Betfair to introduce additiional charge on traders?

[Smokin Joe]

It hasn't been posted yet, but according to Troy McClure it will be on the site shortly:

Ok, here is what will happen

Firstly, if you don't win over the course of a year, read no further. You won't be affected directly by this (Indirectly might be another matter)



Betfair want to make sure long term winners put 20% back into the "pot". They have claimed its to help with marketing etc, to get new losing customers to the site. In essence, they just want to increase their profit.

They will make sure that long term winners pay them this 20%. At the end of each week, they will calculate how much you have won. They will then divide that by 5, to give 20%

If you have paid more than that amount in commission over the week, nothing changes.

However, if you have paid less than this amount, Betfair will take the difference from your account at the end of the week. This "Tax" goes directly to Betfair, and has nothing to do with the government.



An example;

You win £1500 in the week, and lose £500. You win £1000 NETT

You're on 4% commission. You pay Betfair ££60 in commission on the winning £1500, nothing on the losing £500

At the end of the week, Betfair see you have won £1k. They work out that 20% of this is £200, but you have only paid them £60 commission. They therefore take £140 more from your account







Hopefully that example makes it clearer

[Smokin Joe]

The reason I said that traders will be affected is that us punters who take a view tend to pay more than 20% of our winnings in commission, whereas those who win on nearly all markets pay way less than 20% commission on their winnings.

[Smokin Joe]

It's been confirmed.

5) Premium Charges

In addition to the other charges detailed above, a small number (less than 0.5%) of our most successful customers will incur Premium Charges.

Premium Charges will take effect from 22nd September 2008 with the first charges paid the following week (week commencing 29th September 2008).

Please note that if you become eligible to incur Premium Charges, we will contact you before any charges are paid.

Calculating Potential Charges

Each week Betfair will calculate your ‘gross profits’* made, and your ‘total charges’** paid over the previous 60 week period. The details of these calculations are explained below.

You’ll only be considered for the Premium Charge if your account is in profit over the previous 60 weeks, and only if the total charges paid during that period are less than 20% of your gross profits.

The vast majority of customers, and even the majority of those whose betting on Betfair was profitable over the previous 60 weeks, do not meet both these conditions and will not incur the Premium Charge.

While those conditions accurately describe our most successful customers, they might also apply to new customers who have only bet in a few markets, or those whose accounts are in profit because of a significant big win. To ensure that those accounts are not inadvertently charged, we’ve added two further conditions: any single win that constitutes more than 50% of gross profits over the previous 60 weeks will be excluded from the calculation, and customers will only be considered for the Premium Charge if they have bet in more than 250 markets during that 60 week period.

Each customer will also have an allowance in each 60 week period of £1,000 against the Premium Charge. This means that every customer considered for the Premium Charge will be exempted from the first £1,000 of the charge in each 60 week period.

Each week the customers who meet all the conditions set out above will be charged the lesser of:
The difference between 20% of the previous week’s gross profits and the total charges paid during the week; and
The difference between 20% of the previous 60 weeks’ gross profits and the total charges paid during that period.

This means that customers will never be faced with a Premium Charge that is more than 20% of their gross profits for the previous week.

Please note that the second of the two calculations set out above can only ever reduce the Premium Charge and will apply on the rare occasion that the difference between 20% of the previous 60 weeks’ gross profits and the total charges paid during that period is less than the same calculation for the previous week.

Premium Charges will be deducted from customer accounts weekly (on Wednesdays) in relation to the previous week’s activity (Monday to Sunday).

Accounts that relate to one person, entity, API subscription or a Master Account with related Sub- accounts (Trading version only) are treated as one customer for the purposes of calculating Premium Charges. Note that no Betfair points will accrue for Premium Charges.

*By ‘gross profits’ we mean the amounts won, excluding total charges, less the amounts lost, on all Betfair markets.

