If you’re a user of the Betfair Exchange, you may or may not know that Betfair charges some of its users with an additional fee known as Premium Charge. This somewhat secretive fee only applies to a small fraction of Betfair users, but will that ever include you? In this article, we’ll look at everything there is to know about Betfair Premium Charge, including what it is, who pays it, how it’s calculated, and even how to avoid it.
What Is Betfair Premium Charge?
Betfair Premium Charge is an additional fee on the Betfair exchange. Only the most successful users have to pay Premium Charge, with Betfair stating that it applies to less than 0.5% of their customers. Nevertheless, this pesky fee can add up to significant amounts for professional betters, since it’s calculated based on the difference between total betting profits and total commissions paid.
Who Pays Premium Charge?
Premium Charge only applies to some Betfair Exchange users. To be specific, the charge only applies to users who meet three criteria:
- Their account is profitable. In other words, their balance is more than the total amount of money they put on Betfair.
- They have paid less than 20% of their gross profits in total charges. Betfair defines total charges as half of any commission you have paid on any winning bets plus 1.5% of any losing bets.
- They have bet on more than 250 markets.
In addition to this, there are two points worth bearing in mind when determining whether or not the charge will apply to a user:
- If a win accounts for more than 50% of a user’s profits, it’ll be excluded from the calculations.
- Each user has a £1,000 lifetime allowance against the Premium Charge. In other words, they’ll only pay the charge calculated above that amount.
There are a lot of nuances here, but the easiest way to look at it is that the Premium Charge affects users who are profitable, don’t pay much commission, and bet on a variety of markets.
How Is Betfair Premium Charge Calculated?
The next natural question is how the Premium Charge is calculated. The calculation is actually quite simple: it involves comparing a user’s gross profits with the total charges they have paid, either during the span of one week or during the lifetime of the account.
We gave Betfair’s definition of total charges above: half of any commission you have paid on any winning bets plus 1.5% of any losing bets. And just to be clear, gross profits are the amount you have won on the Betfair exchange (not including charges) minus the amount you have lost.
The exact amount of the charge is 20% of gross profits minus total charges paid, for the previous week or for the lifetime of the account (whichever is lower). In other words, Premium Charge effectively means you pay a 20% commission on your Betfair Exchange earnings. Remember, however, that the Premium Charge has a lifetime allowance of £1,000.
Higher Rates for Premium Charge
Believe it or not, Premium Charge can actually grow to more than 20% of your gross profits, less total charges. In fact, it can grow as high as 60% of gross profits (less total charges)!
These higher rates apply to an estimated 0.1% of users, who meet three additional criteria:
- Their account has generated profits of more than £250,000.
- They have paid less than 40% of their gross profits in total charges.
- They have bet on more than 1,000 markets.
If these criteria are met, the Premium Charge is calculated based on the ratio of lifetime commissions paid to gross profits. For a ratio below 5%, the Premium Charge raises the effective commission to 60%. For ratios between 5% and 10%, the Premium Charge raises the effective commission to 50%. Finally, for ratios above 10%, the Premium Charges raises the effective commission to 40%.
When Do You Pay Premium Charge?
Premium Charge is assessed on a weekly basis based on the previous week’s earnings (Monday to Sunday). If the charge applies, it is removed from the users account on the following Wednesday.
How to Avoid Betfair Premium Charge
You may be wondering whether it’s possible to avoid Premium Charge. After all, if you’ve found a profitable betting strategy, why would you want to give away a good chunk of your earnings (sometimes more than half!) to Betfair?
There are a couple of supposed strategies for avoiding Premium Charge. The first (and perhaps most obvious) is to use multiple accounts. Betfair of course frown on this, and claim to have advanced software which can detect accounts that are managed by one owner. Accounts which its suspects are owned by the same entity will be treated as one account for the purposes of Premium Charge. If you’re really keen to get around this, it might be possible to avoid the charge by having multiple accounts registered to different individuals or companies and using different strategies. However, this is something of a grey area, and Betfair might still choose to treat the accounts as one.
Another strategy for avoiding Premium Charge is raising the amount of commission you pay. In other words, by using a less profitable betting strategy, you can increase the ratio of commissions paid to gross profits. Unfortunately, this strategy doesn’t really make sense, as you’ll end up paying 20% or more commission one way or another.
As a result, there aren’t really any good ways to avoid Premium Charge. Instead, you simply have to accept that profits will be severely cut down if you’re a profitable better in the long term!
Betfair Premium Charge is a fee that affects users who consistently profit from their use of the Betfair Exchange. Calculated on a weekly basis, the charge effectively raises the commissions paid by users to a flat 20% on any profits they make. For the most profitable users, Betfair Premium Charge comes with raised rates of 40%, 50%, and 60%. Unfortunately, there are few ways to avoid this charge.