The case against RB

[Fnord]

I'm not very good at this sort of thing, but I'll get the thought process going and perhaps the more sophisticated can expand or refute my points.

Lets look at this from a poker economy perspective…

Fish input money into the system. Party foots the bill for advertising, etc. to bring them in and a bonus to spiff their account.

Fish plays, good players take their money and Party collects rake until fish busts or becomes a better player.

Consider that RB, was just another way of sending money to the players savvy enough to collect it when it was really intended to be spent developing new players. It was also calculated in a screwed up way. MGR was your share of the rake generated on the table. Not a % of the rake you paid. Hence, it became profitable to just camp out hands on as many action tables you can find since you were getting a cut of the other guys capping it off 6-way. There have been fleets of these guys at tables of all limits and it’s certainly more profitable than farming WoW Gold.

Consider the long-term implications of this towards retaining your action players. Do they want to play with these guys? Do you want a fleet of sustenance farmers taking up 4, 6, 8, 10 seats each?

It’s been hella fun playing at tables like this with such a split of player types. This has been a typical hand for me lately:

A fish or two limps with god-knows-what out of position.
I raise two pretty looking cards from late position.
Blinds fold (they probably have AA on one of their other 7 tables.)
I play a short-handed pot with position against god-awful players with dead money in the pot. Screw hand groups, it’s +EV.

…or I run into a hand, get 3-bet and call knowing I’m playing against a very well defined hand.

That’s got to be murder to the fish. At least in a 6 way pot they get schooling protecting their behavior and some exciting action. Not to mention that they probably like it better that way.

Finally, consider this. Is there much a difference between having a rake-back revenue stream vs having softer games to play in? Of course, this assumes Party really puts the money into keeping the pond fully stocked… Sure you paid $100 of rake today, but if that went towards spiffing a fish a bonus is it really a cost in the sense of what you paid for you lunch? If the fish hadn’t been there, would you have made the $50, $100, $200 or whatever of earnings? Will trimming the fleet of rocks help attract and maintain the players we all love?

Obviously rake should be defined as the amount a player actually paid, not as 10% (or whatever) of the total amount paid at the table.

If done properly, rakeback for high volume players makes sense. B&M casinos provide lots of expensive comps for their high volume players, from luxurious hotel suites to tickets to shows, free plane tickets, meals paid for, and god knows what else.

Online casinos can't offer things like that, but what they can do is kick back 25% or so of rake. What I've heard is that 25% is the amount of the average player's losses that B&M casinos kick back to players in the form of comps.

[fnord_too]

Just one quick note:
Affiliates make money for referring whomever. Anyone who does not sign up directly is diverting money from the site regardless of whether they are a fish or a shark. The economics of the situation, as interpretted by most sites, is that paying people this commision to wrangle business is better for growth than just reducing rake across the board.

Given that said rake is effectively taken from the site, but that the site's rake is the same, it does not really matter where it goes after it is diverted. Basicaly there is price discrimination for everyone who signs up through an affiliate from the sites perspective regardless of what happens to the money once it disappears.

It is a shame the analyses the sites have done did not suggest just slashing rake by a third or something, because that is best for everyone around (except the affiliates and maybe the site itself, since sites profit from players being ignorant of the price discrimination aspect of affiliates.)

[scrapperdog]

Am I the only one that did not understand the point of this? What exactly are you trying to say? You raise pretty cards in position? Yawn.

Why do people have to keep going on about the fish/rocks in the poker economy. We all know how that works.

[Nicholasp27]

looking at it economically, rb is better than an across-the-board rake cut

the rb segments the market...the fish that come in from marketing/ads/word-of-mouth, etc and don't know or care about rake will pay full price and party can keep all of that money

the ones who are price sensitive and knowledgeable will still come, but only if u offer them a lower rate, ie rakeback

their flaw in the plan was having skins with rakeback and no 'official' rb for party...so this caused this other segment to simply go to skins...so now they have separated the skins and may offer rakeback officially and increased table number to 10 for multitablers in an effort to get back these price elastic consumers that have a much higher average rake per month than the full-paying customers

[Fnord]

[ QUOTE ]
Am I the only one that did not understand the point of this? What exactly are you trying to say? You raise pretty cards in position?

[/ QUOTE ]

That having fleets of profitable 8-tablers subsidised by RB creates table textures that aren't very exciting for the fish because you no longer have to play as much poker to take enough money off the table to generate a profit.

[Nicholasp27]

the fish don't know about table texture

they don't care about the pros

they just wanna play poker in their pajamas

[otctrader]

I think the best way to look at this is to examine the alternatives; and bear in mind I really have no grasp of the macro online poker economy so take it as jibberish.

In a non-rakeback utopia where all RB is cancelled, and every penny of those payments is diverted exclusively to fish (let's say Party devised a scheme to pay fish proportional to their bad play, i.e. mega-losers get a mega-bonus), the money would simply filter its way to the best players anyway, as they swarm on the uber-fishy games. I'm not sure how this changes anything.

