A Betfair Story

A very well written post on the Betfair Forum (posted by Total Brosman) that is well worth reading:

Firstly, apologies if this is all a bit self-indulgent, this just felt like the right day to jot this down. I’m not looking for sympathy, or to be big-headed, but I’m fed up of being lumped in with courtsiders and cheats, so here’s my story.

Before 2004 I’d been a sport fan but never a gambler. I was working in a boring computer-based job, and a few colleagues liked a punt during the day, so I followed suit to pass the time. I looked at a few bookies sites and, even though I didn’t really understand the exchange concept, was drawn to Betfair. I’d have a couple of quid on a horse race or two to pass the time, but couldn’t watch them, so I liked the fact you could follow the odds to imagine what was happening.

I became fascinated by how the odds moved, particularly in-running, and began watching the markets move in other sports too. Since I was at work I couldn’t watch anything, so I started to almost follow events in reverse, by watching the odds and working out what was happening from that.

One day I had a look at the Sony Open golf before it started, and some form from previous years. I noticed Azinger had played well there in the past, and had a fiver on at triple-digit odds. Two days later he was bang in contention, and trading about 10s. I’d never looked at the dynamics of laying but realised I could lock in a decent guaranteed profit. He faded away, but I was quite excited to be in a position where I won regardless.

So I started following the golf markets every week, and was fascinated by the movement of the odds in a 100+ runner market, where every shot made some sort of difference to the odds of that player and every other player. I didn’t have Sky so again I was looking at the odds and working out what was happening. I’d place a few fiver bets and trade out of them, and make a miniscule profit if I got them right. One day I took the bold step of depositing £300 so I could lay a player I thought was too short. It was the last deposit I made.

I found myself making tiny but consistent profits each week, and built my bank that way throughout 2005. In October 2005 I got pretty lucky with some trades, and made £4000 for the month which established me with a good-sized bank to trade with. Things went well at the start of 2006 as well, but even so I can’t believe I was so rash to quit my job so soon. I did so in June 2006. I certainly didn’t expect to last five years, but I thought I’d have a go. To someone who liked sport and hated his job, it was, and still is, a dream job.

The way I traded then is still the way I trade now. I use the leaderboards from PGAtour.com, and watch it on Sky (I eventually treated myself). Everything I follow during a tournament is available to everyone. I use the standard Betfair interface, not a bot or any trading software. When the North Americans have fast pics on a Sunday night, I’m as far behind as anyone. The skill is in being able to constantly and quickly react to everything that’s going on and re-price a multi-runner market which changes with every shot. And in having the balls to take a big position when you feel there’s value. No two weeks are ever remotely the same.

I make a consistent, comfortable, but not spectacular living. I’m cautious by nature so like to lock in a profit. Although I have bad trades, some very bad ones, I’ve become a good ‘scrambler’, and some of my better performances have been good recovery jobs. One week I lost thousands laying a runaway winner (Brian Gay) but recovered things somehow on the final day for an overall profit of £9. It was one of the most satisfying wins I’ve had.

So, because I play one or two markets a week, and they last long enough to recover mistakes, I generally emerge with a profit. I don’t think this strike-rate is unnatural over such a small number of markets, I’m just consistent.

From today Betfair want to take more of my profit than I get myself.

I don’t know yet what the future is, but it seems certain the five-year run of trading on Betfair for a living is over. It’s possible that if things go well I could make a living on 40% of my profits, but that would leave no buffer for a bad run, and it’s always necessary to have that sort of buffer in such a risky business. I’ve always known that this would come to an end, and that’s always been the scary part- that at any time, by being overtaken by someone better or by losing my focus, interest or discipline, I could stop winning altogether. But the gut-punch is I feel I’m trading better than ever, but am now being priced out by Betfair themselves.

But they don’t owe me a living. Although I was obviously upset when it was introduced, I understand the justification for the 20% PC. It covers Betfair’s costs of attracting new players, and redresses an imbalance between those trading a few number of outright markets and those punting on multiple markets. I’ve never sought to avoid paying PC, and I don’t even really know what churning is, other than what my stomach does at the thought of paying 60%.

