Another Premium Charge question!

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acecard
Posts: 85
Joined: Wed Nov 01, 2017 9:39 pm

Hi all,

Just started my exploration into the PC and have been reading a lot about reducing PC by "churning" commission; I'm hoping that someone can set me straight about something!............what is the point of "churning" comms? As far as my head can calculate, one would end up paying pretty much the same, it would just be paid in commission as opposed to PC.

I can't seem to see the benefit of the whole churn concept as this doesn't seem like it would help to reduce PC as each BE transaction would eat into my overall profits by the commission paid.

Very likely I have missed something here!

Thanks
Ace
spreadbetting
Posts: 3140
Joined: Sun Jan 31, 2010 8:06 pm

You'll find a lot of people will churn like for like prices simply to maintain a 10%+ overall comm rate so they stay in the 40% band rather than pay 60% for a sub 5% account. Plus there are additional benefits like getting a higher discount off your base rate etc.
acecard
Posts: 85
Joined: Wed Nov 01, 2017 9:39 pm

Ok thanks,

So just to confirm, people churn in order to purposefully pay more commission over 10% in order to stay at 40% PC, meaning that they are ultimately paying 50% of their profits back to Betfair?

If this is the case then WOW! That's pretty s@#*!!
pythonic
Posts: 65
Joined: Sun Jul 08, 2018 10:20 pm

The commission would be deducted from the PC.
I think it's helpful to view PC like a tax to understand how it works: If you are a long term winner, then betfair takes at least 20/40% of your long term profit in commission or PC.
If you pay that much in commission anyway, then there won't be a PC. Otherwise they artificially increase your commission to the point where you pay at least 20%/40% (/60%) of your weekly profits in commission + PC.
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Euler
Posts: 24701
Joined: Wed Nov 10, 2010 1:39 pm
Location: Bet Angel HQ

Betfair top up that 10% to 40%. But if you can hit 2% commission you effectively get a rebate of 1% or 33% of commision paid. Confusing I know but worth considering.
acecard
Posts: 85
Joined: Wed Nov 01, 2017 9:39 pm

Ok, so if you manage to generate commission enough that you are at 2% (based on Betfair points I guess?), you could reduce commission down to just over 26%, down from 40%? Surely as your profits increase, this just gets harder and harder to generate these commissions "artificially", so to speak?!

With all this headache, I'm wondering the best course of action to take. I'm early on in my career with this, but have been at it long enough to know that I can profit from it, so PC is something I now need to consider! I trade football in-play successfully and have just started learning and making good progress with pre-race trading on the horses.

I'm thinking that rather than all the hassle of trying to churn comms, or even all the hassle of trying to lose from Betfair into bookies (I have an account with a bet broker so not worried about losing accounts, just worried about having massive wins in Betfair that would increase weekly PC!), that the best course of action would simply be to transfer over to Betdaq whilst I'm still "fresh" and accept that whilst liquidity is lower and I will need to stake less or give up a few ticks getting in/out of trades, it will be overall the same as I won't be paying such high commission fees! Does that make sense?!
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PDC
Posts: 2272
Joined: Sun Jul 24, 2016 5:52 pm

spreadbetting wrote:
Tue Feb 12, 2019 11:17 pm
You'll find a lot of people will churn like for like prices simply to maintain a 10%+ overall comm rate so they stay in the 40% band rather than pay 60% for a sub 5% account. Plus there are additional benefits like getting a higher discount off your base rate etc.
Isn't the activity done largely by automation as opposed to manual trading? The amounts required must be considerable for many.

It is a shame nothing ever came of the recent trial Betfair ran which you were part of where you get a weekly personal allowance, think it was £500 PC in the trial?
LinusP
Posts: 1871
Joined: Mon Jul 02, 2012 10:45 pm

acecard wrote:
Fri Feb 15, 2019 2:48 pm
Ok, so if you manage to generate commission enough that you are at 2% (based on Betfair points I guess?), you could reduce commission down to just over 26%, down from 40%? Surely as your profits increase, this just gets harder and harder to generate these commissions "artificially", so to speak?!

With all this headache, I'm wondering the best course of action to take. I'm early on in my career with this, but have been at it long enough to know that I can profit from it, so PC is something I now need to consider! I trade football in-play successfully and have just started learning and making good progress with pre-race trading on the horses.

I'm thinking that rather than all the hassle of trying to churn comms, or even all the hassle of trying to lose from Betfair into bookies (I have an account with a bet broker so not worried about losing accounts, just worried about having massive wins in Betfair that would increase weekly PC!), that the best course of action would simply be to transfer over to Betdaq whilst I'm still "fresh" and accept that whilst liquidity is lower and I will need to stake less or give up a few ticks getting in/out of trades, it will be overall the same as I won't be paying such high commission fees! Does that make sense?!
Betdaq have a similar PC tax on those that are profitable however it seems to vary by user and it isn't as high as Betfair.
acecard
Posts: 85
Joined: Wed Nov 01, 2017 9:39 pm

LinusP wrote:
Fri Feb 15, 2019 3:06 pm
acecard wrote:
Fri Feb 15, 2019 2:48 pm
Ok, so if you manage to generate commission enough that you are at 2% (based on Betfair points I guess?), you could reduce commission down to just over 26%, down from 40%? Surely as your profits increase, this just gets harder and harder to generate these commissions "artificially", so to speak?!

