Betfair Premium Charge Part 2

Death Of The Dream:

So, my case scenario revolves around the fact that you are statistically more likely to belong to the 99.5% majority of Betfair customers who have a tendency to lose more bets than you win. If so, you can rest assured that you are in the group of ‘really valued’ Betfair customers, but your membership benefits are nothing more than the threat of higher commission charges should you become successful with your Betfair activities.

However, if you already belong to, or are in the process of joining the 0.5% ‘cream of the crop’, you will quickly earn your stripes (literally!) and jump up a rank to ‘premium client’ level (i.e. an outcast!) and thus incur additional charges. This certainly gives the impression that Betfair would gladly rid themselves of you if are successful, but if you don’t take the hint, then they will just walk up and steal from your cookie jar right in front of your eyes, and there’s not a thing you can do about it because, quite frankly, we all need Betfair.

Image: Lisa S. (Shutterstock)

I had to think for some time trying to understand their philosophy as, in the ‘normal’ business world, ‘premium clients’ are considered to be the more valued customers, but Betfair’s model is by comparison ‘perverse’. I asked myself if the elite group represents just 0.5% of Betfair’s clientele, why don’t they want to keep them sweet and use them as an example to encourage more potential ‘losers’ to join the Betfair community? Instead, they continue to introduce harsher penalties for success (the last charge increase was introduced in July 2011) and this can only mean an eventual migration of dissatisfied clients to competing betting exchanges or bookmakers.

The explanation behind Betfair’s premium charge policy is, I suspect, close to the following outline. Betfair’s income is based on commission and in an ideal world they would prefer their successful clients never to withdraw any winnings so that all the bets/stakes just circulate, ’round and ’round, getting exchanged between one customer and another, eternally. It doesn’t matter which client ends up with the bet winnings because Betfair makes a commission on every ‘exchange’ transaction. Therefore, Betfair’s ultimate reward is to see the betting pool turned over as many times as possible in order to generate the maximum possible commission payments from their customers, effectively from the same bundle of cash each time, or a larger pot if more clients join the ‘scheme’, deposit, and then bet against each other.

The ideal customer must therefore be the person who in the long run produces more losses than wins and keeps depositing money into their account to keep Betfair’s bundle of cash maintained. The second most valued client is probably the small trader who doesn’t make a huge profit but contributes to Betfair’s commission carousel by turning over his pot like playing a fruit machine, time and time again.

However, the few ‘successful’ gamblers who make a profit are effectively using Betfair as a platform for their own ‘book’, and have perhaps developed successful backing/laying/trading strategies. These are the bettors who just pull cash out of the bundle which otherwise would be turned over to generate continual commission gains for Betfair.

Sadly, it seems commercially logical for Betfair to have arrived at their decision: Get rid of the successful customers!

The existence of this ‘premium charge’ is probably an indicator of just how much Betfair earns from their ‘normal’ customers and naturally, as a profit making company not a charity, they do not want to lose potential profits to sharp individuals who have earned in excess of £250,000, but who account for only 0.1% of their entire clientele.

Betfair is charging up to 60% (!) of the profits earned by their ‘high roller’ clients! You should turn this number over in your head. Certainly, I am not aware of any country in the world which taxes income at 60% in any occupation other than perhaps sports stars or other very high earners, and even in these situations, high tax can be offset against other capital worth; but not in Betfair. To summarise, this means that successful clients have to pay 60% of their gross income in addition to any costs incurred in running a successful gambling enterprise such as their electricity bill, hardware and software costs, time, et cetera. They will ask themselves is it worth working ten times as hard just to stay on the level they have achieved?

In my opinion, this is a clear misuse of a monopolistic position (no offence Betdaq!) and I truly hope that some trade control agency puts a stop to this unfair behaviour soon.

Unfortunately Betdaq is not a powerful alternative as they do not offer enough markets, liquidity is poorer on the markets they do offer, and cosmetically speaking, there is no live streaming service available to embellish their in-running markets. However, even if Betdaq do become a serious competitor one day, then it is probably just a question of time before they also introduce special fees for ‘successful customers’. They may not say it now but one day, I am sure, Betdaq will also try to remove from their books the handful of undesirable professional gamblers, who, through extreme hard work, have briefly managed to touch the dream, and then had it brutally ripped from their hands.

The whole discriminatory approach of Betfair towards their biggest winners is confusing, contradictory and counter-productive to the goals of millions of people who hope to become successful gamblers. Why remove the dream? Surely, the more people who get hooked on the dream because they can see others succeeding is exactly what the gambling industry needs? Having an industry where customer success and satisfaction is immediately surpressed is absolute madness.

Conclusion:

Anyone dreaming of making a living from betting and developing successful betting strategies and systems is actually operating against the natural rules of the gambling industry. In the long-run, these individuals or groups will probably find it very difficult to place the bets they request or will at least have their hands tied into sharing the winnings with the providers.

The entire betting industry (including the betting exchanges) survives on the dreams of millions of people who bet consistently but anyone who succeeds in taking money out of the system on a regular basis risks the wrath of bookmakers’ and exchanges’ exorbitant charges and commissions, or perhaps even cancelled accounts (I will talk about this another time!). This means that you must be aware that your dream of living from betting is going to be a constant battle against the bookmakers and exchanges who are waiting for you on the other side of no man’s land, with their bayonets drawn. They specialise in hand-to-hand combat and they’re not taking prisoners.

Am I also naïve enough to hope that some people may consider giving-up betting once they realise how high the barriers to success actually are in addition to the already difficult task of predicting an outcome successfully? From this perspective, if the Soccerwidow project convinces people to give up gambling altogether then this is just as much a part of our job as helping people to fight the bookies on level terms.

P.S. If you now need to check your own Betfair ‘Premium Charge’ status, you can do it here: https://account.betfair.com/regpay-myaccount/premiumcharge/summary.html
(NB: You need to be logged into your Betfair account before opening this link.)

Go back to Part 1: The Naked Truth