Posts Tagged premium charge
120% Premium charge!
Posted by Peter Webb in Betfair on December 21st, 2011
As premium charge payers know it’s PC day today. What a surprise then to see Betfair have double debited my account. So this week I paid 120% premium charge, ouch!
Obviously a mistake, but I suggest all premium charge payers check their account immediately and flag it to Betfair. It looks like everyboyd is affected. Nice timing Betfair!
[EDIT : About two hours later the duplicate charge was refunded. I imagine this is applicable to everybody, but please check, just in case]
Good old fashioned gambling
Posted by Peter Webb in Bet Angel on September 21st, 2011
Since Betfair introduced new charges for their most successful customers, me included. I’ve done a fair bit of work all over the place. Back on Betfair, no matter how easy the opportunity, I can’t tell you just how difficult it is to actually do something that you know will result in the loss of 60% of your profit, I don’t know about others, but I really struggle to do it.
So, I’ve done some additional work on Betfair by looking at alternative strategies with the view to understanding just what it would take to overturn or reduce the higher charges. Basically the bottom line is that you have to generate a small profit, while paying a lot of commission. I know this sounds obvious but let me give you an example.
Last week I set out to do some good old fashioned gambling on my account. This, amongst other things, has made a right old jumble of my P&L since the new charges. Last week I stuck fairly rigidly to only using my Betfair account to bet. I did lapse at one point by taking advantage of an opportunity that I could only execute on Betfair. But the practical upshot of that gambling led activity is that, thanks to the way results came in, I only paid 20% in total charges on my account. This means that Betfair still deducted an additional 40% on top of that. That’s a mare on gambling led activity and its a back to the drawing board moment.
The curious think about this is that people I teach can now earn 2.5 times what I can doing the same thing. So if you are interested in learning what I do, come and see me; I’m likely to have more time on my hands this winter!
Eye Watering
Posted by Peter Webb in Bet Angel on August 25th, 2011
I’ve been playing around with spreadsheets and a number of other strategies recently. With the increase in commission charges levied against me, I figured it would make sense to look outside my normal activity. While it’s flattering to know you are better than 99.9% of market participants have ever been, it’s less flattering to give away the majority of your profit! By ‘normal activity’ I am talking ‘active’ participation. I now have a very big incentive to find less manual ways of participating in the market.
One area I have been re-examining is that of value. The reason I am examining this area is that the market on Betfair is remarkable efficient now. In fact it is too efficient, I’m struggling to see how layers can make anything at some of the prices on offer! You can often get a pretty competitive big field handicap where the outcome on the race is very uncertain, yet the market is priced very close to 100% for a lot of the time. At this level, due to the variability in returns and more normal commission rates, I think it’s possible to overturn the margin lost to the other side of the book. This is actually what brought me to exchanges in the first place.
So I blundered in last week with a neat idea that would probably overturn this negligible percentage. I got lucky as, to my surprise, I managed to not only overturn that small percentage but pick a LOT of winners. This was unfortunate as you expect this now and again with a value strategy, not just right at the start. This is the second time this has happened to me.
The net upshot is that I now find myself back at square one. Because of the higher rate commission paid, I have to take a theoretical eye watering massive loss on these positions. I could wait for things to even out, but I am not sure that I can overcome the difference between normal commission and the super premium charge. I have quickly shuffled this strategy off to Betdaq. I tried this on Betfair because I though generating commission would help lower my charges. But when you look at the detail it seems you actually need to win and lose a huge amount of money to stand any chance of paying much lower commission. So much, it looks impossible to me.
I could be wrong, if any body has done the maths, please send me a spreadsheet!
60%
Posted by Peter Webb in Bet Angel on July 18th, 2011
On the first day of trading on 22nd October 2010 Betfair shares closed at 1550p. At the time of writing this post the shares are trading at 627p or down nearly 60% from that closing high. How ironic!
I don’t want to feed that hand that bites me, to reverse the common metaphor. So, for me at least, action speak louder than words. Whether volume decreases or increases on the Betfair exchange, why will be the most pressing question. Volume will increase on Betdaq for sure. With all the risk and effort I take, I can’t operate at 60%’; as can’t many others who have contacted me. But, there are plenty that still have some way to go to be charged at this level, so I look forward to helping those Bet Angel users get there as fast as possible!
I’ll post some more thoughts in the coming days and report back on the markets as well.
Lack of liquidity
Posted by Peter Webb in Bet Angel on July 6th, 2011
Low matched bet turnover, gappy prices, lack of depth in the market. Yes, I am sure you are familiar with these problems. But I’m not talking about Betdaq, I am talking about Betfair.
Back when Betfair started the markets were pretty thin, but I still saw opportunity in them. As people began to develop techniques to squeak a few quid out of these markets things improved. As traders joined the market and improved liquidity, bigger backers and layers started to exploit the larger amounts of money available, and so a virtuous cycle started.
