Wednesday, 24 March 2010

Perhaps Not All

A very good comment from Anonymous about the Premium Charge.

I think what you and the "go purple" people fail to understand is that for Betfair's business model and 99% of it's customers it isn't a monopoly - Betfair is in direct competition with other online bookmakers to offer prices on events. Profitiable trading is a by product of liquidity and more importantly losing liquidity.

This 99% who lose in the long term couldn't care less about the premium charge, the reasons they gamble is complex, but costs or commission is probably down the list (look at Betfair TV adverts). Betfair need to attract these people for their own business, but by doing this leg work they create more opportunties for their profitable punters to make more money, hence the premium charge to contribute more to this - I find that a fairly sensible argument especially for those with a relatively low risk strategy.

Whether there is another "trader viable" betting exchange would be dependent on the losers moving to it (if we presume that all traders are profitable and I'd say almost all those driving the monopoly narrative are). Traders moving over to BETDAQ would be like a bunch of hungry dogs fighting over a piece of gristle, they'd soon be eating each other until theres no dogs left. Commission might be low but BETDAQ wouldn't be able to attract new meat - low commission isn't enough.

I do think traders are a hostage to fortune to Betfair, but as trader's can't exist independently then the monopoly argument doesn't wash. Traders don't have a right to have a platform to make money, the way inciting the wrongs of a monopoly would suggest.

If you want an example of ultra competition then look at the rest of the bookmaking industry and let me know how successful you would be if you made consistent money from them.

Some excellent points. Do 99% of Betfair's customers really just use the site to get better odds, and not with a view to trading? I wouldn't have put the number at anywhere near that high, but I can't say that I have seen any reliable numbers. Clearly outright punters would have no concerns about the Premium Charge since even the most successful have an ROI of less than 10%.

Traders are a hostage to fortune, but the author is right that traders have no right to exist and cannot exist independently, i.e. without Betfair. Why the complaining? For me, it's partly because for years I was perhaps spoiled, and made good profits with just a small percentage going in commission, but practically overnight this small percentage became a lot more significant. 4.3% to 20% is a big jump. For me it's just an irritation, but presumably some traders are full time, and finding your pay cut by such an amount could have had serious consequences. Of course the way that Betfair went about implementing the charge I disagreed with also. To effectively back-date it and 'give' you an allowance that was already used up by the time the e-mail was sent out was just bad PR. Short notice was given, and the 20% wasn't phased in gradually as it could have been. Betfair knew we had no viable alternative, and cashed in, but I am nevertheless extremely thankful for Betfair's existence. The playing field has been well and truly leveled, and with in-play trading and a solid strategy, it is very possible to make profits with little risk, as evidenced by the approximately 0.05% of Betfair customers who pay the Premium Charge each week.

As Anonymous pointed out in his last sentence, it's not easy to win consistently from the bookmakers. I remember Ladbrokes closing my credit account down in the early 90s when I would manually review the Racing Post and cherry-pick from all the bookies, and from what I read and hear, anyone achieving even modest success today is turned away. At least with the exchange business model, Betfair have no need to go to that extreme. "We Welcome Losers Only" is not good for business.

Anyway, the comment was a good one. Thank you.


Unprofessional Gambler said...

Yeah great comment. Better the devil you know I suppose when you look at it from that angle.

Just like to make a point that we seem to have a fine example with this debate about what blogging should be all about. Mature and respectful debate on the issues rather than haranguing Cassini to show his P&L every few posts which is irrelevant. Let's hope it continues!

Anonymous said...

Thanks for the compliment - I thought you might be a bit more combatative about the points I made as I know your no fan of the PC. Completely agree about retrospective part of the PC but I guess they might have forced us to pay up 20% for the lifetime of our accounts. Not sure about the 99% figure either, I suppose it would be more the proportion of people who would never be threatened by the PC be them traders or gamblers, I suppose losing traders wouldn't be affected by the PC.

Anyway 18 months later we're still talking about the PC, I suppose some have become a bit more pragmatic about it now. Although they shouldn't push the profitable traders and gamblers too much as they are still their odds compilers by proxy.

Anonymous said...

lol another excuse for cassini to post up some more "oooooh look at me I pay PC , I remember ladbrokes closing me down in the 90's because I'm the best gambler ever......" crap.

And how much do you make Cassini? "Talking about money isn't relevant etc etc "

Lol what a fkin prick

Anonymous said...

It isn't relevant. If you have a good strategy that works in the long term you can use it to win £10, £1000 or £10,000. It's just how much individual has to invest which is completely irrelevant. If Mr Poor is using the same strategy as Mr Rich and they both have the same ROI what is the relevance of what the make and? They will both make the same profit just less or more of it. The important thing is how they make it and Cassini is always willing to discuss his strategies (both successes and failures) candidly. It just comparing d**cks which is both childish and pointless. Wether Cassini pays the premium charge or not IS completely irrelevant. It doesn't make a difference to anyone if he does or not.

Anonymous said...

It makes a difference to the integrity of his blog if he doesn't - which is almost certainly the case.

Anonymous said...

This blog is just rhetoric, there is no evidence anywhere that Cassini makes a dollar from his knowledge and that is important. How can somebody pretend to be good at what they do when they can't back it up?

Anonymous said...

Betfair will turn the screw tighter and tighter till there is no money left in the system. At the end of the day they don't like consistant winners, which is why the premium charge exists. This decision was the start of the end for Betfair as a place to make big money. They are well on the way to becoming just another bookmaker now. One way traffic from here, especially given their dominance.