Reducing highest levels of Betfair Premium Charge

[xitian]

I was wondering if any of you on the highest levels of Premium Charge have considered trying to reduce your tier by purposely generating commission?

This is how it's structured:
<5% Commission Generated = 60% Premium Charge
5-10% Commission Generated = 50% Premium Charge
>10% Commission Generated = 40% Premium Charge

Let's assume you generate 0% commission (as an unrealistic, but simple example). You're better off just "paying" Betfair 10% in "commission" so that you can move from 60% to 40%, which would net you 10% extra overall (ie. you've gained 20% in less PC, but paid 10% extra commission).

You can "pay commission" by break-even arbitraging in two related markets, for example football correct score and over/under goals. In other words, win £100 in one market, lose £100 in another, and thus "pay commission". You'll lose a little more through an imperfect arb, but overall, if you can generate enough commission, you'll still make a profit by your change in PC tier. Of course the process would have to be automated, but that's entirely doable.

An even easier way of generating commission is to have two accounts (officially linked of course), but then cross-match between them. That way you get near perfect "break-even" arbs, and can generate them at will until you hit your commission target. Again, this can be automated. Only question is whether this would be considered PC evasion. Personally I'd consider it avoidance rather than evasion.

It makes the most sense for someone on the border of a tier, e.g. currently generating 4.5%, why not generate an extra 0.5% to pay 10% less PC? For me, I'm naturally on 5.5%. So I'd need to generate an extra 4.5% commission in order to save 10%, improving my profits by around 5% so I've kinda been put off by the work and administration involved.

I suppose Betfair presumably picked the tiers so that most people wouldn't be bothered to try, but I'm interested to hear what other people think or do.

The final issue is that if your profits are already quite high, then moving from one tier to another can be quite hard since you'll need to generate a LOT of commission to cover your past profits.

[Euler]

If you paid 5% comission and you are a 60% payer you need to generate 11 times your profit in comission, that's a really tough ask however you try. But even worse is that the PC is not at 40 or 60% it's always charged above that unless your comission base rate is lower than 3%. So that should always be your first target.

[xitian]

I wasn't suggesting that you attempt to generate all the way up to 60% commission. That must be near impossible. All I was suggesting was that if you're a 60% payer, then you might be at 4.99%. You could just generate another 0.01% to move into 50% territory. That's an extreme case, but it still makes sense if you're a 2% to generate an extra 3% (perhaps via artificial means) to move from 60 to 50.

I see what you're saying about your commission base rate though.

[Euler]

It's a wortwhile discussion as there are quite a few dynamics to the PC. I guess we will only know at some point in the future if Betfair view churning as avoidance. I think it was hinted elsewhere that this was the case.

[mcfc1981]

ive heard people say u need winners and losers to help reduce premium charge
but if u won 100k and lost 100k
it would reduce ur premium charge but u would pay commision on what u saved and pc, leaving u back to square 1
or have i missed something?????

[mcfc1981]

on pc

[xitian]

Yes, effectively you're back to square one, but it's better to generate commission than to pay PC for two reasons. Firstly, if you generate enough commission you can move between the 60%/50%/40% PC tiers. Secondly, the more commission you generate the more commission discount you will get. (Although the second point is only beneficial in the long-run though, as you'll have lost money getting to the 40% commission discount level).