Betfair - new commission rate?

[jackass]

Is it true that they are going to increase the base commission rate with 6%?

 

[Trevrizent]

I don't know whether this is true or not, but given that Betdaq are now offering a commission-free first month and a maximum rate of 3% thereafter for all new and reactivated accounts, it wouldn't appear to make much commercial sense. That said, it's my impression that Betfair are rather keener on being a sport book than an exchange these days.

 

[jackass]

That's the monopoly... They're going to milk as much as they can. +6 % why not...

 

[quincunx]

If they raise their commission rate,they will kill their business.What they seem unable to understand is that it's the exchange that makes the sport book possible.Whenever people think of Betfair,they think of the exchange - not the sport book.The exchange is what Betfair is famous for.I think that the sport book odds are based on the exchange odds where they are most liquid,and other people's odds.Their sport book and its odds get little publicity,and do not feature to my knowledge on odds comparison websites.
Yes,of course,the sport book can sometimes undercut the exchange after commission,since Betfair set the commission.If Betfair make the exchange unattractive to new punters,they will be killing the goose that lays the golden eggs.

 

[G-Man]

The main focus for betfair will be the development of the fixed odds. I have have heard that the idea would be that betfair eventually have one button for bets that would either be matched by the fixed odds or exchange. With the commission charges it seems that for pure betting (not arbing or trading), only horse racing is important.
Quincunz made a point a while back that the simple facet remains that exchanges do not make enough money for a plc. Betfairs overheads, marketing, affiliates, technology etc are astronomical, and the fact that its closest competitor betdaq sold out to ladbrokes for a relatively low amount is testament to that.

 

[Nick]

Of course, one reason for Betfair's sideways move into Fixed Odds business is that shareholders demand to be fed and their appetites only grow over time.

I suspect(I don't know) that Betfair executives came to realize that a betting exchange could only produce so much growth. I think they realized that punters prepared to embrace exchange betting were finite in number and that 'fresh blood' was arriving only as a trickle rather than the required torrent.

Given that Betfair over the last few years had already moved into poker, casino, games etc the Fixed Odds move was all they had left to grow the business to the degree required by institutional investors that own so much of the company.

On another note Betfair recently announced that its user base had grown by 18% in the second half of the last financial year. It would be interesting to know what proportion of this new business is ostensibly exchange business and what proportion fixed odds business, casino or poker etc. I'd personally find it difficult to believe that new and active exchange users represent more than a fraction of the new users.

 

[G-Man]

@nick - would that increase in customer base not simply be down to the fact that they bought the Blue Square customer database and transferred all accounts to the fixed odds product?

 

[Nick]

That is a good point, Jackass. And if you are right, as I suspect you are, it would encourage the view that the growth is ostensibly Fixed Odds growth.