New MBR & Turnover Charge on NSW Harness

Author

Betfair

Betfair has announced that they will be increasing the Market Base Rate (MBR) for New South Wales (NSW) harness racing markets to 10%. In addition, a Turnover Charge will be introduced for customers that meet certain criteria on Harness Racing NSW Markets. These changes will come into effect on 1 August 2021.

The decision has been made following numerous months of engaging discussions with Harness Racing NSW to shift to a more sustainable product fee model. Our goal throughout these discussions was simple – we wanted our approval conditions to be modified so that, going forward, we were charged based on a ‘revenue model’, rather than a ‘turnover model’ (i.e. back bet volume).

A transition to a revenue-based model would in turn result in Betfair reducing the MBR for Harness Racing NSW racing from 8% to 6%. Unfortunately, in the end, Harness Racing NSW was not willing to modify our approval conditions, which means we will continue to be charged based on a turnover model.

WHY IS AN MBR INCREASE AND TURNOVER CHARGE NECESSARY?

We are committed to providing outstanding products and service to you. As an exchange, we are unique – where winners are wanted. The Betfair Exchange encourages sustainable turnover growth and is focused on growing the industry for the better of our customer base.

We have approvals/agreements in place with racing and sports governing bodies that allow us to offer betting markets on our platform. Pursuant to these approvals/agreements, we must pay product fees to the governing bodies. The costs of these product fees vary based on state, region or sporting code.

The product fees we pay to these governing bodies then determines what we know as the “Market Base Rate” (MBR), essentially the percentage commission taken on a customer’s winning position in a market. We treat all governing bodies equally and set MBRs fairly based on the product fees imposed. The lower we set our MBR’s the better value it is for our customers.

In this instance, our agreement with Harness Racing NSW that enabled us to provide betting markets on their product had been under review since before discussions commenced with Harness Racing NSW. This was due to the abnormally high and increasing costs Betfair was experiencing because of the turnover model set out in the approval conditions. We have been absorbing these costs in good faith while attempting to negotiate a better long-term outcome with Harness Racing NSW.

The decision to increase the MBR and introduce a Turnover Charge on all Harness Racing NSW racing markets is necessary so that Betfair’s product offerings can remain sustainable across the entire platform.

WHAT IS THE TURNOVER CHARGE?

The Harness Racing NSW Turnover Charge is a recuperative charge aimed at customer activity which generates large volumes of back bets without providing Betfair with the corresponding revenue (commission) to cover the product fees imposed. It is designed to pass some of the product fee costs associated with the activity onto customers in scope of the charge.

From 1 August 2021, the Harness Racing NSW Turnover Charge will apply to customers who, in any week (Monday to Sunday GMT), meet each of the below criteria:

Harness Racing NSW Turnover Charge Criteria (applicable from 1 August 2021)

  • Matched back bets placed in 1 or more Harness Racing NSW Turnover Charge Markets
  • Matched back bets with an aggregate value of AUS $1,000 or greater on Harness Racing NSW Turnover Charge Markets
  • Total Commission generated on Harness Racing NSW Turnover Charge Markets is less than 1.00% of aggregate matched back bets

Harness Racing NSW Turnover Charge Rate

  • The Turnover Charge will be 1.80% of the aggregate value of matched back bets on Harness Racing NSW Turnover Charge Markets.

Total commission generated is half of the commission paid plus half of the implied commission, calculated by the formula = (commission paid + implied commission) ÷ 2.

A worked example at the conclusion of the text as well as what activity is in the scope of the charge.

Please note that the Harness Racing NSW Turnover Charge is incurred separately from the Racing NSW and NRL Turnover Charges.

The Harness Racing NSW Turnover Charge is a charge which applies to a very small number of customers betting on Harness Racing NSW markets and engaging in specific activity that is associated to large back bet positions and minimal winning positions and eventual total commission generated.

Customers will be contacted by Betfair (via email or phone) and informed on the first occasion on which a Harness Racing NSW Turnover Charge would have been payable.

Customers will also be afforded a one-week ‘grace period’ for the first instance they hit the Harness Racing NSW Turnover Charge, this is designed to give them an opportunity to refine their betting habits should they wish to do so.

A summary report of an individual’s weekly activity will also be available if requested.

Customers seeking further information can call 1300 238 324 (9am – 7pm AEST) or email service@betfair.com.au, or pricingenquiries@betfair.com.au.

Full details can be found in our Customer Terms and Conditions.

Worked Examples

Confused about how the charge is calculated? Or want to see a worked example of how we will reconcile the turnover charge?

We break down three examples in this article. 

You’ll also find a guide to specific activity that generates a low total commission as a percentage of backbet volume.