Betfair’s justification for charging 60% is that at 20% they merely break even on my account. By that logic, at, say, 30% I’d be an extremely profitable customer. At 60% I can’t be a customer at all. It all seems rather short-sighted.

I do believe 60% can be justified for the courtsiders, bot users or cheats, who cream consistent risk-free profits across hundreds of markets a week. That’s not a ‘natural’ strike-rate. But I hate being lumped in with these guys. I might emerge with a fairly consistent profit, but I’m no cheat. I take on a hell of a lot of risk every time I press submit. Once their 20% is covered, Betfair have no risk, and that’s why I think their share of my reward is unjustified.

Perhaps some extra criteria could mitigate this a touch – a minimum weekly threshold above which 40-60% is charged would help. It seems ridiculous that even in my Brian Gay week, I’d be charged 60% of my £9 profit. Or some sort of distinction based on the number of markets played, since maintaining a high strike-rate over hundreds of markets a week is far more indicative of risk-free ‘cheating’ than winning a consistent profit over only one or two longer-term markets a week. There doesn’t seem to be any possibility of a compromise.

But they can charge what they like, and if I have to go, I have to go. It’s a shame because I’ve always been a Betfair evangelist. When I tell people about what I do they are fascinated, and I daresay a few have come here themselves as a result. When I hear people talking about having a punt on something, I tell them they should come here, not just for better odds, but I also explain the idea of trading out for a profit no matter what happens.

For me, that’s what Betfair’s always been about – they used to run seminars in doing just that – and I feel that I’ve only ever used Betfair in the manner for which it was intended. Although I’m far from the most profitable customer on here, I at least show to some extent what can – or could – be achieved playing honestly and well on Betfair.

Would I recommend Betfair to others now? No, probably not. Not just because of the current price hike, although I do believe it is unfair. But they have shown they don’t want anyone to profit but themselves, and if so, what’s the point? When that is the case, betting here is no more shrewd than betting with any bookie. And they have shown they are constantly willing to move the charging goalposts at the drop of a hat. The premium charge, and especially the new premium premium charge, is not just a charge on profits I might make in the future it’s a charge based on all the profits I’ve made in the past. How could I or anyone know what odds we are really betting when charges invented in the future might apply based on whether or not we win? I do not believe Betfair now has a fair or transparent charging structure.

Like I said, I’m not looking for sympathy or anything, just to get this off my chest. I’ve been lucky to do this for five years, and I’ve got Betfair in part to thank for that, as well as a hell of a lot of hard work a hell of a lot of risk, and a reasonable smattering of stress and recreational swearing. It’s a shame if it has to end like this.

Then after a few comments, Total Brosman added

Thanks for the comments folks.

Regarding any hope of avoidance etc. I'm not getting involved in any account shenanigans. I'm not a fraudster and I don't intend to become one. I make what I consider to be an honest living from gambling and if I can no longer do so then so be it.

And I've got no intention of getting involved in arbing / churning etc. I enjoy the thrills and spills of what I do - I know some people may think of trading as safe or risk-averse, but every trade for me starts with a punt I think is value and then I consider what to do with it further down the line, just like that first ever Azinger punt. It's exciting and it's fun and I don't want to turn into an accountant or a mathematician grinding away at markets day and night to make things pay. I'd rather just get a job.

Assuming Betfair don't suddenly have an epiphany about all this by best hope is that a genuine rival emerges. It could be a slow process but among PC payers or non-PC payers I don't sense much loyalty or goodwill towards BF any more, so there has to be a tipping point. Breaking the monopoly would be a good thing for everyone, maybe even Betfair themselves- the share price suggests they need to buck up their ideas and some competition might actually force them to do that.

One comment by DStyle made clear the inequity of the Premium Charge:

The problem is that it's based on how much you've made in the past not about how much you'll make in the future. Imagine you'd been in your job for four years doing the same thing earning 60k a year. The government taxed you 20% of your earnings, then announces that anyone who's been doing that job for four years or more will now be taxed at between 40% to 60% depending on how good you are at your job (the better you are the more you get taxed). In the meantime, someone else joins the company, does exactly the same job as you, but only gets taxed at 20%.

BetFAIR? Really?