As reported last week in their online 'chat' session, Betfair are to change the time over which the premium charge is calculated. Currently it is over 60 weeks, soon it will be over the lifetime of the account. The fine details about how it will work are yet to be finalised - first £1000 profit allowance? number of markets? etc. But the important point is this time period change.
Naturally, not having the full commission figures for my accounts over their lifetime to hand, I requested a spreadsheet showing this. Shortly after, it arrived in my inbox.
Before I go on, I will explain that I have spent a lot of the time since the premium charge's introduction getting my previous 60 weeks commission level over the 20% threshold so that I can bet without worrying about what I'm actually going to be paying should I have a good run the next week. With this in mind, I was slightly apprehensive, but not overly so, about what I would find in the lifetime spreadsheet (my accounts are almost 8 years old, after a few years you start to forget the sorts of things you used to trade heavily).
To my horror, the sheet came up showing that I was about to find myself in a horrendous £130k premium charge hole. Sure, it showed a very healthy profit too, but the picture it displayed was not the full one, let me explain.
I mentioned before that you can begin to forget what you had been up to in previous years. Several years ago I discovered there was a recurring arbitrage opportunity. As this was 'free money', I obviously took the chance to build on my bank (which was already growing well 'organically' from normal trading, which accounted for - and still does - the majority of my profit).
This was an arb between a particular firm and Betfair, and it was in very good size. I did very many arbs of £30k or more, this was back in the day when this firm had the stomach for a very large bet... and they loved me! Because a very large % of these bets were winners on Betfair, and losers with them. Btw, said firm has me heavily restricted these days, even though I am one of their biggest losers.
In the end I had given them in excess of £500k, I'm unsure of the exact amount (you just get on with arbing when it's there). Lets fast forward to 2009 and the introduction of a lifetime premium charge, with the prospect of an excess of £500k added to an already large profit figure and you can see where this is going.
5 years ago, I was merrily arbing away. I could not have foreseen a lifetime premium charge 5 years later (let alone, allowed for it!), and when it is introduced, I will now be paying fairly heavily for not using a time machine (it's ridiculous).
I had given up moaning about the charge, I felt it wasn't well thought out or implemented to begin with, but I decided to get on with things and introduce a few strategies to nullify it a bit.
It's highly ironic, that it's arbitrage that has me in this mess. Since that is one of the strategies Betfair is quite happy with, even promoting it as a way out of the premium charge... There's serious problems if you start winning every time on Betfair though - that isn't supposed to happen. It would appear, the arbs I thought had a margin, were 20% worse than I thought!
Which is the main point of this posting: Why should I be punished for, the method / strategy with which I bet in the past, when I had no idea this would be bought in (and no chance to allow for it) in the future?
The solution: A lifetime premium charge from the time when the first premium charge was introduced. It's simple, fair, and everyone was in the picture.
And I wouldn't have the prospect of having to turnover however many £millions in wins and losses to counter it. Moan over (for now)... until I call my account manager later.