Betfair Premium Charge Calculation

Betfair Premium Charge – How It’s Calculated (and How to Avoid It)

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The reality is, you probably don’t qualify for Betfair premium charge yet…

If you do, unlucky. This post will help…

Plenty make the lower threshold (20%). But don’t let it stop you, it’s only a small obstacle.

Understanding Betfairs Premium Charge…

Betfair Premium Charges

Once you do qualify to pay the premium charge, an extra tab will appear under your account section (like the image above).

Now I’ll explain how they are calculated in the simplest format I know. Despite Betfairs explanations, many still don’t seem to get it…

Betfair Premium Charges – How Do You Qualify?

Once you meet the qualifying criteria below, you become eligible to pay Betfair premium charges:

  • Bet on more than 250 markets (lifetime of account)
  • Profitable account (lifetime of account)
  • Total charges equate to less than 20% of your profit (lifetime of account)

From this point you then have a Betfair Premium Charge ‘allowance’ which equates to £1,000 worth of premium charges. Until recently, this was displayed on your premium charge statement before you began to pay.

If you’re not sure about how much commission you’ve generated, markets bet on or how profitable your account is (lifetime) don’t worry, you’re not profitable yet…

Once you meet the 3 criteria above, you will receive a delightful email informing you that your account now qualifies, congratulations! (you always used to get an email anyway, not sure if they still do it).

You will also see the tab shown in the image at the top of this post appear within your account section of the website. This is the link to your ‘Premium Portal’. All the information from the qualifying points listed above will be shown, along with the weeks commission, profit and expected Betfair Premium Charge due.

The Premium Charge Calculation…

It goes a little like this:

Premium Charge = % of weeks profit – weeks generated commission

So assuming you profited £1,000 this week, the premium charge (20%) would be £200 minus the commission you generated over the week (charged at 5% on wins). So if your generated commission was £40 you’d pay £160 making the figure up to £200.

The upper % levels kick in at £250,000 net profit. The same calculation applies, but with the additional rates.

At the bottom of your Premium Charge statement you will see the current state of your ‘allowance’ starting at £1,000. Counting down to 0 each week you qualify for a payment. From 0 onward, you pay every Wednesday at around lunchtime-ish.

One thing to note: when you start paying it, make sure there’s enough in your account. I’ve heard horror stories of those trading on the afternoon have opened a trade for the liability of their account and then found they can’t close out because the payment has been taken while the trade was open. I’m not sure if there is anything in place to stop that happening now as it happened to someone I spoke to some time ago.

Related Reading: How Betting Odds Are Calculated

Premium Charge Exclusions: Single wins accounting for 50% or more of gross profits are excluded from the weeks calculation. In trading that’s extremely unlikely, especially if you’ve been profitable for any period of time.

How Can We Avoid Paying the Betfair Premium Charge?

Reducing your Betfair premium charges; here are a few options…

  1. Increase generated commission: easier said than done, unless you’re an automated trader and can find a break-even strategy. And then it would need to be scalable too, in order to increased generated comms significantly.
  2. Arbing at value: by doing this you could make a couple of quid on the way too. Although like generating more commission, bookies are wise to arbers and traders now. Betting at any kind of value with the bookies is likely to be short-lived, making it quite tiresome. It’s not impossible, but for the time spent finding an arb to play the return is low in my opinion. Avoiding some PC is the added value of course, but if the arb loses and you win on the exchange you could face paying extra premium charges. Less than ideal.
  3. Multiple accounts: accounts in others names, addresses and IP’s. This brings many problems and isn’t right on many levels, bringing additional risks as well. Betfair have a ‘premium charge evasion team’ that can suspend and investigate suspicious accounts.
  4. Use Betdaq more: It’s the only one that makes any sense to me. Liquidity on Betdaq is low, but there has been improvement over the last 2 years. Premium charge don’t exist on Betdaq, and commission is lower anyway.
Disclaimer: I am not telling anyone to do the above in point 3. I’m just aware that this has gone on in the past, and by multiple Betfair users. Betfair has its own Premium Charge avoidance measures and have frozen accounts, although with the highest premium charge at 60% I’m not all that surprised some have resorted to this.

If you’re serious about trading the exchanges, reducing any expense should be high on the priority list. Much like TAX in the outside world, it’s a big deal. Finding ways to reduce premium charge payments early is logical. In reality; later on in your trading career, as you profit more, avoiding the charge totally is going to be hard. Save what you can, while you can (arbing is the choice call – before you qualify for the PC).

Betfair Removed £52,000 From Customers Account

Yep, you read that right…

Back in 2011 Betfair premium charge team reportedly removed £52,000 from one customers account for ‘premium charge avoidance’. The harshest point being they seem to be able to act as judge, jury and executioner all in one foul swoop. There’s a full article here courtesy of the telegraph should you want to read it (it’s fairly long).

