Trader or Gambler?

[Euler]

Don't forget, people don't automatically qualify for PC because they hit a target number, they only qualify if they hit those numbers and their com gen is below a certain level and they meet all the other criteria. So very few people actually pay it, especially at the higher rate. It's deliberately designed to target people who are "too efficient". There are plenty of people in profit over the course of the year, but that doesn't mean they pay PC at all. If you look at that spreadsheet I posted further up you can see unless you are really efficient, then you may not qualify. For want of a better word, It's an "elite status" super efficient trader type thing.

By an amazing coincidence, I actually met the guy who helped design it. I didn't try to meet him deliberately but was in another country when we met. So I used the opportunity to quiz him about what and why. But he stopped short of giving me numbers.

But the problem that exchanges face is that the big winners win 'too big' in reality sucking a lot of value out of the exchange, so the charge is a way of rebalancing it. All exchanges suffer the same problem. I'm pretty sure it came down to a case of ban them or charge them a lot more. 20% didn't change activity but 40% probably did.

I'm not going to be an apologist for the charge as I hate it, more so because despite paying an eye-watering amount to Betfair through it, I seemingly get no benefits. It must fund all sorts of expenditure for them. You would think that would be worth something.

[LinusP]

That aside I'd say Betfair's number of 0.10% of customers on the higher rate, is probably about right. But some of that depends on how you measure what you divide that percentage into.

Surely it would have been easier just to say a figure you guesstimate to be true rather than skirting round the houses. If we believe Betfair's figures of 4 million accounts and 0.1%/0.5% that'd put it at 4,000 accounts high rate and 20,000 PC payers, which seem low to me.

You need to take a few zeros off that!

[Derek27]

That aside I'd say Betfair's number of 0.10% of customers on the higher rate, is probably about right. But some of that depends on how you measure what you divide that percentage into.

Surely it would have been easier just to say a figure you guesstimate to be true rather than skirting round the houses. If we believe Betfair's figures of 4 million accounts and 0.1%/0.5% that'd put it at 4,000 accounts high rate and 20,000 PC payers, which seem low to me.

4,000 accounts on higher-rate PC amounts to more than £1 Billion pounds sucked out of the exchange over the years, on top of what ordinary-rate PC and non-PC winners are sucking out!

If anything it sounds quite high to me, though I suppose the number and size of the losers are equally unimaginable.

[spreadbetting]

Don't forget, people don't automatically qualify for PC because they hit a target number, they only qualify if they hit those numbers and their com gen is below a certain level and they meet all the other criteria.

For a winning trader it's pretty much impossible not to get into the PC comms brackets, might be possible churning your way out of the lower rate bands but the higher ones is a different story. there may be some super Aussie traders who can avoid it but for the majority of traders it's not that easy. I'd certainly agree winning gamblers aren't likely to go into the net but I'd imagine they're a rare breed on betfair.

[spreadbetting]

4,000 accounts on higher-rate PC amounts to more than £1 Billion pounds sucked out of the exchange over the years, on top of what ordinary-rate PC and non-PC winners are sucking out!

If anything it sounds quite high to me, though I suppose the number and size of the losers are equally unimaginable.

Compared what's going into the pot from losing traders/gamblers that £1 billion is a very low estimate, Derek. Remember Betfair were valued at £1.5billion in 2006 off the back of charging 5% and have been going 18 years.