It’s another half full / half empty moment. Some people see only opportunity and some people see only problems. The early Betfair markets were different from now and when I saw then I knew no different, so just did what was necessary with what was in front of me. As time moved on and the markets changed and so did I, leaving behind those that were unwilling to change.
So when you look at a any market, look for the opportunity, not the problem. That’s how I started over 11 years ago. Liquidity on Betdaq is bound to rise in the near future, so for me that’s an opportunity. Even if you are not a premium charge payer over on Betfair I suggest that a new opportunity has been created on Betdaq with its introduction. I suggest you gear up to take advantage of that.
Betfair premium charge & earnings soar
Posted by Peter Webb in Bet Angel on June 29th, 2011
As we are all aware now, Betfair pleaded poverty and an imbalanced business model again yesterday, when announcing another new charge. This time hitting consistent earners for up to 60% of their profits. We heard the similar stories for data charges, transaction charges and the premium charge part one and all the other various amendments over the years to their charge structure.
This didn’t stop them from announcing record revenue and earnings a few hours later. Earnings per share are up 56.2% on the year before. So on the face of it, it looks like profitability isn’t a problem. See the full announcement here: -
http://corporate.betfair.com/media/press-releases/2011/2011-06-29.aspx
Given the apathetic response to the first premium charge I always guessed that Betfair would go for an increase at some point. The thing I didn’t guess was that it would triple! I pencilled in a worst case scenario of 50% but never thought a figure above that was feasible, rational or viable. It seems I was wrong. It remains to be seen what impact this will have on Betfair’s ‘We like winners’ stance.
The curious thing about this new charge is that it makes sense, at 60%, for me to teach others how to do it and not to do it myself. This doesn’t really solve Betfair’s ‘problem’ if they are concerned with the cost of servicing my account? It also means if I can earn 40% of my Betfair total on Betdaq then I should switch, and this is perfectly possible to do.
On the positive side Betfair just confirmed by imposing this charge who are the most successful ever users of Betfair. So I should be pleased with that as I am in that group. It also means that increased competition in the market is now almost a nailed on certainty, which we should all welcome.
At the lower levels of the market there is still room for newbies and aspiring super users. Unfortunately it is now unlikely they will reach the same heights as people that have gone before them, but there is still plenty of opportunity there. You will just have to stop when you get to £250k!
Will I make a profit this week?
Posted by Peter Webb in Bet Angel on November 12th, 2009
Yes and no I guess?
Yes I will make a profit, but technically I will right up against the wall, why?
Last week with the Melbourne Cup, Breeders Cup, the UK racing and the champions league it was a busy week. This week there isn’t a great deal on the card. On Wednesday the premium charge came out for last week and it was a big one. This week I may struggle to get in a day what I managed in just one race last week. Net result, I will probably spend most, if not all, this week working for Betfair. Boo hoo.
Premium charge anniversary
Posted by Peter Webb in Bet Angel on September 24th, 2009
It seems to have slipped quietly into the background, but in September last year we saw the announcement of the premium charge. After the furore of last year, there seems little fuss to ‘celebrate’ the anniversary. Maybe there really are only a few payers of the charge?
For my part, Betfair was an easy sell in the past. Get better odds and trade sports like financial markets. But the premium charge muddied that message somewhat. I think the post by Armida summed it up nicely.
I guess some of response to the charge comes from your perspective as well. If you have come from a background of successful involvement for a number of years then any new charge is going to hurt when the market is not growing at a core level, you don’t expect to pay more to get less. If you don’t have that background, then you have a different perspective and it turns into just another hurdle to overcome on a market where there are many. With the high level of churn in these markets, I imagine that helps bury any changes.
Speaking of changes, Betfair are due to tweak the charge again in October, in case you missed that announcement. I can’t see any mention of this anywhere other than in this thread so if anybody lets me know if there is an official announcement I’d be happy to link to it.
Betfair to change premium charge
Posted by Peter Webb in Bet Angel on August 11th, 2009
During the forum chat with Betfair on Monday evening it transpired that Betfair are going to change the premium charge. Obviously not to traders advantage by the look of it. Join the debate on the forum.
Biggest premium charge?
Posted by Peter Webb in Bet Angel on February 25th, 2009
I was passed some information this morning that indicates that at least one Betfair customer paid fees of some sort somewhere in the region of £200-250k in the last three months of the year! Puts things into perspective doesn’t it? It also makes you wonder just how much money is being generated in premium charges? It will be interesting to see where it ends up on Betfair’s next annual report. If they are spending it to get new customers then that’ll be great, but I have to say it doesn’t feel to me like the horse racing markets are growing in all honesty. We’ll have to wait for answer to both I guess.
Premium charge online
Posted by Peter Webb in Bet Angel on January 26th, 2009
Just been emailed this link: -
https://premiumcharge.betfair.com/PremiumPortal/portal
By the look of it it appears to generate your last premium charge statement, or at least the front page of it. Despite efforts to reduce the charge mine still makes grim reading. But I suppose in some ways I should be thankful that is the case.