Betfair Expert fee : Questions

[mathsnerd]

What's the thinking behind setting the new charging bands without graduated rates? Have Betfair considered that this will incentivise many traders to reduce activity?

eg for higher band:
£125k gross profit, paying out and generating 10% in commission, would normally be charged at 40% = £67.5k after charges.
£95k gross profit, paying out and generating 10% in commission, would normally be charged at 20% = £68.4k after charges.
Therefore £1k greater profit for 25% less work.

eg for lower band:
£28k gross profit, paying out and generating 10% in commission, would normally be charged at 20% = £20.2k after charges.
£23k gross profit, paying out and generating 10% in commission, would normally be charged at zero rate = £20.7k after charges.
Therefore £0.5k greater profit for 20% less work.

For some they might as well take a few months off until their rolling profit drops beneath their current band. Then maintain a permanently capped activity level that keeps them just below the threshold.

It's rolling week to week so you can at least look to profit what you did a year earlier to maintain the current charge rather than stop completely. Alot depends on how consistently you're able to profit and/or if you're looking to expand on what you're already doing. For me as a straight better i'll just ride the wave and pay whatever.

Anyone sat between £100k-£132k rolling profit, (and granted, relatively consistent), would ceteris paribus be better off shutting up shop until their rolling 52 weeks reaches below £100k. Once below £100k then recommence activity but at a capped level to remain consistently just below threshold.

The problem is that if you are in that band, you'd need to maintain an active 52 weeks while you are "shutting up shop" which means you are losing money while doing so. If you are consistently making £110k a year net and average 10% commission, that makes you about £120 gross (rough numbers). At those rates, on the assumption that your profit a UNIFORM £10k per MONTH you've then got to wait about 2 months actively betting for £0 profit a month (to remain active) to get back to a 100k gross profit rolling 52 week average.
That 2 months is about £20k gross which translates to ROUGHLY £13k - £14k after the 40% PC deduction. So you've effectively cost yourself £13k to drop into the 20% band. You'd also probably need to give yourself a bit longer off, so you drop far enough under threshold so that when you start again you don't automatically find yourself back into the 40% bracket. I can't see many people willing to do that (I certainly won't be)

I agree with your sentiment as I've been weighing up the same argument myself but I feel that it will only apply to new people or people moving up from lower to higher bands. Anyone already up more than 100k is unlikely to shut up shop and let profit go to waste, just to drop down into the 20% level.
I suspect that Betfair are relying on this in their calculations - and there are probably very few people in that profit category. For people over 150k a year they will just take it on the chin. If they pay 40% currently, they will just take the reduction in profit from the new drop in implied commission to 2.5% on the chin. Higher rate 50/60% payers will be very very happy with the change anyway, so no need to factor them in at all.

So I'd imagine that the only potential drop in activity will be from newbies and 0% and 20% payers getting close to a transition boundary and scaly back to make sure that they stay in their current lane. This does cause a problem as there is a large disincentive to move to a higher band and NOW you will have the means of staying out of the higher band (much harder to do with the old method of £250k lifetime profit). Basically if you work UP to a point where you are about 90k gross profit over the year and gradually get better, the only one profiting from it is Betfair - unless you know you can get yourself up and over the 140k mark (a lot easier said than done).

Maybe Betfair have modelled this and consider it less of an issue in comparison with the "new volume" that will arrive as a result of the changes???

[jamesedwards]

The problem is that if you are in that band, you'd need to maintain an active 52 weeks while you are "shutting up shop" which means you are losing money while doing so. If you are consistently making £110k a year net and average 10% commission, that makes you about £120 gross (rough numbers). At those rates, on the assumption that your profit a UNIFORM £10k per MONTH you've then got to wait about 2 months actively betting for £0 profit a month (to remain active) to get back to a 100k gross profit rolling 52 week average.
That 2 months is about £20k gross which translates to ROUGHLY £13k - £14k after the 40% PC deduction. So you've effectively cost yourself £13k to drop into the 20% band. You'd also probably need to give yourself a bit longer off, so you drop far enough under threshold so that when you start again you don't automatically find yourself back into the 40% bracket. I can't see many people willing to do that (I certainly won't be)

To remain active you simply need to place one trade every week. eg £1 on a football match.

If you're earning a consistent £2.5k gross every week and 10% commission and 10% commission generated then you take home greater profit by taking 12 weeks holiday every year.

In this example, take weeks 1 to 12 off (placing a token £1 bet every week to remain active), then continue weeks 13 to 52 as usual. Total profit £78k trading for 52 weeks or £80k trading for 40 weeks.

z46.JPG

[mathsnerd]

To remain active you simply need to place one trade every week. eg £1 on a football match.

If you're earning a consistent £2.5k gross every week and 10% commission and 10% commission generated then you take home greater profit by taking 12 weeks holiday every year.

