Sharp Minds Betfair?

Some things have caught my attention this week.

The world’s biggest betting exchange have indicated their intention to introduce a ‘premium charge’ on the biggest winning accounts on the exchange.

You can read plenty about this in the newspapers but don’t try looking on the betfair forums for any discussion. They have deleted all threads criticising the changes.

Obviously it is bad news for players, as there is no corresponding reduction in commissions for account holders that don’t get charged the extra amount – it is just extra revenues accrued for the site operator.

That said, the interesting bit to me is not the uproar over the charge, but the reasons behind it

The questions that interests me are;

Why have they done it? And more specifically,
Why have they done it, the way that they’ve done it?

Some have speculated it is an exercise to generate income in order to fatten up revenues prior to a flotation. This may be a factor, and it is not a question of ‘If’ but ‘When’ Betfair floats, so this will be always be advanced as a possible factor in any changes that are made.
Even if it is the reason, it brings me onto the second question.

Why is the charge being made the way it is?

Clearly it is being targeted at particular accounts. If it was a general revenue raiser – like an increase in commission to 7.5% on winning bets, it would hit everyone, large and small, winners and losers.
But, by having a specific formula it seems clear to me that they have sat down and looked closely at the large volume accounts and determined they are ripe for a premium charge or a winnings tax. The figures I have seen mentioned are 20-22%

The only conclusion I can draw from this, is that some of the automated bet placing systems are making so much money from the exchange that Betfair feel they can afford to pay, and due to the near monopoly on liquidity, they have nowhere else to go.

I have long wondered where the layers come from on Betfair.
When you see Betfair adverts they are always aimed at attracting punters, usually away from the traditional bookie, with their 20% better odds line as an example.

When Betfair started they used to have adverts depicting a pub conversation where two punters were having differing opinions on a game. The idea that the exchange is drive by this type of activity is an image that helps explain the concept of an exchange but is so far removed from the reality to be laughable.


I know many users on betfair, and while a few like the Mask & the Fugitive will secure a position to ‘green up’ this is done as part of a back/lay in that order. I don’t know anyone who operates as a layer exclusively. Yet the money is always around.
In the case of Mansion, it is/was an open secret that they ‘seed’ the exchange acting as layers to get the business markets moving.
When Betfair quietly went about wooing software people to work alongside the exchange they clearly did so with the hope that these people would be the layers to bring in backers giving the exchange the balance that is needed.

Harry Findlay said last week that there are no racecourse bookmakers anymore.
He said there are people at home betting on Betfair, and there are people stood at the course taking cash bets to lay off on Betfair. I don’t always agree with Findlay but on this occasion he is totally right. With the exception of a few big meetings the racecourse market is pretty irrelevant. If you don’t believe it, take a walk around the back of any layer’s pitch and he’ll have his laptop running, with his clerk monitoring all the runners.

So we’ve got bookmakers backing horses on exchanges that they’ve taken cash for on Betfair. Who is laying these?
I would say other bookmakers and professional traders, many of these who will be bots, or automated bet making software programs.

I have seen figures mentioned like 600 massive winning accounts that are being targeted, so how much are they making and how are they doing it?

Like a dog with a bone, I am on to this, and I intend to get to the bottom of it.