Totally disagree jeff.
There is more losers than winners on betfair, the losers will keep pumping more money into the exchange.
The top earners on betfair are providing a service off putting lots of money into the exchange and they are getting over charge to do so.
Full Timers
The whole Betfair experience was sold on the "we are not bookies" ticket. Guess what? They are.Ferru123 wrote:I'm probably going to get shot down in flames for saying this, but imagine you were a Betfair shareholder. I don't think you would want Betfair to sacrifice profits in the name of fairness.
Whilst the 60% payers do contribute a lot of liquidity to Betfair, Betfair may well take the view that they could step into their shoes and offer liquidity themselves if necessary. They probably also correctly foretold that there wouldn't be a mass exodus to Betdaq.
I imagine that most of Betfair's profits come from mug punters, not from the big hitters. Punter A makes money from Punter B, and places another bet, losing his money to Punter C. Every time this money-go-round happens, Betfair makes money from commission. By contrast, when a 60% trader has a good day, the grand he makes will leave the ecosystem and go into his bank account. If he were out of the way and Betfair were the main market maker, that wouldn't be such an issue.
Jeff
The reason I was given why I have to pay the higher rate PC is pretty much what Jeff has said. They say my account costs more to service as I take money out and they have to pay extra in marketing to bring in new money for me to take out. However, they do take into account the positive aspects of my business. My liquidity - which is the life blood of the exchange model. They can put their own money in - or buy it from market makers. But is isn't "real" money. It destroys the delicate eco system on which the exchange exists. What is so frustrating is the absolute obviousness of this. But they are so arrogant they cannot or will not see it. This is where your logic falls down Jeff. The way the exchange system is so unique, is it's ability to take all the different opinions and rationalise them to get the "true" odds. If single entities dump in money, this destroys the way the exchange works. hence the markets we are seeing now. No one has any confidence anything is real. The money appears and disappears randomly.Yes, there may be money there, but it isn't really. The exchange IS many, many individuals shaping the market.
For me now the original reason they gave does not hold any water. There is a miniscule budget to advertise the exchange. Are they using my PC to promote the sportsbook? It leaves a bad taste in my mouth.
At least when bookies close your account or restrict your bets they have the balls to tell you why. Cos you win. Betfair are bookies of the worst kind.
They are sleepwalking towards a tipping point that cannot be reversed. The switch over to Betdaq will happen very quickly once we reach this. Many more of you are finding the markets untradable. It's only the skill and experience of the Pro's that keeps us in the game. (That sounds arrogant, but it isn't meant to be).
Back to what Jeff says about the Betfair shareholders not wanting to sacrifice profits for fairness. Well if I was a shareholder I would be more interested in long term growth and longevity over a kamikaze strategy that would let my biggest competitor gain a foothold in a market where I had a monopoly - just to boost short term profits.
I have no idea about business and shares. But I know as a customer when I am being taken the piss out of. Let me put in Mugs English.
If you pop in the Butchers for a 1lb of Mince and when you cook it 1/2lb of it floats away in fat, you will be fed up. But as it's the only Butcher around for miles, and he knows this you have to keep buying it or go hungry. After 12 months the Butcher is pissing himself laughing, he puts even more fat into his Mince because he can. Then Tesco opens a store. He still isn't bothered though, as all the meat is pre packed. A few of his customers may buy from them, but most won't. Then Tesco opens a meat counter and gets a top butcher in.
6 months later he can't give his Mince away.
I think Tesco is about to get that Butcher in - know what I mean?
They don't provide a service. They act in their own self-interest in a manner which arguably provides a benefit to Betfair as an unintended consequence.
As for being over-charged, no-one is holding a gun to their heads. Betfair, like any company in the land, can charge whatever they want, and people are free to take it or leave it.
Jeff
As for being over-charged, no-one is holding a gun to their heads. Betfair, like any company in the land, can charge whatever they want, and people are free to take it or leave it.
Jeff
marko236 wrote: The top earners on betfair are providing a service off putting lots of money into the exchange and they are getting over charge to do so.
Not sure how one is supposed to respond to a 'question' like that...marko236 wrote:Are you getting the point yet jeff??
Great, there's nothing stopping them from doing so.marko236 wrote:You would only be willing to pay 60% if your life deppended on it like in a war.
Most of the people on betfair that pay pc are smart and can leave and make money elsewhere.