With all this headache, I'm wondering the best course of action to take. I'm early on in my career with this, but have been at it long enough to know that I can profit from it, so PC is something I now need to consider! I trade football in-play successfully and have just started learning and making good progress with pre-race trading on the horses.

I'm thinking that rather than all the hassle of trying to churn comms, or even all the hassle of trying to lose from Betfair into bookies (I have an account with a bet broker so not worried about losing accounts, just worried about having massive wins in Betfair that would increase weekly PC!), that the best course of action would simply be to transfer over to Betdaq whilst I'm still "fresh" and accept that whilst liquidity is lower and I will need to stake less or give up a few ticks getting in/out of trades, it will be overall the same as I won't be paying such high commission fees! Does that make sense?!
Betdaq have a similar PC tax on those that are profitable however it seems to vary by user and it isn't as high as Betfair.
Maybe I just need to accept that if I want the luxury of making money through sports trading then there will be high business costs, i.e. PC (paying for the convenience of not having to get a "normal" job)! Just looked at Betdaq to compare liquidity......Juventus game tonight has under £3k matched! Betfair has over half a million!! WTF!!! Maybe things pick up in-play? Only just started looking at this so no idea myself at the moment!
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PDC
Posts: 2272
Joined: Sun Jul 24, 2016 5:52 pm

It gets worse inplay not better.
acecard
Posts: 85
Joined: Wed Nov 01, 2017 9:39 pm

Euler wrote:
Fri Feb 15, 2019 10:40 am
Betfair top up that 10% to 40%. But if you can hit 2% commission you effectively get a rebate of 1% or 33% of commision paid. Confusing I know but worth considering.
Could you point me in the direction of the T&Cs that talk about this rebate? Really want to get my noggin' around this!
acecard
Posts: 85
Joined: Wed Nov 01, 2017 9:39 pm

PDC wrote:
Fri Feb 15, 2019 3:34 pm
It gets worse inplay not better.
Hmmmm.......that's no good at all! OK I think acceptance is the only way forward on this one!
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Derek27
Posts: 23477
Joined: Wed Aug 30, 2017 11:44 am
Location: UK

acecard wrote:
Fri Feb 15, 2019 3:34 pm
Euler wrote:
Fri Feb 15, 2019 10:40 am
Betfair top up that 10% to 40%. But if you can hit 2% commission you effectively get a rebate of 1% or 33% of commision paid. Confusing I know but worth considering.
Could you point me in the direction of the T&Cs that talk about this rebate? Really want to get my noggin' around this!
http://www.betfair.com/aboutUs/Betfair. ... /#charges6
spreadbetting
Posts: 3140
Joined: Sun Jan 31, 2010 8:06 pm

acecard wrote:
Fri Feb 15, 2019 3:34 pm
Euler wrote:
Fri Feb 15, 2019 10:40 am
Betfair top up that 10% to 40%. But if you can hit 2% commission you effectively get a rebate of 1% or 33% of commision paid. Confusing I know but worth considering.
Could you point me in the direction of the T&Cs that talk about this rebate? Really want to get my noggin' around this!
There's aren't any t&c's for the 'rebate', Euler is just stating you effectively get a rebate due to the way PC is calculated using a set percentage of 3% for implied commission on losses. If you wish to look at ways to lessen the effect or reduce PC you need to look exactley how it's calculated and if you can incorporate anyhting within your current betting strategy to lessen the effects. Here's the PC betfar charges page

http://www.betfair.com/aboutUs/Betfair. ... /#charges6
spreadbetting
Posts: 3140
Joined: Sun Jan 31, 2010 8:06 pm

PDC wrote:
Fri Feb 15, 2019 3:04 pm
spreadbetting wrote:
Tue Feb 12, 2019 11:17 pm
You'll find a lot of people will churn like for like prices simply to maintain a 10%+ overall comm rate so they stay in the 40% band rather than pay 60% for a sub 5% account. Plus there are additional benefits like getting a higher discount off your base rate etc.
Isn't the activity done largely by automation as opposed to manual trading? The amounts required must be considerable for many.

It is a shame nothing ever came of the recent trial Betfair ran which you were part of where you get a weekly personal allowance, think it was £500 PC in the trial?
Depends what you're doing and how good you are with automation I suppose but there are plenty of sports where you can churn thru large amounts.

I never even had a follow up call regarding the PC trial which is a pity as to me that would be the sensible way forward and much fairer to the players who've been around a while and helped Betfair promote their business in the first place.
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