New Premium Charge on the way

News, chat and debate about the Betfair betting exchange.
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Derek27
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andyfuller wrote:
Thu Aug 02, 2018 4:23 pm
Thats interesting Peter. Though I won't hold my breath, none of the T&C's in the email make any mention of the Premium Charge and I guess it does say commission is 2% but doesn't say PC is being reduced at all.

I have received a lot of marketing emails from Betfair the last few months offering me various stuff - they must be missing bending me over each week!
I wonder if the 60% rate is making them money or costing them. Beyond 50% is a psychological milestone that must make people feel they're making money for Betfair rather than themselves.
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Euler
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Very few people on 60% now. Anybody that landed on it made the effort to reduce it. But 40% is still high considering the promises made when it was introduced never materialised. I sort of understand the higher rate for certain types of activity or strategies, but they threw the baby out with the bathwater on most accounts.
Lutruwita
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I am about £80,000 away from the super premium charge. I am happy with 20% of gross profits but 40%+ will see me packing up and doing something else. I am not good enough to absorb 40%+ on Australian markets and could then earn a better hourly rate in a proper job. I may only pop in for a Saturday etc.

Betair already struggle with liquidity in Australian markets and they will lose a customer who provides liquidity in pre-race markets and also in-play harness racing markets. How do they win? Betfair Australia are owned by Crown Resorts but have informed me that even if they agree the Super Premium Charge is excessive there's nothing they can do about it because of their systems agreement etc with Paddy Power in the UK. I suspect that's rubbish.
spreadbetting
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Aarondewit wrote:
Fri Aug 03, 2018 3:41 am

Betair already struggle with liquidity in Australian markets and they will lose a customer who provides liquidity in pre-race markets and also in-play harness racing markets. How do they win? Betfair Australia are owned by Crown Resorts but have informed me that even if they agree the Super Premium Charge is excessive there's nothing they can do about it because of their systems agreement etc with Paddy Power in the UK. I suspect that's rubbish.
Don't think it's just the AUS markets, you only need to turn off x-matching to see the underlying liquidity is very poor on a lot of markets these days, very much a case of robbing Peter to pay Paul.
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napshnap
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Westerner wrote:
Thu Aug 02, 2018 6:21 pm
Could be just me, but markets, at least cricket markets, feel very bot/market maker heavy these days.

It does feel that the number of players has fallen even if volume matched levels are increasing/remaining stable.

Andy's offer & the recent tv commercials for the exchange do seem to fit that theory - they are losing too many long serving players and aren't able to replace them.

Shame Betfair stopped publishing their matched volume data. Would have like to have seen Linus produce another update to his data for 2017 and 2018.
Interesting what their shareholders think about it, they can't be so blind. What will Betfair be without their core product - Exchange, just another oversized bookie.
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napshnap
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Euler wrote:
Thu Aug 02, 2018 10:42 pm
Very few people on 60% now. Anybody that landed on it made the effort to reduce it. But 40% is still high considering the promises made when it was introduced never materialised. I sort of understand the higher rate for certain types of activity or strategies, but they threw the baby out with the bathwater on most accounts.
I'm not sure about it, Peter, I'll start to pay high pc at the end of this year. There is nothing I can do to avoid it. Best I can do is reduce it slowly after few years to 40%.
I got used to it.
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Euler
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Betfair half-year figures
Overall, the second half of the year has started in line with our expectations. For the full year we now expect underlying1 EBITDA to be between £460m and £480m, before the impact of US sports betting. This outlook reflects our recent trading momentum, with a better than expected performance in gaming and strong conclusion to the World Cup offset by continued weakness in exchange horseracing revenues, as well as the impact of additional Australian taxes and product fee increases, and the inclusion of the FanDuel daily fantasy sports operations.

Sports revenue was up 5%, which comprised a 12% increase in sportsbook revenues offset by a 4% decline in exchange and B2B revenues. In sportsbook, stakes were down 8%, reflecting the reduced recycling of customer winnings in Q1 and a greater focus on profitable revenue growth, rather than volume. Both sportsbooks brands have shown good revenue momentum across the half with 3% total sportsbook growth in Q1, increasing to 15% growth in Q2 in the period prior to the World Cup (Q2 total growth 23%).

While football commissions are also showing good momentum on the Betfair Exchange, overall exchange revenues were down 1% in Q2 due to continued weakness in horseracing commissions. The weak horseracing performance in Q1 could largely be attributed to the high number of fixture cancellations, but the fact this weakness continued in Q2 highlights the competitive challenge facing racing commissions from low margin sportsbooks and price discounting by smaller exchange competitors.
Jukebox
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reduced recycling of customer winnings
Those pesky punters aren't giving it all back!
weemac
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"and a greater focus on profitable revenue growth, rather than volume."

And those pesky bookies are restricting winners.
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Euler
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Listening to the conference call.

Horse racing -7% in Q1, -1% in Q2. It generates around 40% of exchange revenues.
iambic_pentameter
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"but the fact this weakness continued in Q2 highlights the competitive challenge facing racing commissions from low margin sportsbooks and price discounting by smaller exchange competitors"

They might be smaller exchange competitors now Betfair, but they be growing ;)

Will be interesting to see how the racing markets change in the next few years.
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Euler
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Q&A session started
iambic_pentameter
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If you could let the forum know of any interesting questions / answers that come out, that would be fantastic, Euler.
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Euler
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"Do you intend to reduce commission to compete?"

We continue to innovate.....we suspect some customers are more price sensitive.

We will have better visibility later in the year.
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Euler
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They have cited Bet365 as a problem for their horse racing offering, but that doesn't seem to be an exchange related issue.
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