Betfair - where winners have just become losers

[Pace Cap'n]

blogs.guardian.co.uk/sport/2008/09/09/betfair (http://blogs.guardian.co.uk/sport/2008/09/09/betfair_where_winners_have_jus.html)

"
The loyalty of some customers may be tested to the limit, however, by Betfair's decision, announced yesterday, to introduce "premium charges" for some of their biggest winners. Betfair insists that the new charges will affect "less than 0.5%" of its customers, but still seems to stand in complete contradiction to the company's oft-repeated boast that this is a place "where winners are welcome".

The charges, and the conditions under which these will be incurred, are explained in a 1,200-word posting on the Betfair website. The rules are, clearly, quite complicated, but plenty of their customers are starting to consider the implications. One Betfair client who contacted the Guardian yesterday said that if the charges had been imposed over the last few weeks, he would have been forced to pay "a five-figure sum".

"They think they can do it because they have an effective monopoly. I look forward to their next advertising campaign. Instead of 'where winners are welcome', they can say, 'come to Betfair, where winners get screwed'," he added.

More at the link...

Especially the extensive discussion that follows the article...

[Robert Fischer]

greedy move by BF:ThmbDown:

[Tom]

Talk about a BF Deal!!!

[LottaKash]

They must be borrowing ideas from modern day American race track executives......:rolleyes:

best,

[Charlie D]

Andrew "Bert" Black Co founder of Betfair



I’m away from the company at the moment and I have been for a while, but I did know about this change (although I’m not sure about the fine detail). Some comments;

I’m told that this is a change that affects less than 1 in 200 customers - a tiny proportion. A large number of those affected are running aggressive bots that are collectively costing us millions each year in running costs. I guess the majority of the remainder are traders, but to qualify for the charge they must be making a fair amount and rarely lose.

The new charge (again AFAIK) has it that these consistent winners now have to pay a minimum of 20% of their profits. It’s not much though. Betfair has enormous running costs - over 1200 people employed, massive technology costs, big marketing costs and a load of taxes, levy etc. The trader has very few costs - basically access to the internet which he would probably have anyway and that’s it.

I think that 20% is actually a very good deal - there aren’t many walks of life where you can get an 80-20 deal your way where the 20% side carry all the costs as well. It isn’t as good a deal as the one you had yesterday, but it’s still a good deal.

As far as the greed comments are concerned - it is normal business practice to change and optimise charges. The exec at Betfair think they have been undercharging and this is a move to rectify the balance.

[classhandicapper]

An interesting aspect of this his comment was about "bots". I can't play at Betfair, but I've seen evidence of bots at the e-horse exchange also. When I first started playing there, my typical manual reaction time was more than enough to quickly pick up a bet here or there that looked especially out of whack. Now, they often seem to get taken away at lightning speed. So my assumption was that someone had automated some aspect of arbitrage play etc.... This is a semi-confirmation.

As far as charging extra for winners, I think that's preposterous and there's no way I can see to defend it. What we need is free markets. If only we could round up all the politicians and dump them in the ocean.

[Humph]

I haven't looked into this to any real extent, but I wonder where Betfair stand legally here . I take it their members agreed to certain terms when they signed up with the company . And I presume charging their most successful clients 20% wasn't one of the conditions .

No doubt a few Betfair clients are already looking into this matter.

[Robert Fischer]

It's business

give and take

supply and demand

labour hours and value

Some interesting spins by Andrew Black. As if the size of the affected population matters. Or spinning it as an 80-20 take for the player (who by the way has no expenses, - try information, the cost of bots needed to stay competitive which are allowed to run rampant by BF, and most of all many many labour hours spent working on trading)

bottom line and the best thing Black said - "...it is normal business practice to change and optimise charges.".

Maybe this will spur some of the big money traders to get together and negotiate this back down? This is business. Treat it as such.
Lets see what the deal looks like when both sides weigh in.

:)

[HUSKER55]

What does AFAIK and BOTS stand for. (new terms for me).

I am just wondering why these betters continue to do business with them. I am NOT a big better but if I was and that happened to me I would take my business someplace else.

If the big betters got together and left Betfair, I think Betfair would get the message or go under. With the internet I am having a hard time believing it is hard to find someone who will book your action.

Who cares about Betfairs costs? They started the business and they knew what ws needed and decided to "enter the ring". So why is that our problem?

Most places I am at have either a monthly base fee to cover costs or a minimum monthly wagering cost. I pay $9 at one place and nothing at the other.

What am I missing?

Thanks guys.

husker55

:)

[robert99]

I haven't looked into this to any real extent, but I wonder where Betfair stand legally here . I take it their members agreed to certain terms when they signed up with the company . And I presume charging their most successful clients 20% wasn't one of the conditions .

No doubt a few Betfair clients are already looking into this matter.

BF want to backdate these charges for bets taken over the last 6 months from September.
They cannot legally do that as it breaks the mutually binding contract condition between the parties that existed at the earlier time. That can only happen if "both "parties agree and there is no chance of that.

[lamboguy]

i assume what has happened here is that there are lots of losers and few winners, and the house wants to make sure they get their end.

just a hypothetical: bruce levine has 150 horses in training, some are training and eating super. he could have a horse that ran a poor race for $16k and now he has the horse in for $10. he knows the horse is training better today than the day he ran for $16. he is sitting with the unknown hole-card, everyone else is guessing. don't you think he would be looking to get down for all he could without effecting the odds? he would be a complete fool not to! either he or his friends would create a market at betfair with a little out of whack odds, knowing how good his horse is. people step into that for the value and he takes down the money.

my guess is that stuff like this happens every day. i would guess that the people without the info betting into value, are getting cleaned out.

[classhandicapper]

What does AFAIK and BOTS stand for. (new terms for me).

:)

A BOT is an automated software robot. They are supposedly used to play online poker, so a natural extention would horse racing.

I suppose you could build software to analyze the odds at Betfair and at various racetracks and automatically place wagers when the discrepancies allow for an arbitrage.

One could also probably be designed to create an odds line and place wagers automatically if any overlays exist at Betfair.

Manual calculation and reaction time could probably not match software like that. So the BOT players would have a big edge in getting in on overlays/arbitrage opportunities.

[robert99]

What does AFAIK and BOTS stand for. (new terms for me).

I am just wondering why these betters continue to do business with them. I am NOT a big better but if I was and that happened to me I would take my business someplace else.

If the big betters got together and left Betfair, I think Betfair would get the message or go under. With the internet I am having a hard time believing it is hard to find someone who will book your action.

Who cares about Betfairs costs? They started the business and they knew what ws needed and decided to "enter the ring". So why is that our problem?

Most places I am at have either a monthly base fee to cover costs or a minimum monthly wagering cost. I pay $9 at one place and nothing at the other.

What am I missing?

Thanks guys.

husker55

:)

"As far as I know" and "web robots".

Betfair has the liquidity for large bets and software application interface AIP to run bots (automated trading software). There are other exchanges but they are not so developed - that might change very soon. One is guaranteeing customers a maximum 2% take out for the next 3 months.
Whether their hardware will withstand trading at a level that exceeds the NYSE is another matter.

Bookmakers on the internet close any account that looks like winning or only accept tiny bets at reduced prices. Exchanges thinking of themselves a middlemen, taking zero risk, did not bother whether you won or lost.

If the big traders go, then Betfair dies as the liquidity dries up.

BF is a business that works on commissions and they always look on their customers as milk cows.

[HUSKER55]

tHANKS FOR THE INFO GUYS


APPRECIATE IT

HUSKER55
:)