I couldn’t see any other articles online at the time of writing so would assume he didn’t get it back. A scary prospect for most.

Betfair Commission Rates & Fee’s (Exchange)

The standard commission rates on Betfair are slightly simpler than the premium charge. First of all; you only pay commission on winning bets.

For traders that’s great, because you only pay commission on the overall market result – not the actual bets struck. So for example, if you were to place a £100 trade (both back and lay) but the net result was £10 profit, you would only pay commission on that profit. Not the opening and closing bets.

The commission rate that you are liable to pay depends on your resident country, and the amount of money you bet.

This makes it hard to give you an exact figure here and now. Typically, the base rate within the UK and Ireland is 5%.

The standard Betfair commission rate is calculated like this:

Standard Commission = Net Profit x Market Rate x (100% – discount rate)

So as an example:

For somebody with a £100 profit and a 20% discount rate:

£100 x 5% x (1 – 20%) = £3

This would obviously mean our example user is on 3%. Easy enough right?

To be honest, you can’t change it so there’s not a lot of point in worrying about it. Plus, even if your generated commission is lower, the premium charge compensates for it.

Betfair Premium Charge In Summary:

Little can be done, except producing profit more! Or rolling the dice with extra accounts…

By adding the upper levels of Premium Charge Betfair have created a deter-ant to new traders. Learning to trade can be tricky at the best of times, the last thing you want to hear if 40-60% could be swiped from you when you reach the upper levels of success.

But remember… that’s exactly what it is. The upper levels.

As gambling in the UK is tax free 20% isn’t too much of a problem. Betfair premium charge above 40% certainly is though. If you’re new to the game it’s best to start off small, use other exchanges like Betdaq and consider counter-measures like arbing early.

Top Post: 3 Simple Horse Racing Trading Strategies


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43 thoughts on “Betfair Premium Charge – How It’s Calculated (and How to Avoid It)

    1. Tried to make it that way, thanks 🙂 there is something a little else extra but it’s not even worth mentioning as it just makes it all more confusing and very little difference on the bottom line.

    2. Hello Caan, I’ve been arbing horse racing for a living for the last year and a half and my Betfair is around minus 50 grand I have also been paying between 400 and 500 in commission a week if I was to trade successfully have long would it be before I pay pc. Horse racing arbing has became much less profitable as prices change with Betfair almost and also having not many betting accounts left so looking to for a change.

          1. Yes, this would also factor, making it harder to pay it so soon. Commission charges must be less than 20% of the lifetime profit on your account.

          2. Yes that is correct. The premium charge calculation is mindful of this type of thing. So in order to pay it you would have to make that profit back, and then qualify.

  1. A friend of mine has been successful at trading football team news for many years and for a while he used multiple accounts in family members names to avoid PC. Eventually he got hit with a 5 figure charge when betfair linked the accounts, they took the money straight out of his account and informed him afterwards. I guessing they caught him through IP addresses but who knows. Definitely not a wise thing to do!

    1. Yes, not worth the risk. I read in the news when they caught someone and took around 30k out of their account… may have even been the same person.

      1. I think that must of been another instance, as I know it was more like £12k taken from the guy i know. Just goes to show they have no qualms about doing it. Makes me wonder how they would treat two traders living at the same address?

    2. I think there is a way to get round this with multiple accounts but I am not going into it here. The only real solution to it is to use Betdaq more, but it would probably have to start on Saturdays and big meetings until confidence in the liquidity built up. Mind you if there was a wholesale switch to Betdaq they would probably introduce a premium charge.

  2. Fucking corporate mentality. Betfair is like “Guys we’ll just do all is in our power to suck all your money and if you try to avoid that you’re in deep shit, cuz we have legal solutions to take even more of your money, all for our holy corporate profit”. And the government is like “Oh casinos are annoyed by some shit and cry for help. HHMM what to do? dont really know so lets make a law.” Its like they have all the tools for profit and we need to try the hardest. I think this also makes us smarter than them. Top kek

    1. Hi Hannah, say what you think why not!

      Although in all seriousness. I do agree… the Premium Charge was supposedly introduced so that Betfair could re-invest in the exchange infrastructure. Sounded great. There was a lot of unhappy people at the time but that seems to have blown over now.

      Sad to see that several years later and the exchange still seems to fall over at peak times like Cheltenham and Aintree. Still, it could be worse.

      Thanks for commenting,
      Caan

  3. We will always be on an uneven playing field. Not only do they charge outrages p/c they run away to the less tax that is Gibralter etc.