**By ‘total charges’ we mean all commission generated by Betfair as a result of your betting, plus any Transaction Charges, Data Request Charges and Premium Charges you’ve incurred. ‘Commission generated’ includes the commission paid on winnings, but also the commission that Betfair makes from the other customers who win in markets in which you’ve lost, which we call ‘implied commission’. When you win, Betfair collects commission at your rate of commission, but when you lose, the commission collected by Betfair from the winners is at their rate. So we’ll determine the commission generated by your betting activity to be:

Commission generated = (Commission + Implied Commission) ÷ 2

where

Implied Commission = market losses x average market commission rate

We divide by 2 because otherwise we’d be counting each pound of commission twice.

Premium Charge Summary

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.
Two further conditions reduce the likelihood that you will be required to pay the Premium Charge:
Any single win that constitutes more than 50% of your gross profits over the previous 60 weeks will be excluded from the calculation; and
Each customer will have a 60 week allowance of £1,000 against the Premium Charge.
Each week the customers who meet all the conditions set out above will be charged the lesser of:
The difference between 20% of the previous week’s gross profits and the total charges paid during the week; and
The difference between 20% of the previous 60 weeks’ gross profits and the total charges paid during that period.

Examples

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.

[tjpoulos]

Not too happy about this to say the least. Very short sighted of BF imo. With every move they make in this direction they are eroding the advantages of an exchange and becoming closer to a bookmaker. What is the point of 20% better prices when you pay 20% commission?

Things like this will only drive users to the competition. The main problem with betdaq atm is liquidity - something that will no doubt improve with users being drived from betfair and it's exorbitant commission.

[milfor]

Oh my god this is a nightmare

[joe lively]

Tell me about it! I'm just going through my figures to see just how much an effect this going to have in the future.

As tjpoulos said this will surely see an influx of new users to Betdaq. I can't see why Betfair would make such a move apart from the obvious increase in revenue, they will surely drive users to other exchanges. The word Greed springs to mind.

I suppose they feel that when the initial uproar dies down then everyone will be back to business as usual and the majority will except the new charges.

As we stand though guys, what choice do we have? Until we see greater liquidity on other exchanges Betfair have us over a barrel.

[Castillo]

Request charges ...Transaction charges ... and now this ...

[mantas779]

We are writing to inform you that had the new charge been in place over the last 6 months then you would, at some point, have been required to pay Premium Charges. If your betting in the future continues to be as successful as it has been in the past then you could be required to pay Premium Charges in line with others who, like you, fall into the top 0.5% of our customers.


Thats what we get for being succesfull.

[mantas779]

Just got a repley on my questions over the prem charges.

you have incurred charges : This, as a percentage, is 37.66%, leaving you total charges of £0.00 for the period.

But this is because i had lost half of my $ couple of moths ago., otherwise i had to pay an extra 5%

[2020vision]

Hi All,

just a bit of info to say how easy it is to incur this Premium Charge...

After just six months I would have paid almost £850 in charges!

But because of my £1000 allowance I still have the chance to evade
only another £150 in charges before I actually start to be liable.
This will take only about another 3 weeks and then - PAY UP time!

I am considering alternatives such as changing to a different method
of gambling but that would most likely mean weeks of learnig new stuff.
Also I was thinking of actually trying for more winnings but there seems to
be little point in that now. (No, that is not greed - just a hobby!)

Also I am hoping that a Betdaq interface to rival BA will soon be
available and then I could consider leaving Betfair altogether?
But at the moment there is not enough volume floating about on Betdaq
in the markets I play. Hopefully this will improve?

This charge has almost killed my enthusiasm altogether - not nice to
have someone simply take away 20% of (at times) hard earned cash.
Surely Betfair are basically making this a "SUCCES TAX"?
After my allowance is reached I would actually be accepting all bets at
around 20% less than face value - do I continue or pack it in?

I already pay their going rate for commission and excess charges, why
even more? If their charges are insufficient to function then they
ought to increase charges for all users? Not all heavy users are also
winners but they do not pay additional charges? Also all winners are not
always heavy users. Surely if they can punish the consistent winners then
they should compensate the consistent losers? There is no refund for
losing, why a punishment for winning?

This seems totally wrong to me. Does anyone know of any techniques or
ways to minimize or evade them? What about simply signing up for a new
account from scratch every time you would have incurred £1000's worth?

I shall leave it at that for now and ask if anyone has any tips, ideas or
thoughts on this I would like to hear them please.

Thanks for reading, all the best - Michael