12th April 2012, 07:11 PM
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Banned
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Join Date: Oct 2011
Posts: 366
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Picked this up on another site.
How many shop owners hang the closed sign up when they have people at the counter with money in hand waiting to buy their product? Not many, right?
If they do then they are either idiots and will likely go broke, or they have an agenda.
I have been asking myself why Racing NSW consciously imposed a tax law on the giant global betting exchange Betfair, when they knew that their business model would never survive such a hit.
Many observers may consider Betfair (BF) are just another bookie and who cares anyway, but they are not a bookie as they facilitate bets between two punters when one bets to win and the other lays to lose. BF survive by collecting a 5% (or less) commission from whichever punter wins his investment. Racing NSW should be collecting their fair whack from the profit that Betfair makes from their winning members, but in a staggering affront, they have demanded a 1.5% tax based on the turnover.
I asked trader Tony Hargraves for a print out from his trades today and you can quickly see that Betfair have no future in the exchange business as a partner with RNSW.
Tony worked on ten races and as usual won on all of them, but importantly he turned over $16,754 and made a profit of $320 which yielded BF $6.40 Gross Profit on Tony's trades, but because RNSW want 1.5% of the turnover, BF lose $251 from the business.
OK got it!
Betfair generate incremental income for the racing industry as their unique fun model has attracted many players to the fold, and thousands of "retired" punters have flocked back to the industry as they love Betfair. The BF business creates millions of dollars of exotic bets and bet backs for corporate bookies including the TAB.
Tony had $8,200 in bet backs that stemmed from his trades today, which RNSW also grab 1.5%.
So we have proved that Betfair cannot survive under the RNSW tax and that they attract incremental revenue and participants to the industry. So given that very clear and obvious statement is some government watch dog going to ask why?
Racing Minister George Souris must ask RNSW why have they actively killed off a cash cow? We all would like to know the answer.
CHEERS.
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