  4. Hi Caan,
    Great materials. Thanks.
    Can you please help me to understand that when is the 20% Charge kicks in?
    Lets say, If I am up £20k in the last 6 month, should I already paying the 20%?
    Sorry for my ignorance.
    Thanks.
    Peter

    1. Hi Peter,

      It depends entirely on your generated commission. Once you ‘qualify’ you will get a ‘premium charge’ tab turn up in the dash of your account and probably an email if they still do it.

      It’s basically more than 250 markets, profitable account, generated commission below 20% of profit over the lifetime of your account, 1k allowance then starts, so you have a 5k buffer, if you’re 20k up, but you’ve generated 20k generated comms over the lifetime of your account you will not be paying PC. However if for example you are 20k up (fit the other criteria) and have 1k generated comms you’ll be paying it for sure.

      Either way, dont worry until yo get the email/additional tab. Then you have the 1k pretend PC allowance.

    1. Indeed they are. That’s the problem, I’m sure nearly all the traders would bail in a heartbeat if there was the chance. But they can’t go first…

  5. What do Betfair pretend this charge is for? Why would a company suddenly start to charge it’s most successful customers up to 60%?
    Why not move to Smarkets (for example) or at least use them for a percentage of trades to limit the Betfair lifetime profit, perhaps the most liquid trades?

    1. Smarkets are even worse, they trade their own markets. Who would want to play with somebody that’s against them, that can watch their hand?

  6. I really, really, really can’t understand how Betfair can defend the PC. In what universe is it “Fair” to charge this? I thought they loved the fact that the winners made sure there is a lot of liquidity, but apparently not. Why do they have a problem with some people winning a lot? I truly wish that Betdaq, Matchbook or other exchanges step up and the majority of Betfair users move all their money to one of those instead, as that is probably the only thing that would make Betfair actually living up to the “fair” part of their name. Question: Was the PC introduced after Paddy Power acquired Betfair or was it before (i.e., are Paddy Power the real bad guys here)?
    I think that Bet365 and similar bookies operate with an over round of somewhere in the area of 5-7%, i.e. pretty close to the Betfair commision, and Bet365 even have some punters they lose money to, so surely the standard Betfair commision would be sufficient to make a decent company profit, especially as Betfair can never lose money to the bettors/traders? If it’s a problem for them they could start by not reducing the standard commision to bettors who use their service a lot. It’s pretty weird to reduce commision on the one hand to loyal customers and then punish them with the PC on the other hand. Makes no sense at all.

    1. PC has nothing to do with Paddy Power, it’s been around many years longer than the merger took place. There is no reason for it, Betfair claimed it was money to be used to ensure there was a fresh supply of ‘losers’ (ie marketing) for the winning traders to suck money off, but in reality they did it simply ‘because they can’, and it’s more money in their pocket.

    2. I think you have to remember that also – those winners have no other place to go. And even if they do, who’s going first? Bearing in mind they will be walking away from a tone of cash.

  7. So say your up and paying this PC because your trading made a profit this month and they take 20%. Then next month you have a bad time and lose half your profits. They will turn profitable systems into unprofitable and lost customers surely? They take more when your winning but not overall longer term? Some systems have ups and downs and this sounds really unfair for longer term bettors!

    1. No nothing is returned. If you lost the month after your allowance will be in ‘credit’ until you recoup that loss and more, the additional profit is then charged at the rate. So nothing is returned but if you have a losing period, you’re not stung additionally.

  8. After 10 years with Betfair I eventually ended up with the PC. What bothers me is the massive increase it is, I wouldn’t object to an increase to say 10% , but 20% is just too much. I moved to smarkets but the liquidity is pretty poor, however happy be paying only 2% now.

      1. Hi Mark,

        Profit. Although I do believe BF have run independent premium charge tests where some users have been offered a higher flat rate instead. Either way it works out similarly, mainly for in-play bettors.

  9. Thank you Caan, I’ve searching for how it works on the web, and you are the only one the really knows how it works.. Thanks!

    1. No problem. It does seem that many struggle to get their head around how the premium charge works. The first time it baffled me, but it’s not really that complicated once you’ve absorbed it…

      The harder part of course is avoiding paying it.

  10. I was recently talking to Betfair via their help desk asking for my lifetime balance, they sent it via email in a couple of days. It was interesting to see every bet l placed over the last 14 years. Then l asked how the premium charge was calculated, the answer l got shocked me. He said the first level was 40% charge and then it went up to 60% . Any body out there who could confirm or refute this as sometime these agents are not totally plugged in.
    Mike

  11. Hi there, I’m very new to the trading scene, so apologies if I’m overlooking something obvious here…but, would it make sense to once a week attempt a large loss at Betfair by for example laying Man City and backing them at Smarkets (where I currently get 0% commission)? Any comments much appreciated.

      1. Good point, I guess that only has to happen a couple of times in a season and you’re no further forward. Thanks Caan

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