If you are a long term winning Betfair customer there is every reason to worry about the premium charge. It is a greedy money grab and it can ruin your betting career.
Betfair used to be an innovative betting company that stuck it to the “greedy sportsbooks” then as they grew bigger and bigger they started to hire people with backgrounds in banking and finance for the top jobs and these executives now run Betfair more like a finance company than part of the betting community.
The natural conclusion to this was Betfair becoming a publicly traded company. Now if Betfair make 100 million dollars profit in a year they would consider that a bad thing because they made 110 million dollars profit last year so share prices would fall. Considering 100 million dollars profit a year, based on a no risk model, to be a bad thing is the definition of greedy but this is the mentality of most publicly traded companies.
What would a bank do if a segment of customers gets a lot of value out of the product but pay relatively less fees and charges than other customers, and the bank has a monopoly on the product? A bank would raise the fees and charges on these customers and make sure they are so complicated most customers can’t understand them. This is exactly the mentality Betfair applied to its long term winning customers by slapping them with the premium charge.
The premium charge has been a public relations disaster for Betfair. It has made the customers that loved Betfair and were their best source of positive word of mouth become Betfair’s worst source of negative word of mouth.
To find out how close you are to having to pay the premium charge try to view your premium charge portal or reports. To make it difficult Betfair regularly changes where to access this information; first check your my account section and if you can’t find it email support.
How the premium charge works
If you have
- Bet on more than 250 markets.
- Are in profit over the life of your account.
- Have paid less than 20% of your lifetime profit in “total charges”.
You are eligible to pay the premium charge at the end of any profitable week in which you paid less than 20% of profit in “total charges”. The amount of premium charge you have to pay will be enough to bring you up to 20% of profit for that week. It is automatically deducted from your account balance.
- Don’t count any win that accounts for more than 50% of your lifetime profit.
- You have a £1000 premium charge allowance which means you don’t have to pay the first £1000 in premium charge even after you meet the criteria.
- Your first week of premium charge is reversed.
Confused? You’re supposed to be, that’s part of the strategy. It keeps getting more complicated to make sure no one except the banking and finance industry types who implemented the charge can understand it.
One example of how sneaky and insidious the premium charge is is that if you win all your bets in a week and pay 5% commission Betfair will treat it as if you paid 2.5 % “total charges” and make you pay another 17.5% premium charge bringing you to 22.5% which Betfair will say is 20% according to the premium charge rules.
Betfair try to rationalize this by saying if you lost bets they would have applied 2.5% implied commission toward “total charges” even though you actually pay no commision on losing bets. This does not stand up because the premium charge is by definition for winning customers so the implied commission and “total charges” malarkey is just a condition to generate more premium charge and to make it more complicated and confusing.
More details at Betfair’s official terms and conditions.
Let’s look at the above criteria against my lifetime stats in my premium charge portal.
You can see I have bet in 2944 markets which is more than 250. Have made £15,382.41 lifetime profit which is more than 0. But I have paid £3,414.04 in total charges which is more than 20% of my lifetime profit so for now I don’t have to pay the premium charge.
What to do about it
In the past I was eligible for the premium charge and used £645.06 of my £1000 premium charge allowance leaving £354.94 as you can see in the above image. A serious bettor does a lot of soul searching in the premium charge allowance period especially someone who had loved and supported Betfair as much as I did.
You might try to change your betting style or make special bets to get your total charges over the 20% threshold. I advise against this for 2 reasons
1. Profitable sports betting is a game of very small margins. If you have found a way to be profitable in the long term any change to your betting to try to avoid the premium charge has a good chance of making you unprofitable.
2. Premium charge avoidance is specifically prohibited in Betfair’s terms and conditions so the profit police will get you anyway.
What you should do is reevaluate other places to bet. I did and discovered bitcoin betting; boy did Betfair do me a favour there! If you are about to have to pay premium charge then the best bitcoin sportsbooks will more than replace Betfair.
The odds are good and the websites and customer experience’ are brilliant. You get to bet anonymously from anywhere in the world, you get free and instant deposits and withdrawals of any amount 24/7 and no premium charge!
If you want a direct replacement for the Betfair exchange BetBTC (review) (UK punters must use a VPN) closely copies Betfair’s model. Fairlay (review) is another bitcoin betting exchange with even better odds.
The premium charge is not going away until bitcoin operators get major traction in the market. Betfair have already taken the huge negative public relations hit and now they won’t want to lose the revenue for the effect it would have on the share price. So rather than try to fight it just move to bitcoin land, it’s better over here.