulling out $3,000,000 or $2,000,000 do it when they lose 60% of their winnings>>>if I am understanding correctly.

It's a charge based on weekly profit losses. So your 5-0 example for one day may be offset by losses on other days that week.
I think you need an ROI of greater than 1.10 before you need to start worrying about Premium Charge. It's really more for people who have learned how to exploit holes in the Betfair platform and have very large long term ROI's.
So if you're a high roller, if you profit more than $100,000 on each $1 million bet,and you have lifetime winnings of greater than $250,000 GBP, than 60% tax is your penalty. Again, this is only realistic for people who have learned to exploit the Betfair wagering system.

[cyberinvestor]

Ok, gotcha. Thanks for the information and help!

[lukahh]

many people worry about premium charge. it is designed to hit only people who have no alternative to Betfair.
thoug unpopular, it is a profit driven model, who squeezes people who cannot achieve those betting results elsewhere.

[HeeeHAWWWW]

It's a charge based on weekly profit losses. So your 5-0 example for one day may be offset by losses on other days that week.
I think you need an ROI of greater than 1.10 before you need to start worrying about Premium Charge.

Or those who run hot for a week.

Or those who hit a long odds once. I made a tennis correctscore at 11.0 once, and got premium charge the next week of $1k. For a single week. On top ofthe countless thousands I'd already paid them in regular commission.

Oh, and no, that was no exploit, it was just regular prematch value betting.


Now they've introduced an extra high level of PC for those who make more than 250k lifetime. Since betfair has been around for a decade, this means those who take 25k+ profit per year are getting destroyed - these guys are essentially the same as poker grinders, who put in a full working shift, and don't actually make that much money.

The poker analogy is apt imo - betfair just want lots of people churning money in circles, with them taking 20%+. Anyone who wins at a good rate withdraws their profit, and thus they are getting penalised.

The PC is just betfair abusing a monopoly. Same as ebay and their ever-increasing charges.

[FourLengthsClear]

I will cross the GBP 250k lifetime profit threshold in around 6 or 7 weeks. I have a commission/profit ratio of just over 28% and to date have not paid a penny in Premium Charge (I still have over GBP 800 of the 1k 'allowance'. in tact.

I have not even tried to raise the commission/profit ratio to 40% (it is not possible without 'gambling') and face the prospect of Betfair taking 40% of my trading profits in future.

I have already increased my activities on Betdaq and, to a lesser extent, Matchbook but these pools of liquidity shows no signs to becoming deep enough and I also would not be comfortable maintaining a substantial balance in either of these exchanges.

This leaves me with 3 basic options:

1) Hold my nose and swallow the charge.
2) Gamble approx GBP 8,000 per week in order to raise the commission/profit ratio above 40%
3) Quit.

ATM 2) appears to be the most logical solution and I am sure it is one that most others in my position will choose too. For the life of me I can't see any of the really big market makers on Betfair simply going with option 1) and paying literally hundreds of thousands without 'fighting' it.

[Jontheman]

You're only going to fall below their commission/profit % if you're a trader who is "greening up" all the time or a gambler of almost godlike ability. FLC is quite clearly the first of those (not a criticism - fair play to you if you can consistently trade for a profit there).

FYC - if you're bright enough to earn 250k out of BF you must be able to figure a way to increase your comm/profit ratio and avoid the PC without taking the gambling risks you're seeking to avoid. It's really pretty easy (and profitable) to do

[Hareeba!]

I will cross the GBP 250k lifetime profit threshold in around 6 or 7 weeks. I have a commission/profit ratio of just over 28% and to date have not paid a penny in Premium Charge (I still have over GBP 800 of the 1k 'allowance'. in tact.

I have not even tried to raise the commission/profit ratio to 40% (it is not possible without 'gambling') and face the prospect of Betfair taking 60% of my trading profits in future.

I have already increased my activities on Betdaq and, to a lesser extent, Matchbook but these pools of liquidity shows no signs to becoming deep enough and I also would not be comfortable maintaining a substantial balance in either of these exchanges.

If you've paid 28% of your winnings in regular commission why are you expecting to be hit with the premium charge which only comes into being if you've paid under 20%?
Or have they changed it again?
This leaves me with 3 basic options:

1) Hold my nose and swallow the charge.
2) Gamble approx GBP 8,000 per week in order to raise the commission/profit ratio above 40%
3) Quit.

ATM 2) appears to be the most logical solution and I am sure it is one that most others in my position will choose too. For the life of me I can't see any of the really big market makers on Betfair simply going with option 1) and paying literally hundreds of thousands without 'fighting' it.

....

[FourLengthsClear]

You're only going to fall below their commission/profit % if you're a trader who is "greening up" all the time or a gambler of almost godlike ability. FLC is quite clearly the first of those (not a criticism - fair play to you if you can consistently trade for a profit there).

