Predictit charges a 5% withdrawal fee, presumably because they incur Admin fees to "Cut-a-check".
That's an exorbitant fee by any measure...and further...who the hell issues checks anymore. This is a game stopper!
I think the 5% is a good choice for the withdrawal fee. It's your contribution for the system to organize the betting.
I don't mind the 10% fee in principle, but I fear it is distorting the betting markets, because hedged bets become worth less through it. As an example: There are two bets, A and B, either Yes or No. I believe "if A happens, then B happens" and buy B-Yes shares but also A-No shares to hedge my bet, in case A results in No and B becomes very unlikely (in my view). IF A happens and I'm right that B happens, too, I get my profit from B, but have to pay the full 10% on the profit, without subtracting my hedge A first.
Hedged bets should be promoted to get a more efficient market and better information from the market, and they shouldn't be punished by calculating the 10% profit on the winning part of the bet (B), without allowing to subtract the loosing part of the hedge.
I'm going to carry an unpopular opinion here, but I don't think the fees are that bad. (Full disclosure: I work for a payments company so I deal with fee structures on a regular basis.) The fees are a bit higher than strictly necessary to cover costs and make a profit, but PI is paying us (the consumers) money for a sophisticated guessing game. They set up a structure where we get to say, "Hey, I think this thing will happen", put down some cash, and then potentially gain 10,000% of what we put down. That's basically unheard of anywhere else. Likely they have to take a cut when people make a profit because they're taxed on it; same with payouts. Plus, they need to pay their people.
At any rate, it's not that much money, all told, and we do very minimal work for lots of potential gain. The fee structure seems reasonable for the benefits.
That said, I'm not against lower fees! :P
Not sure what happened to my comment, but could be awaiting moderation. For you to charge a percentage basis just because your credit card costs are also percentage based is flawed. It means that people who lose all their shares don't pay into the fee structure at all, while good players pay multiple of how many times they win. A person who wins 6x as much as me pays 6 times more fees even though I was the one feeding the system with my extra deposits. That's the wrong kind of incentive.
The total 15% spread is also too much for average bettors to overcome. I'm cashing out now that I'm ahead, but now that I understand my further wins are going to be taxed at 15% rather than 10%, and add another 1% for all the games you start that you take so very long to close and pay out, I'm done here.
Saw this site on Stossel and wanted to give it a try but will wait for the fees to come down.
I find the 5% withdrawal fee too high. However, my guess is that this is a safety valve to avoid the problem that Intrade had when, after the 2008 election, everybody withdrew their money creating a huge liquidity crisis. While Intrade had other problems, at least with this fee in place PredictIt will easily survive a massive withdrawal moment, and be able to pay their staff since they will be rolling in cash at the time.
Agreed with the points above. A percentage fee is not justifiable for a service that has a flat cost.
If PredictIt wants to keep calling themselves a "non-profit", this should be changed.
A flat withdrawal fee is fair. I'm with afoux1 on this. Or cap the 5% fee for the first $500- or whatever is fair. But it costs predictit no more to cut a $50- or $500- or $5000- check. The current 5% fee is exorbitant, given the 10% chunk predictit has already taken out of winnings. Respectfully, this should be reconsidered and changed.
I think they mail checks as an implicit additional means of address verification, but repeatedly having large checks in the mail does get scary, insofar as I simply don't know one way or another what would happen if the post office lost any envelope. Not speaking of these checks but just mail in general, most people have probably noticed how occasionally a postman drops an envelope in the wrong mailbox, like I've gotten unrelated mail addressed to neighbors and others.
Maybe, after the first withdrawal is done by check, allow direct deposit on subsequent withdrawals?
The fees serve a purpose, insofar as I want them incentivized to continue to maintain this great site, but always using mail alone seems unnecessary.
Alternatively, if continuing to use mail alone, maybe clarify the FAQ by explaining how a lost check would be handled, like if one could pay a moderate fee to have it canceled and then a replacement check mailed out?
In addition to the seemingly high 10% fee on profit, the fee structure is straight out misleading. I reasonably inferred that if my position was closed out at $1, the profit would automatically be mailed to me. Instead, they cleverly merely "credit" my account. That way, in addition to the 10% disclosed fee, they charge an additional 5% fee to redeem the "credit." The fee should be clearly disclosed as 15% of all profits and not disguised as 10%. It is never 10%!
You're welcome, Shak.
I think the 5% fee is mostly about recovering for costs PredictIt incurs when processing credit card deposits.