I have heard this argument many times, and at one time (for a short period of time) actually thought this myself. However this is a very simplistic view of the situation. It is only the fact that the commission is paid post-collect that makes this argument appear to be valid, however it is not necessarily the case.

In the case you cite above, let's assume the punter in question has bet $18,000 and returned $20,000 for his $2,000 profit. If commission were factored into the dividend (as it is with bookies and the tote) then he would have bet $18,000 and returned $19,000 for a $1000 profit and he may consider himself to be a reasonable punter.

If we can agree that over a very large number of bets, the better dividends will be where the market takeout (including commission) is the lowest, then if that same punter had put that same $18,000 into the totes (if a horse racing punter) at 17% takeout, then the $18,000 bet would have only resulted in a return of something like $17,000 and they would be in a loss situation. Regardless of whether the $1,000 in commission is paid before or after the collect, $1,000 profit is still better than $1,000 loss.

If the punter in question was a sports punter, and were betting on a book with a percentage of around 8%, then the difference would not be so great, but would still be there. Regardless of whether the commission is paid before or after the fact, they would still be ahead by paying the 5% commission - as long as the dividends received were better at BF than elsewhere.

I am a punter and not a trader. By my calculations I don't pay any commission. My software displays the betfair dividend "post commission". I record all my bets with this post commission dividend. The commission is irrelevant to me. If I put a bet on at $2.00 (assuming a 5% commission), I consider this a dividend of $1.95. I only put this bet on if the $1.95 available is better than what I can get elsewhere. If I put $100 on that $2.00 shot, my profit is $95. The fact that they pay me $100 and then take back $5 is totally irrelevant and confuses the issue.

The above argument suggests that I've "lost more" by paying that extra $5 in commission. If the $1.95 was better than what I can get elsewhere then I'm far better off.

I suppose what I'm trying to say is that if that selection was a true 50% chance, then the 5% commission (net $1.95) is far LESS significant than a tote takeout of 17% which would show that selection at something like $1.85.



They most certainly can.

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