FYC - if you're bright enough to earn 250k out of BF you must be able to figure a way to increase your comm/profit ratio and avoid the PC without taking the gambling risks you're seeking to avoid. It's really pretty easy (and profitable) to do

To maintain my ratio above 28% is already very tough TBH and this has been done primarily by taking odds at traditional books which I calculate to be +EV or 0EV (or another exchange), creating exposures within Betfair.

I tend to focus on markets with lower liquidity (US Sports especially) and as such the easiest/most obvious strategies (cross market arbs etc.) are very rarely available to me. Increasing my pain threshold for taking odds at traditional books (ie. betting at odds which I believe to be -EV) is a possibility, of course, but this, in theory at least, will produce worse results than option 2) from my previous post.

I have been a customer/market maker at Betfair pretty much from day 1 and added a lot of liquidity back in the early days when they were having to seed markets on their own account. I have no objection to the principle of paying a surcharge (say a fraction of a percent of the bets matched amount) for the wonderful platform that Betfair offers but 20% (nervermind 40%-60%) is gouging in the extreme.

Fwiw, I just sent them a copy of a screenshot showing that I have shorted their stock/share together with a chart for Netflix as an example of what happens when you alienate your customers. I just wish Betdaq could get their act together.

[tommygun]

I got hit with the premium charge about 3 months back, it is a joke to say the least, especially if you happen to have a loss just before the date they take their 20% cut, it's like a double whammy. Getting real tired of donating my winnings to be honest. If anything I should/we should be getting even more of a discount for generating so much commision for them not the other way around, getting penalised for having a winning streak and a good run, just an all round joke.

[FourLengthsClear]

I got hit with the premium charge about 3 months back, it is a joke to say the least, especially if you happen to have a loss just before the date they take their 20% cut, it's like a double whammy. Getting real tired of donating my winnings to be honest. If anything I should/we should be getting even more of a discount for generating so much commision for them not the other way around, getting penalised for having a winning streak and a good run, just an all round joke.

As mentioned above, I am principally a trader and have no real objection to the principal/concept of a reasonable "trader's tax" on top of the standard commissions.

Applying the Premium Charge carte blanche to encompass regular bettors like yourself is just dumb.

Such a 'tax' (say 0.05% of the total matched bet amount over GBP 1 million per month) would be much fairer, easier to understand and would 'catch' only the guys like me (and my much better funded peers) whom it was intended to.

[FourLengthsClear]

You're only going to fall below their commission/profit % if you're a trader who is "greening up" all the time or a gambler of almost godlike ability. FLC is quite clearly the first of those (not a criticism - fair play to you if you can consistently trade for a profit there).

FYC - if you're bright enough to earn 250k out of BF you must be able to figure a way to increase your comm/profit ratio and avoid the PC without taking the gambling risks you're seeking to avoid. It's really pretty easy (and profitable) to do

The other thing, I should have mentioned is the clause from Betfair's Ts and Cs.

If you satisfy the conditions set out above on 20th June 2011, your lifetime commission generated to gross profits ratio on that date will be used to determine the Premium Charge rate that will be applied to your betting thereafter. If you first satisfy the conditions above after 20th June 2011, your Premium Charge rate will be determined based on your lifetime commission generated to gross profits ratio at that time.

This essentially means that I have to find a way to pay Betfair GBP 29,000 in commisson (the difference between a 28.x% ratio and 40% before my lifetime profit goes over the 250k threshold). If I cannot do that I am lumbered with the elevated PC regardless of what happens subsequently.

B@st@rds.

[tommygun]

The other thing, I should have mentioned is the clause from Betfair's Ts and Cs. If you satisfy the conditions set out above on 20th June 2011, your lifetime commission generated to gross profits ratio on that date will be used to determine the Premium Charge rate that will be applied to your betting thereafter. If you first satisfy the conditions above after 20th June 2011, your Premium Charge rate will be determined based on your lifetime commission generated to gross profits ratio at that time. This essentially means that I have to find a way to pay Betfair GBP 29,000 in commisson (the difference between a 28.x% ratio and 40% before my lifetime profit goes over the threshold). If I cannot do that I am lumbered with the elevated PC regardless of what happens subsequently. B@st@rds.

contrary to belief, I too am a trader.

[Hareeba!]

The other thing, I should have mentioned is the clause from Betfair's Ts and Cs.

If you satisfy the conditions set out above on 20th June 2011, your lifetime commission generated to gross profits ratio on that date will be used to determine the Premium Charge rate that will be applied to your betting thereafter. If you first satisfy the conditions above after 20th June 2011, your Premium Charge rate will be determined based on your lifetime commission generated to gross profits ratio at that time.