The other alternative would be a RB cancellation, and rake cut across the board. It's not going to attract fish, since uber-fish only care about bonuses, giveaways, and such. And it will, over time, be more advantageous to the elite players, since they are the ones dragging a majority of the pots.

I really don't see how either alternative would change the online poker dynamic for better or worse except for short run ramifications. In the long run, the fish-shark dynamic should always balance out from supply/demand.

[scrapperdog]

[ QUOTE ]
[ QUOTE ]
Am I the only one that did not understand the point of this? What exactly are you trying to say? You raise pretty cards in position?

[/ QUOTE ]

That having fleets of profitable 8-tablers subsidised by RB creates table textures that aren't very exciting for the fish because you no longer have to play as much poker to take enough money off the table to generate a profit.

[/ QUOTE ]

I would agree. A lot of fish create their own excitement though, forget what the rest of the table is doing.

We all know rakeback is crap for the fish. Not only do they not take advantage of it, it tends to attract a certain type of player to a site. If party changed to contributed rakeback all of these tight players would take a hit, that is for sure.

Good points, I agree.

This situation is solved so easily. Only pay money to affiliates for the first 3 months of each player they introduce. This gives them a huge incentive to keep new player volume coming into the site. It also eliminates rakeback. Easy.

The other thing they have to do is stronger cross checking to prevent current/previous customers signing up under a new account and getting rakeback. There needs to be a zero tolerance policy, the poker sites are just giving money away for no gain by allowing this.

[Nicholasp27]

they aren't giving it away for no gain

they are getting the players who pay them 10/20k/etc in rake EVERY MONTH

those players will lose 5k+/month in rb and WILL go to other sites that give rb if they can't get it at party...

they give rb in order to attract the price elastic consumers, which also happen to be their best customers

[Daliman]

[ QUOTE ]
the fish don't know about table texture

they don't care about the pros

they just wanna play poker in their pajamas

[/ QUOTE ]

[radar5]

[ QUOTE ]
[ QUOTE ]
the fish don't know about table texture

they don't care about the pros

they just wanna play poker in their pajamas

[/ QUOTE ]

[/ QUOTE ]

[ QUOTE ]
the fish don't know about table texture

they don't care about the pros

they just wanna play poker in their pajamas

[/ QUOTE ]

If two of those three items are true, does that make one a fish?

[sqvirrel]

[ QUOTE ]
they are getting the players who pay them 10/20k/etc in rake EVERY MONTH

[/ QUOTE ]

Okay, no they aren't. First of all as previously pointed out MGR is miscalculated and TAGs do not pay rake nearly in proportion to what they are credited.

Second of all if the internet multi-table break-even rakebackers are all playing through skins then Party is giving the skins a big piece of their MGR - and bear in mind that MGR is already disproportionately credited to the player. If your affiliate can afford to give the player a 30% rakeback then what is the affiate getting? 35%? 37%? And if the affiliate is getting 35% then I guarantee that the skin is getting at least 50%.

So in the end Party is losing 50% of rake that they aren't even collecting in full. But it doesn't quite stop there.

Consider the Party landscape if every shark decided to stop playing. What percentage of gambled dollars ends up in the pockets of internet poker pros right now? 10%? 25%? 50%? Even at 10% this represents far more rake than the pros ever pay. If Party could eliminate the sharks then the site would just be fish passing cash back and forth. Eventually 90% plus would be plunged through the rake-hole.

Face it. Rakeback junkies need Party much more than Party needs them.

[blackize]

[ QUOTE ]
Face it. Rakeback junkies need Party much more than Party needs them.

[/ QUOTE ]

Don't be so sure about that. The fish don't like starting new tables or playing shorthanded. Take away 10 guys 8 tabling and that is 80 seats. Multiply that by a few hundred and you are looking at a drop of 16000 seats for just 200 guys 8 tabling it.

I imagine on this forum alone there are easily 200 people playing an average of 8 or more tables at once. I feel that if it weren't for these people taking up space in the games, the fish would all sign up in waiting lists because there aren't enough full tables around and eventually get bored with all the waiting they have to do and the games would dry up.

[johnnymac]

[ QUOTE ]
If Party could eliminate the sharks then the site would just be fish passing cash back and forth.

[/ QUOTE ]

But they would see a massive reduction in games/rake. I would imagine your standard fish plays a couple of hours a week for amusement, and drops maybe a couple of hundred dollars. Eliminate the sharks and you end up with fish being able to keep their bankroll from weekend to weekend, but see a massive drop in players. Fish are not suddenly going to be playing 8 tables for 30+ hours a week simply because they are not losing their money to sharks.

Joe

Lemme check your math... 200 guys 8-tabling would be 1600 seats, not 16000.

[Pokeraddict]

Here is my defense of rakeback and why it is good for poker rooms.

