It is a frequent complaint from successful gamblers that their accounts at high street bookmakers frequently get closed down with the only explanation given that is it was a business decision.
Other bettors find that their accounts have been capped, with bets reduced to small amounts. Ultimately bookmakers are in the game to make a profit, and when they come across unprofitable accounts, they tend to close them down. The don’t like customers who bet to make a living; they very much prefer to deal with ordinary punters rather than the professionals.
But Betfair is very different from a high street bookmaker. It is so different that many professional gamblers shun high street bookmakers and instead concentrated on betting exchanges such as Betfair. Betfair does not restrict or exclude winning customers; doing so would be contrary to their business model.
When you bet at Betfair, you are not betting against a bookmaker; you are betting against other customers. The only income Betfair receives is the commission it charges on bets. These charges are based on net winnings; losing bets are not charged.
The basic Betfair commission is 5% of winnings less a discount. Discount rates vary from zero up to 60%, with the rate an individual receives being determined by how many Betfair points they have. For instance, if you hold between 1,000 and 2,499 points, your discount rate will be 2%; if you hold over 150,000 points you qualify for the maximum discount rate of 60%.
Betfair awards points depending on the amount of commission that has been paid by the individual to date plus the amount of commission that he would have paid had unsuccessful bets won. You receive one point for every £0.10 of this combined commission.
You don’t keep your points forever. Once your discount has been awarded, your point holding will be reduced by 15% which Betfair refers to as “weekly decay”.
Betfair Premium Charge
So far so good; big winners will receive a substantial discount off their fees, so will only pay an effective 2% charge on their winnings. But there is a catch. There is another tier in Betfair charges known at the premium charge. While Betfair claims that fewer than 0.5% of their customers pay the premium charge, for those few customers who do it can amount to a substantial payment that might seem unfair.
The premium charge is levied on people who have: bet or laid bets on more than 250 markets; have been in profit for the life of their account, and have paid under 20% of that profit in total charges.
Customers who meet these criteria will face a potential weekly charge calculated to ensure their total charges for the lifetime of their account is 20%. The charge will be applied to balances automatically, though each customer is granted a £1,000 premium charge allowance. Also, if any single win accounts for more than 50% of lifetime profit, that win will be excluded from the calculation.
In a nutshell, the premium charge will ensure that professional gamblers will be charged at least 20% of their winnings. If you happen to be one of these and are discovered attempting to avoid the premium charge, for instance by having multiple accounts, you will face a ban.
Higher Rate Premium Charge
There is even a more painful sting in the tail called the higher rate premium charge. This applied to punters who have bet in over 1,000 markets, have lifetime profits of over £250,000 and have paid less than 40% of your profit in commission charges. Depending on how much commission you have paid, you will face a premium charge rate of between 40% and 60% of your lifetime profit.
Betfair does not ban winners, though the premium charge is a significant disincentive for professionals, and the higher rate premium charge, an effective 60% tax on winnings, is punitive. Betfair claims that fewer than 0.1% of their customers pay the higher rate, but given that Betfair has over 4 million customers, that still amounts to 4,000 individuals.