Demystifying Betting Myths
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Betfair Premium Charge Part 1

The Naked Truth:

I had always believed that if I found one good strategy (or hopefully more), I could sit back and earn an easy, tax-free living from betting, whilst at the same time having fun operating this blog and explaining to other people how to develop their own successful betting strategies…

G-cramp squeezing oil from coinsImage: Shutterstock

…Like I said, I only ever thought of the pleasant side of the equation.

Unfortunately, I quickly became aware of my naïvity and realised the extent of greed within the betting industry as pieces of my hard earned cake were quickly ‘robbed’ from under my nose. What I mean is that so long as you remain a ‘loser’ you are the best friend of all the bookmakers.

I had no idea until recently that the betting exchange, Betfair, discriminates against customers who actually win more than they lose. My misaligned presumption was that surely the winning bettors reward Betfair via their commission payments for the privilege of using the trading platform? Wrong! Carry on with the naïvity play…

Although I haven’t yet crawled out of the primordial soup onto dry land with my betting systems, I already seem earmarked for the Betfair ‘special club’, which sounds akin to some exclusive lounge at a top airport. It’s even better when you realise that to qualify, you have to be within the top 0.5% of Betfair’s most successful customers.

However, instead of being treated to reclining seats and waiter service, it came as more than a slight shock to realise that my membership will entitle me to no more than ‘Premium Charges’ on my account purely when I have reached the stage where I have won more money than I have lost.

Never heard of Betfair Premium Charges? Here’s a screenshot from one of our account statements showing that although we haven’t yet qualified to pay higher commissions, the trap is set:

Betfair Premium Charges
The above P/L screenprint shows the result of 397 back and lay bets from a starting bank of £348.10 with stakes (risk per bet) between £0.80 and £10.50 each.

The whole idea of receiving Betfair points to claim commission discounts now becomes somewhat misleading because as soon as regular profits are made at Betfair, you are hit with their form of ‘stealth tax’. In a way, Betfair prejudices and/or takes advantage of a small minority of its customers who succeed to turnover their money less frequently but win more often and who therefore ordinarily pay less commission than clients who turnover their pots more rapidly, and who perhaps top-up their accounts more often.

Bearing in mind that Betfair is a profits driven company, they are undermining the dream of every gambler with this surcharge, which paints only a cynical picture that on one hand they prey on gambling ‘victims’ to make their money and on the other they exploit their more successful customers to maximise profits (as if they aren’t already making huge profits!). Their target seems to be to retain at least 20% of their clients’ profits. From customers who make more than £250,000 profit during the life-time of their account, you will see from Betfair’s Terms and Conditions that a 60% premium charge applies to all subsequent winnings (read more:

Here’s an excerpt from Betfair’s T’s & C’s:

Premium Charges
In addition to other charges, a small number (less than 0.5%) of our most successful customers will incur Premium Charges… …Higher rates of Premium Charge will apply to the very small number of customers (less than 0.1%) that satisfy the following conditions over the lifetime of their account:

  • Lifetime net profits exceed £250,000
  • Commission generated less than 40% of lifetime gross profits
  • Bet in more than 1,000 markets

Lifetime commission generated to gross profits ratio: Applicable Premium Charge Rate
5%: 60%
5%-10%: 50%
10%+: 40%”

Go forward to Part 2: Death Of The Dream

Last Update: 20 April 2012

Categories:Betting Exchanges Curiosities & Oddities Money Management

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