Smarkets mulls 0% commission for recreational punters

Smarkets could eventually cut its commission rates to 0% for recreational users, EGR Intel can reveal.

Smarkets developer Shashank Khare said the 0% plan was a “long-term goal” for more casual users, while institutional traders and market-makers using the API would still pay commission.

The exchange currently charges 2% commission on net winnings, which is significantly lower than the standard 5% at Betfair, but the firm said its low operational costs would allow it to go even lower in the bid for recreational customers.

“We don’t have to spend that much on areas that a big company might spend on so that allows us to cut prices and out compete everyone,” Khare said.

“0% commission is a long long-term goal but we can do that because we’re not spending on other areas.”

Smarkets press officer Pascal Lemesre specified the 0% goal was an “ideal”, rather than something the firm has concrete plans for currently.

The London-based company has made recreational punters a priority this year, recently overhauling its desktop and mobile sites to appeal to “non-bettors”.

The firm may also be able to withstand lower commission revenues, with the firm generating less than a third of it 2016 revenues from commission. The remaining two third came for proprietary trading.

As one analyst put it to EGR: “Smarkets is half exchange and half pro punter”.

And the proposed tiered commission structure is not unusual in the sector, with Betdaq charging lower rates for customers who support the ecosystem by putting offers up on the exchange, for example.

However the plans could ruffle some feathers at rivals after Betfair warned recently its competitors were engaged in a “race to the bottom”.

Matchbook is currently running a 0% offer of its own, with no commission on horseracing bets until the end of April, while Betdaq has also cut its commission rates this year.