▬Borrowed Stake Open the partner account
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Borrowed Stake / What it costs
The certain cost

The one figure in a wager that is not a probability

A stake is a price paid for a chance. A borrowed stake is that price plus a second one, charged by someone who is not part of the wager and who does not care how it settles. This page puts the two costs side by side, and works the arithmetic of the one that is certain.

Open the partner accountStart with what the funding clause says
crClear: the money is the player’s owndrDisguised: borrowed, under another labeldrCredit proper: owed from the day it moves
Direct answerBorrowed money used for a gambling deposit carries a cost that begins on the day the transaction is made - a cash-advance classification on a card usually removes the interest-free period entirely, and an instalment plan creates a repayment schedule regardless of the balance. That cost is charged whether the wager wins or loses, and it is the only figure in the whole transaction that is not a probability. A stake from the player’s own funds has no second cost attached.

Why the rate starts immediately

Because a gambling deposit is not a purchase. A card issuer’s interest-free period is a period of credit extended against goods that can be returned, and a gambling transaction is neither returnable nor reversible in the way a purchase is. That is why the classification that applies to cash withdrawals and to gambling expenses usually begins accruing interest on the transaction date rather than on the statement date, and it is the single most expensive detail of the whole route.

The classification matters more than the headline rate, and it is worth checking before the deposit rather than after. The series’ payment-rails desk covers how a deposit is authorised and credited; this page covers what happens to the money that funded it once it has been credited.

The cost ledger, and how to read it

The ledger at the top of the overview page runs four borrowed stakes through the arithmetic of what the borrowing cost, and the four rows differ in every respect except one: the interest line is not a function of how the wager settled. A reader who wants to check the ledger against their own position needs three figures - the stake, the rate, and the number of days the money was owed - which is the whole method.

Worked example - the certain cost against the expected one (illustrative) Stake: 300.00, drawn on a credit line at 39.9% EAR, cleared after 90 days. Certain cost of the borrowing: 300.00 x 0.399 x 90 / 365 = 29.52 Expected loss of the wager itself, on a product returning 96% to the player: 300.00 x (1 - 0.96) = 12.00 Ratio of the certain cost to the expected one: 29.52 / 12.00 = 2.5 Hold the two figures side by side and the shape of the transaction changes. The 12.00 is an average over a very long run and may never be experienced by this reader at all; the 29.52 is a schedule that will be charged whatever happens, and it is two and a half times the size of the thing it was borrowed to buy a chance at. That is the honest comparison and it is not an argument that one wager is worse than another. It is the observation that a borrowed stake has a guaranteed floor of loss that an owned stake does not have.

What the cost is made of

  1. The rate. A card rate, an overdraft rate or a facility charge. It matters, but it is the smallest of the four parts in most real cases, and a reader who compares only rates will misread the total.
  2. The classification. Whether the interest-free period applies. On a gambling transaction the usual answer is that it does not, which is worth more than a percentage point or two of rate.
  3. The days owed. The cost is a daily accrual, so a stake that is repaid in a fortnight costs a fraction of the same stake repaid over three months. The number of days is the figure most under a reader’s control.
  4. The fees that are not interest. Late instalments, a cash-advance fee, a facility’s monthly administration charge - none of which appears in a headline rate, and all of which land on a stake that has already been placed.

What the arithmetic does not say

It does not say a stake is worth less because the return is negative in expectation; every stake in every product in this series is negative in expectation, and a reader who has decided to take that risk has decided to take it. What the arithmetic says is narrower and harder to argue with: borrowing adds a certain cost to a position that is already uncertain, and it does so on the wrong axis. The wager offers variance with an expected loss; the loan offers no variance at all and a certain loss. Putting the two together does not make the wager more interesting; it makes the reader a customer of a lender as well as a customer of a bookmaker, and the lender is the only party on either side of the trade with no exposure to the outcome.

Read the rate, then read the statement. Every figure on this page is illustrative and its arithmetic is on the page so it can be re-derived, but rates, classifications and fees differ between lenders and change by publication. The two numbers worth finding in a reader’s own position are the effective rate applied to a gambling transaction and the date interest began - they are both on the statement, and no other page in this desk is worth more than checking them.