Only time will tell whether the PC charge makes business sense for Betfair, but as Betfair's share price is about 30% up on a year ago, I'd say they aren't taking a beating, whatever is happening on the exchange itself... http://uk.finance.yahoo.com/echarts?s=B ... L;range=5y
Jeff
Not at all. There will always be someone to fill their shoes - Betfair themselves, if no-one else.marko236 wrote:Jeff your right we are doing this to try and make money, but we are also providing a service to others in the market.
And the big boys are providing most of the money.
Without them the market is gone as far as i can tell.
BTW, I can understand the ethics argument that Betfair is supposed to be a place where only your own skill and the market liquidity limit how much you can make. But ethics aside, I'm not sure Betfair made a bad business decision.
It's interesting that their share price has been rising even though the declining volumes traded on the exchange suggests that it should have been falling. Maybe the reason is that, whilst volumes are down, profitability is sound because more of the money is being recycled within the ecosystem rather than leaving it.
Just after the 60% PC charge was introduced, Betfair told me that their top 70 earners made more money combined during the previous year than Betfair itself. Go figure...
Jeff
It's not my bag - the market generally knows far more than you or I, whether we are talking about a horse or a company, so you only bet on it being wrong if you're sure you know more than it does.
Right now, the market says that Betfair's prospects are far better than they were a year ago. Go ahead and short them if you're convinced the market is wrong. Feelin' lucky?
Jeff
Right now, the market says that Betfair's prospects are far better than they were a year ago. Go ahead and short them if you're convinced the market is wrong. Feelin' lucky?
Jeff
marko236 wrote:Go and buy some shares then, i wont be.
Betfair should of taking the bookies out by now.
They have gone in the wrong direction.
Its late, but Im just trying to get my head around that one...Ferru123 wrote:
Just after the 60% PC charge was introduced, Betfair told me that their top 70 earners made more money combined during the previous year than Betfair itself. Go figure...
Jeff
Assuming that each person paid 60% and for argument sake they made a million a year...
Total PC would be 60% of £70m = £42 Million
Total Traders income = £28m
Thats not taking commission into account either..
If the PC income is directly proportional to the traders income and its greater than 50% I dont see how thats possible? I guess there are fixed costs in running Betfair, so that come into the equation I suppose, depends on whether its gross or net too? Smoke and mirrors..
Hi Peter
I've just tried to find the original email, but it appears I've deleted it.
However, I did find the following interesting exchange (from July 2011)
Me: You may have heard of plans of a 'strike' by some Betfair users affected by the new Premium Charge. How would Betfair respond to such a move, and will it affect the ordinary users of the site?
Betfair: I have heard that some affected by this new charge have threatened to walk away from the site which is understandable to a degree. This has been threatened previously but nothing has come of it. Should they actually carry out this threat, previous instances when big players have walked away has had very little effect on markets. It is usually the case that a slightly smaller trader will fill the gap left and our Pricing Team are confident that this change should have very little effect on 'ordinary users'.
Jeff
I've just tried to find the original email, but it appears I've deleted it.
However, I did find the following interesting exchange (from July 2011)
Me: You may have heard of plans of a 'strike' by some Betfair users affected by the new Premium Charge. How would Betfair respond to such a move, and will it affect the ordinary users of the site?
Betfair: I have heard that some affected by this new charge have threatened to walk away from the site which is understandable to a degree. This has been threatened previously but nothing has come of it. Should they actually carry out this threat, previous instances when big players have walked away has had very little effect on markets. It is usually the case that a slightly smaller trader will fill the gap left and our Pricing Team are confident that this change should have very little effect on 'ordinary users'.
Jeff
That's not a valid argument for introducing PC though, Jeff - it makes it sound as though they done it out of spite
It's no different to food manufacturers moaning that Tesco make more money than they do, even though they do the easy bit by just selling it
It's no different to food manufacturers moaning that Tesco make more money than they do, even though they do the easy bit by just selling it
I don't think they did it out of spite - I think they did it because they felt that it was a way to maximize their profit. They possibly looked at the money those 70 traders were pulling in, and thought 'How can we get our hands on some of that?'.
Whatever you think of the ethics of the PC, there's a strong case in my opinion for saying it was a good business decision.
Jeff
Whatever you think of the ethics of the PC, there's a strong case in my opinion for saying it was a good business decision.
Jeff