Saturday, 13 September 2008

Random Premium Charge Generator

Here is an example of how the Premium Charge can vary unfairly, taken from a letter to Betfair:

Sir/Madam,

With regard to the new Premium Charge, I would be grateful if you would please review the scenario below and let me have your comments on it. I may well be misunderstanding something (your logic is not exactly straight forward in the way that a flat 5% is).

I have two bets between Monday and Sunday, and I am already nicely in profit for the 60 weeks, and have played in enough markets to be eligible for the Premium Charge.

Bet A - I win gross £2,000, pay 5% commission (of £100) and net £1,900.

Bet B - I lose £1,000 to one of your customers who is on 2% commission who nets £980. My Commssion Generated for the week is therefore (£100+£20) / 2 = £60. Premium Charge applied is £140 (£1,000 gross profit * 20%, minus the £60 Commission Generated). So my total commission for the week is £100 + £140 = £240.

Bet C - I lose £1,000 to one of your customers who is on 5% commission who nets £950. My Commssion Generated for the week is therefore (£100+£50) / 2 = £75. Premium Charge applied is £125 (£1,000 gross profit * 20%, minus the £75 Commission Generated). So my total commission for the week is £100 + £125 = £225.

As I do not have a choice of who my bet is matched with (and indeed it could be matched with any number of people all on different commission rates) how is this formula fair?

Why should the amount I am charged vary? I cannot see how this pricing policy is fair? Customers should always know before making a transaction what their charges are going to be.

How am I able to verify that any charges are in fact accurate?

There is a disturbing lack of transparency to the way this Premium Charge is calculated.

I do hope that someone will be able to explain this to me, because right now I am very confused.

2 comments:

GatDacor said...

It will be interesting if they get back to you with a detailed response but I doubt it. It seems some of the unfortunate souls manning the helpdesk dont quite get the logic either as I have had different responses to the same question.
Betfair could easily get themselves out of this PR hole by reversing the decision, opening it up to debate with their users and then introducing a fair change later down the line.

Cassini said...

Let's hope so. I think everyone would prefer just a flat percentage on winning bets with no discounts. Do away with the impossible to calculate Implied Commission etc. If I get a response, I'll publish it on here. Thanks for the comment.