In this example, take weeks 1 to 12 off (placing a token £1 bet every week to remain active), then continue weeks 13 to 52 as usual. Total profit £78k trading for 52 weeks or £80k trading for 40 weeks.


z46.JPG

Wow that is a great breakdown. The most interesting thing there is that you are denying BF 29K a year with this approach. If they have failed to take this into account they have missed a trick. Maybe there are just so few people in that profit bracket that they ignore the adverse effect.
Makes you wonder if the criteria for "active week" will change over the coming weeks....
If there are sufficient amount of people in this bracket who have done the numbers like you have and will go dark for 3 months, we might be able to see the effect in the market (especially if they are making rather than taking prices).

[jamesedwards]

To remain active you simply need to place one trade every week. eg £1 on a football match.

If you're earning a consistent £2.5k gross every week and 10% commission and 10% commission generated then you take home greater profit by taking 12 weeks holiday every year.

In this example, take weeks 1 to 12 off (placing a token £1 bet every week to remain active), then continue weeks 13 to 52 as usual. Total profit £78k trading for 52 weeks or £80k trading for 40 weeks.


z46.JPG

Wow that is a great breakdown. The most interesting thing there is that you are denying BF 29K a year with this approach. If they have failed to take this into account they have missed a trick. Maybe there are just so few people in that profit bracket that they ignore the adverse effect.
Makes you wonder if the criteria for "active week" will change over the coming weeks....
If there are sufficient amount of people in this bracket who have done the numbers like you have and will go dark for 3 months, we might be able to see the effect in the market (especially if they are making rather than taking prices).

Absolutely.

They may have taken this into account and are happy to lose this business in the grand scheme of their combined assumptions. It's just a shame they haven't graduated their bandings so everybody in any situation always has an incentive to increase their gross profits. If the government ever tried to do similar with income tax the economic impact would be disastrous.

[ShaunWhite]

Unless they want to get into fee refunds and sending bills for back taxes then I can see a fairer way than taxing the current week at the rate your deserve for the prev 52, repeat and revise next week.

I'd have suggested simplification. Scrap fees, just add 0.1% (or whatever) to your MBR for each 10k net you've earned the previous year. Regular Joe pays base 2%, Mr 100k pays 3%, with a max for Mr million of maybe 6%. Simple, progressive. It's not even new admin because MBR varies with points earned anyway for Aus markets. Just do that on all markets and replace 'points' with net 12mth income 'handicap'.

[jamesedwards]

I'd have suggested simplification. Scrap fees, just add 0.1% (or whatever) to your MBR for each 10k net you've earned the previous year. Regular Joe pays base 2%, Mr 100k pays 3%, with a max for Mr million of maybe 6%. Simple, progressive. It's not even new admin because MBR varies with points earned anyway for Aus markets. Just do that on all markets and replace 'points' with net 12mth income 'handicap'.

Yes this would be so much better. They could have properly claimed an end to Premium Charge too.

Or the charge could have been levied on the previous week based proportionally on bands within rolling 52wk gross rather than at a fixed rate, but that would have added complexity.

[Revenant]

Is there any concern that the decrease in implied commission rates from 3% to 2.5% will impact volume and associated liquidity currently created from commission churning? Or is this a deliberate move to reduce the amount of commission churning in action?

More likely people will try and up the churning money they put thru the markets rather than lower it. Still profitable if you get your calcs right. They've been looking to lower the 3% for a long time, as soon as they brought in the 2% band it was costing them. There have been plenty of PC alternative method trials over the years and all the ones I did had the implied comms lower than 3%. The fact they left a few crumbs in the rate shows they're still happy for people to add liquidity to the related markets where they can't stick the cross matcher.

[gstar1975]

When does the rolling 52 weeks start do they base it on the last 52 weeks from last year? As we would have to build up to that starting 1/1/26. So will we be charged starting from that date?

[jamesedwards]

When does the rolling 52 weeks start do they base it on the last 52 weeks from last year? As we would have to build up to that starting 1/1/26. So will we be charged starting from that date?

It's started as of 6th Jan. My expectation is on Mon 13th Jan BF will use my rolling 52 weeks profit between 15/01/24 and 12/01/25 to calculate my Expert Fee, and apply that to profits made between 06/01/25 and 12/01/25. Remember that it's the last 52 active weeks, so they will only count a week when there has been at least one bet settled in that time.

[Naffman]

Where’s the Expert Fee page?

[ShaunWhite]

Where’s the Expert Fee page?

You too? Good. I thought there'd been an account balls up and I didn't qualify. You'd all be talking about and I'd have to pretend I could see it.

[ShaunWhite]

...old page has gone......drum roll.

[Naffman]

Where’s the Expert Fee page?

You too? Good. I thought there'd been an account balls up and I didn't qualify. You'd all be talking about and I'd have to pretend I could see it.

Yeah seems to not be there and first payment is today I believe…

[Euler]

Maybe Betfair have scrapped all additional charges?

[Naffman]

Maybe Betfair have scrapped all additional charges?