How would you change the premium charge?

[wearthefoxhat]

Conquer the U.S. market(s) ASAP and find a way to access Hong Kong. I'll leave it with you...


With the U.S. they've been waffling on about it for some while. It would breathe fresh money through the exchanges. Also remove the parasite that is the Sportsbook.


Brands under Flutter at the time of writing.

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The PC should be capped at 20% (same rate as capital gains tax for Crypto 10%-20%) At the same time, increase comms to 5% across the board. If both done at the same time, in line with access to the U.S. markets, Bobs your uncle.

[Derek27]

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%.

I'd largely go along with that, it needs to be simplified.

I've never really thought about it, but commission on winning markets is a way of taxing losers for their use of Betfair resources. So this thread raises the question, should losers and recreational Betfair users get charged for the entertainment they get from betting, or should the commission/PC the winners pay, which is obtained from losers cover them?

[buyshirts]

The fact that "you" are paying PC means you are "successful" but the problem with this is the "fiscal drag" because the limits for paying each level haven't increased (as far as im aware). So from a fairness point of view these need to be increased on a regualr basis because otherwise overtime less successful people will be getting dragged into it. These extra people's revenue could be used to redcue the rates of the PC in general and BF's take from PC will still be the same. Personally as a PC payer, the amount of people constantly expanding doesn't seem a good idea for the exchange as a whole and is also getting away from what it was orignally designed for.

Betfair's business model has the PC charge engrained in it and the higher up the scale the more that is accepted (in my experience). So if it here to stay the only way people will tolerate it and not move on to other businesses interests is to increase their (PC payers) overall revenue. These leads us back invigorating the exchange.

There is no doubt that the exchange has had to play second fiddle to the Sportsbook since the Sportsbook inception and there is obviously a lot cross work staff can do but as all early adopters of the exchange know the customer service reps standard has gone through the floor and this just highlights the differnece between the two products.
So in around about way a splitting off of the the exchange could be a way to start this process.

[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%.

I'd largely go along with that, it needs to be simplified.

I've never really thought about it, but commission on winning markets is a way of taxing losers for their use of Betfair resources. So this thread raises the question, should losers and recreational Betfair users get charged for the entertainment they get from betting, or should the commission/PC the winners pay, which is obtained from losers cover them?

The vast majority of Betfair users make very small losses. If Betfair were to remove commission from all losing accounts then the compensatory charges from the small number of winning accounts would go through the roof. Possibly even 100% Premium Charge wouldn't cover it

[ShaunWhite]

and 30% above £30k.

Ouch.

It's worth remembering PC isn't just a revenue model it's an idiology. I wish I could remember where I saw it but "the highest earners subsidising the ordinary punter" was the gist of it. It's overcomplicated but in principal it's an attempt at progressive taxation.

[Emmson]

If I was being cynical I might suggest this thread may have been a tool to re-invigorate the forum. forum volume seems to have dropped lately too.

[jamesedwards]

and 30% above £30k.

Ouch.

It's worth remembering PC isn't just a revenue model it's an idiology. I wish I could remember where I saw it but "the highest earners subsidising the ordinary punter" was the gist of it. It's overcomplicated but in principal it's an attempt at progressive taxation.

Don't forget it's tiered like income tax, so you will have earnt £10k without charge, then paid only 15% on the next £20k before you hit the 30% rate. There has to be increased rate at lower profits in order to compensate for reduced top rate to keep people in the game.

£30000 = £3000 total PC = 10%
£40000 = £6000 total PC = 15%
£50000 = £9000 total PC = 18%
£100000 = £24000 total PC = 24%
£200000 = £54000 total PC = 27%

[Derek27]

If I was being cynical I might suggest this thread may have been a tool to re-invigorate the forum. forum volume seems to have dropped lately too.

[Archangel]

The worst thing about the PC was that for many people it killed the dream of what could be achieved on BF . I know some people never recovered from that kick in the stomach

[Naffman]

The worst thing about the PC was that for many people it killed the dream of what could be achieved on BF . I know some people never recovered from that kick in the stomach

Mark Iverson recently quit, I think PC was almost the last straw, so over a decade later it's still affecting people

[Euler]

If I was being cynical I might suggest this thread may have been a tool to re-invigorate the forum. forum volume seems to have dropped lately too.

It's a genuine question. I'm interested in what people would think is 'fair'

[Hepburn]

Stick at 20% and a free lucky bag.

[Derek27]

The vast majority of Betfair users make very small losses. If Betfair were to remove commission from all losing accounts then the compensatory charges from the small number of winning accounts would go through the roof. Possibly even 100% Premium Charge wouldn't cover it

Does Betfair publish any stats on customer profit, losses and turnover?

I'd be surprised if they did, but it's the information needed to take an informed view.

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

That sounds like a very small figure, but I'm guessing the 99.5% includes customers who place five bets a year, stopped betting, haven't used their account for ten years, self-excluded, perhaps even closed accounts.

[alexmr2]

I've always thought that doing it annually would be simpler and fairer than by lifetime P&L so something like 20% above £10k, 40% above £50k, 50% above £100k and then it resets at the end of the year.

This would incentivise traders into a better work/life balance which could also stop people putting more strain on the exchange trying to generate commission to circumvent PC.

I also think that in the current system it would be worth someone on 60% trying to avoid PC by cleverly using someone elses account for what it's worth (massive savings on bottom line up to £250k). If done annually they shouldn't feel the need to even bother going down this route.

There's lots of other things like BF customers going elsewhere because PC makes what they do no longer worthwhile.

So I think this way benefits both the customer and Betfair although I can't be sure how it would affect their profits exactly

[Derek27]

I've always thought that doing it annually would be simpler and fairer than by lifetime P&L so something like 20% above £10k, 40% above £50k, 50% above £100k and then it resets at the end of the year.

This would incentivise traders into a better work/life balance which could also stop people putting more strain on the exchange trying to generate commission to circumvent PC.

I also think that in the current system it would be worth someone on 60% trying to avoid PC by cleverly using someone elses account for what it's worth (massive savings on bottom line up to £250k). If done annually they shouldn't feel the need to even bother going down this route.

There's lots of other things like BF customers going elsewhere because PC makes what they do no longer worthwhile.

So I think this way benefits both the customer and Betfair although I can't be sure how it would affect their profits exactly

Basing PC on lifetime PL is beneficial to Betfair users because it offsets losses.

If a new trader loses £5K in his first year, then wins £7K in his second year, his lifetime profit is £2K so that's all that will be applicable for PC, rather than the full £7K.

The amount payable is actually the lesser of the two, 20% of your lifetime profit or 20% of last week's profit, so it can only lower the amount payable.