How would you change the premium charge?

[Euler]

OK, so you've landed a top job at Betfair. You realise that PC is a big giant elephant in the room and you want to reform it.

So, what do you do?

You have to retain revenue from the big PC players, but you need it to be fairer. What would you do?

Also, what would you do to re-invigorate the exchange on top of this. Though I think this would be top of most people's lists.

[LeTiss]

In terms of reinvigorating, I think there are too many markets on some events, especially football. There's simply no need for 20-25 markets on many matches. It feels like money gets too thinly spread

[jimibt]

I think your closing comment re re-invigorate the Exchange has to be at the top of most lists. Not sure if it's deliberate or mismanagement but from a (now) bystander pov, I feel that it needs to be reinvented by those in a position of power/authority. It just seems that there's been a slow but gradual slide going on (be that market dilution, or simply withdrawal from certain events). This is such a shame as there's a real dedicated community here that actually do contribute a lot to the betfair brand.

I get a feeling that the management views the Exchange as an exotic sibling that it no longer knows how to handle. A bit like a naughty aunt, the more open minded love her, the more conservative find her lack of will to be controlled excruciating.

Here's hoping that someone NEW steps in and realises that the potential is and always has been present on the Exchange - just in a different way to the Sportsbook.

[ShaunWhite]

Also, what would you do to re-invigorate the exchange on top of this. Though I think this would be top of most people's lists.

It's hard to reinvigorate a business when the country is on its knees. The leisure sector always suffers the worst in a downturn and the only way to reinvigorate it is to put more money to burn in punters pockets. The blue collar betting classes just can't spend like they once did.

[Emmson]

I wish someone would take it private, some gazillionaire, no real innovation is occurring at all. The Betfair Exchange is in its Leonid Brezhnev era.

[Derek27]

Difficult question to answer without seeing the figures, but perhaps moving the focus of their income away from PC and onto commission. Everybody who uses the exchange should pay for it, winners should pay substantially more, but 60% is robbery. And scrap the win that amounts to more than half your lifetime profit exemption. If somebody wins a million on Betfair from a £2 accumulator, why shouldn't they pay their fair share?

Concerning reinvigorating the markets, when I started trading football, I often thought of packing it in because I'm just gambling on the suspend monkey's ability to do his job. Eventually I accepted it's worth the cock-ups for the gains, but I wonder how many potential footy traders there are that just gave up after losing a huge amount. Scrap the bum leagues that nobody trades and just focus on tradable football. How many people think Gee, there's a second division match in Armenia, I'll skip this evening's barbeque and trade it?

[gstar1975]

How much of the Betfair Exchange volume gets stolen from the Sportsbook? They shouldn't be allowed to have a sports book or if so not under the Betfair Banner. So get rid of the Betfair Sportsbook. It should be promoted like Bet365.

PC I've never got to the stage where it matters to me so can't comment on that. Still don't understand it. Why it's so complicated.

[Crazyskier]

In terms of reinvigorating, I think there are too many markets on some events, especially football. There's simply no need for 20-25 markets on many matches. It feels like money gets too thinly spread

I agree absolutely on this. Even some PL matches seem to have large gaps and limited liquidity on some of the more obscure markets. There is a finite amount of liquidity and market makers, etc, so removing the least popular markets should in theory, mean more liquidity and volume for those that remain.

Regarding the PC, I can't offer much as I still (after all these years) have yet to pay a bean in PC charges.

Sadly.

CS

[Naffman]

Get rid of entirely.

But if it were to continue then should only apply to those who are on PC2 and should be capped at 20%.

[Naffman]

OK, so you've landed a top job at Betfair. You realise that PC is a big giant elephant in the room and you want to reform it.

So, what do you do?

You have to retain revenue from the big PC players, but you need it to be fairer. What would you do?

Also, what would you do to re-invigorate the exchange on top of this. Though I think this would be top of most people's lists.

Interesting you've asked this too, is something in the works?

[jamesedwards]

20% reflects the profit Betfair lose by long-term winners taking profit out of the ecosystem, and thus is reasonably justifiable. But 40%/50%/60% just wipes many people out of the game and I'm sure many accounts must be lost once they reach PC2.

The current system is horribly complicated but is designed to promote commission-churning activity (and therefore liquidity) as well as Betfair profitability. Betfair would need to be sure any changes to PC would drive enough liquidity from increased number of active PC accounts to more than cover liquidity lost from less commission-churning activity.

I'd like to see a simplified single PC that is charged similarly to UK income tax with an annual tax free allowance, and then tiers based on annual profit above the allowance.
eg up to £10k is free of PC, then 10% on profit above £10k, 20% above £20k and 30% above £30k.

The charge could still be taken weekly based on previous weeks profit at relevant rate based on year-to-date profit tier. Everyone gets a charge-free allowance to encourage people not to turn their backs on Betfair completely as they do today once they reach PC2 level. Losses in a single week would contribute towards the profit in the following weeks in the same way as it does today. Max charge shouldn't breach 30%.

[Derek27]

How much of the Betfair Exchange volume gets stolen from the Sportsbook? They shouldn't be allowed to have a sports book or if so not under the Betfair Banner. So get rid of the Betfair Sportsbook. It should be promoted like Bet365.

PC I've never got to the stage where it matters to me so can't comment on that. Still don't understand it. Why it's so complicated.

I may be wrong but I always assumed that Betfair would chuck their sports book liabilities on the exchange, which could only be a good thing for liquidity.

[Naffman]

The current system is horribly complicated but is designed to promote commission-churning activity (and therefore liquidity) as well as Betfair profitability. Betfair would need to be sure any changes to PC would drive enough liquidity from increased number of active PC accounts to more than cover liquidity lost from less commission-churning activity.

I would say about 85% of my generated commission is from trying to avoid PC so that's definitely something they wouldn't want to lose out on as I'm sure its a similar % for most people

[Derek27]

Get rid of entirely.

But if it were to continue then should only apply to those who are on PC2 and should be capped at 20%.

The important question is how do they make up the shortfall? I'd imagine it costs a fortune to run a worldwide exchange and Betfair isn't spending the PC they collect on lavished parties. That is, so long as they don't appoint the jobless buffoon as their new chief executive.

[jamesedwards]

The current system is horribly complicated but is designed to promote commission-churning activity (and therefore liquidity) as well as Betfair profitability. Betfair would need to be sure any changes to PC would drive enough liquidity from increased number of active PC accounts to more than cover liquidity lost from less commission-churning activity.

I would say about 85% of my generated commission is from trying to avoid PC so that's definitely something they wouldn't want to lose out on as I'm sure its a similar % for most people

Same. I'm sure this is the main reason why Betfair haven't revisited the PC mechanic since they introduced PC2.