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Betfair to screw biggest winners for more cash

Once upon a time, Betfair's best marketing line was 'Winners Are Welcome'. Not any more. In a desperate move to show the shaer market they have more options to increase their revenues, Betfair's biggest winners will be hit with an even higher Premium Charge rate.

For full details, read here - Betfair Premium Charge Hike details

Realistically, how many people will it affect? A very small number. You've got to have done very well to win £250k after commission over the years. But what will it do to liquidity? Well, the people it will hurt are the elite level traders such as Mr Bet Angel. Peter Webb and the best of his genre. Traders lose infrequently, so thus are destined to pay less commission than your average winning punter. The big liquidity providers who market-make across the board will be hit - 40% commission on your gross profits is a stiff ask, you'd need some heavy losses mixed in there to sweeten them up.

This comes on top of their less-publicised efforts to squeeze huge fees out of bookmakers using their commercial API service - over £1m/yr for the bigger firms!

Will 99.95% of us punters ever get near paying that level of Premium Charge? No. But at a time when their PR can't get much worse, is it really a great time to come out with this? Perhaps it is - Wimbledon's almost over, there's no major football tournament for European nations this year, Royal Ascot is done and dusted so maybe it was the best time to sneak it in. They'll be hoping it disappears into the dust by the time their next big football season campaign comes along....

Company figures are published next week I hear - profits are obviously stagnating so they are desperate to show the stock market they have other options to raise revenue.

The stock market liked the announcement today, climbing back towards 800p, or was that just a positive reaction to the news David Yu is finally on the way out?
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Comments

  1. Neru29 June 2011 at 10:48

    Why Betdaq and WBX do not have premium charges and are still alive? Does 20% premium charges have a financial reason or it is just greed of Betfair? To compare with the financial markets where the commission for 1000 pounds is 7 pounds, even 50 pounds (5%) commission Betfair is too high.

    ReplyDelete
  2. Scott29 June 2011 at 11:05

    Thanks for the comment Neru. It's not quite that simple - nobody is sure Betdaq and WBX have ever turned a profit, and they certainly don't have the customer base to justify such an unpopular move. It's also very hard to believe anyone could sustain themselves purely on either site - there simply isn't the liquidity there.

    Re comparison with financial markets - aren't you ignoring the transaction charges involved with each trade?

    ReplyDelete

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