How would you change the premium charge?

[Trader724]

Betfair is going down the drain because of its lousy leadership. They don't seem to care about improving anything, even though there's so much that needs fixing. The premium charge and differential commission are a total disaster. Honestly, I can't wait for someone more capable to take over and give Betfair the boot it deserves.

[jamesedwards]

When the cost of energy sky-rocketed, pubs, restaurants, cafes, etc. didn't double their prices. They realised it just wasn't practical to pay twice as much as you did last week. Betfair started out at 5% comms and no PC. I guess they saw people making £100k+ paying very little relative commission and thought it would still be worthwhile for them if they pinched 50-60%.

I like the idea of a gradual increase in PC based on lifetime profits, but 30-40% in fairness should be a maximum. I can't see how it would work annually though. Someone who's built up a large profit for the year could blow it all before the year's out or try to arb it into his bank account.

You still pay it weekly based on the previous week's profit. But the % you pay is based on year-to-date profit and increases through the year as you reach set milestones.

[MaxLiability]

Gambling should be tax free, hell there's enough risk we all take in the markets every day.

So to then make people pay more tax (PC) than they would if they were working at Tesco is when people will say 'why do I bother'.

Fair enough for those on 250k+ a year to pay 20-25% PC I think is fair but even then they'll just lower and lower the threshold amount in the future.

People on higher rate PC will be experienced enough that they're not taking any risks , certainly not long term. For the majority of Higher rate payers it's simply a case of turning up for work and collecting your pay. Betfair are well aware of that and won't be changing things any time soon.

Only change I was told of was that they were considering amending the implied commission rate as it's no longer sustainable because everyone is on 2% base rate these days. Although that was quite a while ago and not happened yet so may have simply been one of the various trials they do from time to time regarding PC.

Basically Betfair have simply become one of the dinosaurs they hoped to get rid of at the start, all innovation has long gone and the sportsbook is always going to be their primary focus and earner now. The exchange is far too reliant on the money PC brings in for them to change it drastically. Every trial I ever did was always scrapped and written off at the end of the 3 months because they never brought in the same income as the current PC does. So the only way PC will reduce for many is if they widen the net which they don't want to do and upset the current status quo.

[Derek27]

When the cost of energy sky-rocketed, pubs, restaurants, cafes, etc. didn't double their prices. They realised it just wasn't practical to pay twice as much as you did last week. Betfair started out at 5% comms and no PC. I guess they saw people making £100k+ paying very little relative commission and thought it would still be worthwhile for them if they pinched 50-60%.

I like the idea of a gradual increase in PC based on lifetime profits, but 30-40% in fairness should be a maximum. I can't see how it would work annually though. Someone who's built up a large profit for the year could blow it all before the year's out or try to arb it into his bank account.

You still pay it weekly based on the previous week's profit. But the % you pay is based on year-to-date profit and increases through the year as you reach set milestones.

On second thoughts, keep it as it is but have a fixed rate of PC, even if it means lifting the base rate to the mid to upper twenties. Once you've used up your allowance, you know you're going the right way, can't complain that you have to pay more and won't have to worry about it going up any further.

From Betfair's perspective, they need to budget and know how much income they'll be getting so they can plan for future development of the exchange. They can't be sitting hoping we all have a good year.

But basing the calculation on lifetime profits and the 'lesser of the two' calculation is essential to ensure people who've suffered big losses in previous years don't pay PC until their lifetime charges have dropped to the required rate.

[Archangel]

My day job used to involve trading in financial markets in the US. Because there is so much competition out there now for each dollar, broker comissions have become really low, even for the retail trader, years ago only big players or institutions would get these rates. Brokers who tried to fleece their customers with higher commissions or extra charges soon lost their business. The brokers themselves even now pay the exchange feed fees and dont pass them on. Its become a volume business. It just shows what healthy compeition can do for the consumer.

[ShaunWhite]

PC seems to be more of an issue for manual traders who have higher RoI and therefore a lower comm:gross ratio. I guess you're unlikely to be netting £200 on a gross of £300+ and therefore avoiding PC by virtue of the fact you've already paid it in the course of your normal day to day activity?

[ShaunWhite]

. It just shows what healthy compeition can do for the consumer.

That's true of brokerages but it also shows that one central exchange for a given instrument creates the scale to enable that. So long as the money is spread around across Befair Betdaq BetConnect and Betblahblahblah then we're left with fees being a big issue. If you could put £20m through Betfair in a month instead of £2m, then 60% of a lot would be acceptable compared to 60% of not a lot.