Tuesday, 20 December 2016

Tsunami In A Tea Cup

The hits have been coming at twice the average rate recently, so I must be doing something right. Bossman Megarian, possibly not his real name, wrote:
I am far from a defender of Bf, but, I think this is a bit of a storm in a teacup.
The 8.5% rate, is based on lifetime mkts, and basically just makes u pay PC per market, rather then weekly. There should be no overall change, in the amount u end up paying Bf. (which is the key point)
I was on a rate .. of 12% for a trial period, but, Bf then found, I was overall paying less, so quickly wanted to change it to 22% per mkt, which I declined.
I got the 'trial' rate, by moaning .. which is a fair tactic, in life.
This was over a yr ago - and maybe Bf will introduce changes to PC next yr, but, I am only expecting it to change the way its collected, not, the amount its collecting.
I must say the Bossman has lost me there. How can paying a flat commission on each market of 8.5% result in “no overall change in the amount you end up paying Betfair” versus paying, in my case, a Premium Charge resulting in 50% of my profits being deducted?

For example, if I trade one market in a week, and win £100, I pay £5 at the time the market is settled, and an additional £45 when the weekly Premium Charge is assessed, a total of 
£50 (i.e. 50%), which is a lot more than had I paid £8.50 (8.5%) at the time the market was settled. Even the 12% or 22% mentioned at market settlement would be a huge improvement.

The way that Super Premium Charges are calculated, at least for most (although I’m beginning to wonder) of us, is that any profits in excess of our lifetime allowance of £250,000 are taxed at 40%, 50% or 60% depending on how we achieved that allowance. 

If we got there with a low profit to loss ratio, the penalty is lower than if we had a near 100% winning record, as would be the case with the court-siding syndicates. For every £1 I win, I give 50p back, typically 5p at market settlement and 45p on weekly assessment, and if I have a losing week, there is no refund (although the Premium Charges are mitigated until a new 'high' is reached).

So given the method used for calculating the Premium Charge is based on past and known results, how can a change in the way it is collected (per market) ever result in the same amount being collected? Am I missing something?

If I have a losing week, I’d still be charged commission at 5%, 8.5%, 12% or 22% (this is getting complicated) on any winning bets, and if I have a winning week, I’d be paying much less overall, but there’s no way that Betfair can see into the future and know what my results might be.

As for the comment that “moaning is a fair tactic in life”, I’d agree this is acceptable in a competitive market, but Betfair is a de facto monopoly - the term used when more than 70% of an industry is serviced by one company. 

If I want to fly to Philadelphia, I have a number of options available, and if I don’t like British Airways prices I can shop around. When Southern Rail set out their fares for my commute into London, can I moan and expect to get a special deal? I can certainly moan, but I won’t get a special deal, and I wouldn’t expect anyone else from the general public to receive a special deal either. If special deals are available, they should be published for all to see.

Having secret special deals is surely the type of practice that the CMA (Competition and Markets Authority) are there to protect against, an organisation interested in hearing about:
  • anti-competitive practices (e.g. price fixing and bid rigging)
  • a market not working well
  • unfair terms in a contract
  • any issues related to poor competition
  • report anti-competitive behaviour
The more voices that are raised regarding this issue, the better. 

Gambling@cma.gsi.gov.uk

It may be a "bit of a storm in a tea cup" to the Bossman, but paying 50% in taxes when my competitors are paying 8.5% (or 12% or 22%) is more of a tsunami to me. 

Does anyone know how long the special deals have been available for?
Pegguy Wort, also possibly not his real name, asked:
Doesn’t Bf charge different amounts of commission in some countries?
I believe this is the case, and they may also charge different rates of commission on different markets, but I’m not sure how this is relevant to favouring some Premium Charge payers over others. 

Presumably regulatory factors account for different rates in different jurisdictions – the cost of doing business (i.e. taxation levels) is not the same in all countries, and the differences are much smaller (5% versus 7%) than the 8.5% versus 40% (or more) we are talking about with Premium Charges. 

This may no longer be current, but at one time 7% basic commission was charged in Albania, Armenia, Croatia, Monaco, Serbia & Montenegro and Slovakia - but who wants to live in a country or principality that ends in a vowel?  

5 comments:

Robbo the trader said...

I think you're misunderstanding the trial, it's supposed to level out your income so you don't get a fat payout on Wednesday, PC is still calculated as normal on your weekly income just that you're paying up front with an estimate of your likely PC rate. Paying at 40% per market with loosing markets could easily mean you'd make no money in the week. I've got mine set to 12.5% and generally I'll pay little or no PC on wednesday

https://s28.postimg.org/miiima8n1/image.jpg

Robbo the trader said...

I think you're misunderstanding the trial, it's supposed to level out your income so you don't get a fat payout on Wednesday, PC is still calculated as normal on your weekly income just that you're paying up front with an estimate of your likely PC rate. Paying at 40% per market with loosing markets could easily mean you'd make no money in the week. I've got mine set to 12.5% and generally I'll pay little or no PC on wednesday

https://s28.postimg.org/miiima8n1/image.jpg

Trader 247 said...

Australia, for example, has rates of 6% and 8%. For those events based in Australia, your location is irrelevant. But, for Australian customers, they pay 6% on international markets.

As for Bossman's rate, could it also be paid on implied commission (the Matchbook way), ie on losing bets?

pegguy Wort said...

I was trying to explain why someone had a commission rate of 8.5% and thought it might be because other countries had higher base rates. I had no idea that some people were able to avoid the PC!

bossman megarain said...

I am not trying to be argumentative .. and, if we can get Bf to change PC, so that we pay less OVERALL, then, sure its a win for us.

But, and its a big but ..

Bf have 10 yrs of your records. Maybe u win £100k a yr, playing in 10000 mkts.

They know, based on history, the ratio of winning mkts, to losing ones.

Therefore, they can calculate, what comm rate would need to be applied to your mkts, so, u pay, based per mkt, rather than weekly.

If the calc is wrong, they will re-do, it .. so, maybe u get away with a few percent this mth, but, they will get it back.

If u accept a 24% comm per mkt, u are hamstrung, in that u dare not lose .. as u get no relief for this. This .. to me, makes it less likely I would play a non-advantage mkt with Bf, and is why I dont see how Bf would go forward with it - at least, without some modifications.

Anyway, the dialog is all good ..

I do wonder, if customers in Aus/USA/other are treated equally. Maybe the argument, geographic location is different, can lead to a diff overall PC rate .. but, then, why wouldnt big PC payers, re-locate / get nominees, in foreign countries ?