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HOW TO: UNDERSTANDING COMMISSION

Okay, we should come clean on fees and charges.

Betfair Commission. We know it’s scary. We’d rather spend time talking about the great features of the Exchange. We’d rather spend time talking up better odds, which have been proven time and again. We’d rather spend our time talking about anything else, really.

But like any traditional bookmaker, there needs to be some way for Betfair to make money. To keep the Exchange running, help us in improving our products and services – and pay the handsome bloke writing this article. Our pricing model, however, looks a little different to a bookie. Whilst they must interfere with your odds with built-in margins, we don’t. Remember: odds creation is completely decided by you.

Putting it bluntly …

Betfair’s pricing model comes into the picture after the race has been won, when commission is taken from a customer’s net winnings. This is called a Market Base Rate. The percentage of commission will depend on what type of sport you are betting into, as well as which governing body is overseeing the sporting event. And that can vary from state to state, code to code.

As a rule you will find Betfair markets on Australian racing have the Market Base Rate (or MBR) set at 7%. But in some states (plus New Zealand and International) the MBR is lower at 5% – and others is set at 10%. All sports markets have an MBR set at 5% (except for National Rugby League markets, which is 10%).

View this easy-to-read chart for a guide to MBR across racing and sport on the Exchange.

 

Commission Example

You place a $50 BACK bet on Incentivise to win the Melbourne Cup at odds of $3.00. Incentivise wins. This means that your net winnings are $100.00 ($150 return – $50 stake).

With Victorian thoroughbred racing’s Market Base Rate set at 7%, the commission you will pay is $100 x 7% = $7.00.

Why Commission?

Taxes set by state and territory governments on individual customer winnings are imposed on Australian licensed wagering providers. In addition, these providers must also pay product fees to Australian sporting and racing bodies so they can put up betting markets on their sporting matches and races.

Traditional bookmakers offset any fees and taxes by having a built-in margin on all betting markets. This is made possible because the bookies are setting the odds and can dictate odds movement and creation. And once again, the Betfair Exchange does not set the odds – you do!

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