Expert Fee

As mentioned in my previous post, my granddaughter and I attended the Crystal Palace v Arsenal match last Saturday and we now have in common that our first Palace defeats in person were both 1:5 losses at home to Arsenal, mine being way back in November 1969.

At age 7, it's fair to say that she didn't seem to find this coincidence quite as interesting as I did, and was more interested in getting to BOXPARK Croydon for a healthy post match meal of chips and milkshakes but in a further disappointment for the evening, Croydon appeared to be undergoing a milkshake shortage.

Aside from those challenges, my trip was good and while betting activity took a back seat to family matters, I did see the news that after 16 years Betfair have decided to get rid of the Premium Charge and replace it with a new 'Expert Fee' starting next month.

Per the Racing Post, this fee:

"will focus on gross profit over a rolling 52-week period, rather than lifetime profitability, with a flexible rate of commission rather than a fixed level.

Exchange users with a 52-week gross profit of less than £25,000 will not pay the new fee, with rates of 20 per cent for those winning between £25,000-£100,000 and a top rate of 40 per cent for players winning more than £100,000 in the measured timeframe. Users can go up and down the fee structure depending on their level of success."

Whether or not this change will reverse the challenges with liquidity remains to be seen, with the Racing Post article stating:

The incoming change in the fee structure comes at a time when liquidity levels – the amount of money being bet on events – have been falling. Data from the exchange shows the average traded in win markets on British horseracing has fallen every year since 2016, with a sharp fall between 2019-2022.

Affordability checks have been put forward as one reason for the drop in liquidity, with bigger layers on the exchange not prepared to disclose financial information to continue betting and leaving the site.

Speaking in August, professional gambler Neil Channing said: "If you're a professional layer on there [Betfair] you need a big balance as there will be volatility and swings. So if you're restricted in what you can deposit it makes it very hard to operate. It's a barrier to entry and it's hard for me to be a big layer on the exchange."

The impact on individuals will vary of course. £25,000 a year works out at about £69 a day while £100,000 is about £275 a day.

I have never exceeded this latter amount with a rolling 52-week high of £177.57 set on November 6th, 2009, which was a long time ago when the majority of my sports investing was on Betfair and almost all was in the form of in-play trading. 

Circumstances change in life though, and with the Premium Charge implementation a big reason why in-play liquidity in my favourite sports dried up, my strategy changed to bet-and-forget as I wrote about back in 2019:

I still don't have many friends, but I do have other betting options these days. Yes, Betfair may be taking 50% of profits, but this penalty only kicks in after reaching a lifetime limit, and complaining about paying a higher rate of tax as your income increases isn't something that is morally defensible. Payer a higher tax rate is generally a good problem to have.

My complaints about the Premium Charge were about how it was implemented. The goal posts were moved, but I don't set the rules and no amount of crying or whining will move them back.

The 2008 implementation of a 20% tax was reasonable, but in late June of 2011, the second, and more punitive, phase was introduced when I was already about 90.4% of the way to the lifetime limit. It didn't seem fair to include previous winnings in the lifetime total, but there are some things in life we control, and for those we don't control, we adapt.

In my case, this meant that the time spent trading in-play could no longer be justified, so I moved to a bet-and-forget approach. Winning 50p for a few minutes 'work' is one thing; winning 50p after several hours is quite another.

As it happens, liquidity on the in-play markets I followed took a dive around the same time anyway, so in a way, the Premium Charge did me a favour. I made lemonade with the lemons I was given, as the saying goes.

With just a couple of trading days to go in the financial markets, and anything can happen, it does look as though 2024 will be one of the better years with the US's S&P 500 index currently up about 24% on the year. It's also been a strong year for some of the individual stocks I've mentioned over the years with Bitcoin up 115%, NatWest up 80%, Tesla up 75%, and Walmart up 74%. 

If my former employer's stock price had performed anywhere close to these numbers I'd be ecstatic, but they are currently down almost 4% with the most recent options granted earlier this year out of the money. Plenty of time before these expire though.

Unfortunately another number that has gone up this year is the one on my scales. With my son's wedding less than 150 days away, Dry January may need to be extended next year!