This essentially means that I have to find a way to pay Betfair GBP 29,000 in commisson (the difference between a 28.x% ratio and 40% before my lifetime profit goes over the 250k threshold). If I cannot do that I am lumbered with the elevated PC regardless of what happens subsequently.

B@st@rds.

.....

[davidchong]

so hitting the pick six in breeders cup day with 500,000 payout, i have to pay 60% to betfair for commision charges?

[FourLengthsClear]

If you've paid 28% of your winnings in regular commission why are you expecting to be hit with the premium charge which only comes into being if you've paid under 20%?
Or have they changed it again?

Yes they changed it in June. There is now a second, elevated, level of PC for accounts which have a lifetime profit of GBP 250k and above. The commission/profit threshold for that is a ratio of 40% at a minimum level of 40% (upto 60% for the pure green screeners whose ratio is below 5%).

[FourLengthsClear]

so hitting the pick six in breeders cup day with 500,000 payout, i have to pay 60% to betfair for commision charges?

No.
There are exceptions for single big wins.

[davidchong]

No.
There are exceptions for single big wins.

where is that exception? i cant find it

[Hareeba!]

where is that exception? i cant find it

"Any single win that constitutes more than 50% of your gross profits over the lifetime of your account will be excluded from the calculation"

[Jontheman]

To maintain my ratio above 28% is already very tough TBH and this has been done primarily by taking odds at traditional books which I calculate to be +EV or 0EV (or another exchange), creating exposures within Betfair.

I tend to focus on markets with lower liquidity (US Sports especially) and as such the easiest/most obvious strategies (cross market arbs etc.) are very rarely available to me. Increasing my pain threshold for taking odds at traditional books (ie. betting at odds which I believe to be -EV) is a possibility, of course, but this, in theory at least, will produce worse results than option 2) from my previous post.

I was going to write a fuller reply but may have not understood you correctly. I assume you mean taking odds AT BETFAIR that you believe to be -EV?

[FourLengthsClear]

I was going to write a fuller reply but may have not understood you correctly. I assume you mean taking odds AT BETFAIR that you believe to be -EV?

either/or really.
Over time both (unless there is outrageous variance) will generate individual market losses in Betfair markets and increase the commission/profit ratio. The downside, of course, is that my trading profits are diminished.

[Jontheman]

Are you saying that you normally take odds at traditional books and let them ride as straight bets? I thought you were a trader?

[FourLengthsClear]

Are you saying that you normally take odds at traditional books and let them ride as straight bets? I thought you were a trader?

No, suppose I have a 50/50 event where I have a locked in profit of GBP 50 regardless of the outcome on the Betfair market.

As it stands, I would generally put down a bet say (GBP 400) at a traditional book if odds of 2.00/+100 (or better) are available and take the other side on the Betfair market.

So my position in the BF market would be win GBP 450 or lose GBP 350 (not accounting for commission).

This works fine in terms of getting the commission ratio comfortably above 20%. To increase the size of these +EV/0EV bets at traditional books is very difficult without being booted from some and having the numbers of outs reduced (I have already lost a few!)

I do have a few other ways of increasing my exposures within BF markets but nothing that will get me near 40%.

[McFly86]

No, suppose I have a 50/50 event where I have a locked in profit of GBP 50 regardless of the outcome on the Betfair market.

As it stands, I would generally put down a bet say (GBP 400) at a traditional book if odds of 2.00/+100 (or better) are available and take the other side on the Betfair market.

So my position in the BF market would be win GBP 450 or lose GBP 350 (not accounting for commission).

This works fine in terms of getting the commission ratio comfortably above 20%. To increase the size of these +EV/0EV bets at traditional books is very difficult without being booted from some and having the numbers of outs reduced (I have already lost a few!)

I do have a few other ways of increasing my exposures within BF markets but nothing that will get me near 40%.

There's a fairly simple way to pay roughly 2% (or whatever your commission rate it), instead of 20% or 40%.

Find 100% correlated markets and bet different sides on each market.

E.g. a Premier League soccer match lay over 2.5 goals, but then back 3 goals or more in the "total goals" market. If you're able to "win" a tick or two, you will be getting credited for commission with little/no cost.

[FourLengthsClear]

There's a fairly simple way to pay roughly 2% (or whatever your commission rate it), instead of 20% or 40%.

Find 100% correlated markets and bet different sides on each market.

E.g. a Premier League soccer match lay over 2.5 goals, but then back 3 goals or more in the "total goals" market. If you're able to "win" a tick or two, you will be getting credited for commission with little/no cost.

Hi McFly. In post 13, I mentioned that I tend to focus on lower liquidity (higher margin) markets where the type of cross-market arb you mention is not generally available.

Churning through hundreds of thousands in matched bets on an EPL match (or similar) is something I can set a 'bot' to do but has not been overly productive for me in the past and in truth I would need at least double my current bankroll for it to be a worthwhile avenue.

Thanks anyway.