Player A has rakeback. He is a -.5BB/100 loser. He plays 3/6 4 tables at a time learning to be a pro. He plays 3 hours a day so every day he loses $30 on average. At the end of the month he has lost about $1000. Then this player gets about $1200 (at 25% this is $800 in total rake) in rakeback. He can then play another month without another reload. The house made $3600. Next month he does the same, house makes another $3600 and he gets his losses back. At what point would this player bust and not come back? After losing $2000? $5000? Instead Party makes $50,000 in a year, this rakeback is money they would possibly have to pay an affiliate anyway that would not get recycled.

Would a poker room rather have players generate $50,000 a year or have them play a couple of months and leave? I think the logical choice is obvious.

[Fnord]

[ QUOTE ]
I imagine on this forum alone there are easily 200 people playing an average of 8 or more tables at once.

[/ QUOTE ]

My SWAG

Most of 2+2ers 2-3 table.
Hundreds that play 4 mostly, some do it well, many give up too much.
~100 that 6-8 table. Many give up too much.
~20 that can 8+ table well.

[sqvirrel]

[ QUOTE ]
Eliminate the sharks and you end up with fish being able to keep their bankroll from weekend to weekend, but see a massive drop in players. Fish are not suddenly going to be playing 8 tables for 30+ hours a week simply because they are not losing their money to sharks.


[/ QUOTE ]

You are assuming that poker rooms make money from superior players. They don't.

They make money from equally skilled players, and lacking that they make money from bad players. Any player that is extracting money from the site is not a profit center.

[Nicholasp27]

correction: any player that is PLAYING at the site is a money maker

when a winning player withdraws his profits, that doesn't affect Party

all that affects them is how many hands/tourneys are being played with what rake...

winning players tend to play more hands/tourneys and thus party gets more money from them...

[sqvirrel]

[ QUOTE ]
correction: any player that is PLAYING at the site is a money maker


[/ QUOTE ]

This is a false dichotomy. Clearly if Party could only choose between a great player playing a terrible player or nothing they would take the former, but that really isn't their choice, is it?

A player deposits $100 at Party. A day later he withdraws $150. Where is Party's profit?

[Nicholasp27]

party's profit is the $400 in rake he paid to make that $50

again, party is NOT the 'house' in poker...if this were bj or craps, then yes...but players do NOT win or lose to the house...they win or lose against each other while party gets paid to provide that medium for doing so

so the more rake that's paid, the more party makes

which is better for them?

a) fishy deposits $55 into party, plays 5 10/1 tournaments, gets ootm in all of them and is done

party made: $5 in rake from this person

b) pro deposits $50 and builds it up to $300 by playing 5 10/1 and 10 20/2 tournaments then cashes out

party made $25 in rake from this person


the profits the person cashed out were NOT party's money...the money belonged to other users

[Perseus]

The bottom line is that Party had 65k players playing on their site today and they keep 100% of the rake so they win.

[Schwartzy61]

They don't keep 100% of the rake.

Don't they still pay affiliates?

the problem was with affiliates being able to play those they signed up. Party poker banned rake-back programs and eliminated individual trackers from what I understood and this is what prevented players from getting rakeback not Party deciding not to pay affiliates.

[Schwartzy61]

What's better for Party?

10 fish trading pots all the while losing their money to party rake.

OR

7 fish, 3 sharks with the sharks taking the fish's money before it can be completely lost to rake?

Also, the fish are more likely to be dabbling in the blackjack while also experimenting with the retarded side bets.

[StellarWind]

[ QUOTE ]
Obviously rake should be defined as the amount a player actually paid, not as 10% (or whatever) of the total amount paid at the table.

[/ QUOTE ]
A poker network is going to have an agreement governing how the different skins divide the rake when their players share a table. That agreement will inevitably determine how rakeback and other affiliate payments are computed. No skin wants to pay an affiliate for revenue that the network never credited them with.

It depends on what limits the fish's playing. Is it cash or is it time?

If the fish is time-constrained then sharks don't cost the site anything. The fish just loses more. If on the other hand the typical fish has a certain bankroll to spend playing poker then everything the shark takes eats into the site's profit, because the fish would have lost the money in rake eventually.

I'd guess it's a mixture, but weighted more towards the fish being limited by bankroll. I'd imagine if a fish wasn't being eaten by a shark, he'd move up to a higher limit where the tougher play and higher rake would take his money. That's what i did!

[SomethingClever]

[ QUOTE ]
[ QUOTE ]
Am I the only one that did not understand the point of this? What exactly are you trying to say? You raise pretty cards in position?

[/ QUOTE ]

That having fleets of profitable 8-tablers subsidised by RB creates table textures that aren't very exciting for the fish because you no longer have to play as much poker to take enough money off the table to generate a profit.

[/ QUOTE ]

Guess that's why it was so hard to find a table of fish before they cut rakeback.

Oh, wait.