Why there will never be a rake war (longwinded)

[Greg J]

There have been many posters constantly discuss how market forces will force rake down. The logic is simple, and based on the idea that fair and open competition will lead to a lowering of prices. It’s a common assumption in economics, and it is really a logical conclusion. A lot of posters I highly respect have this view. But I think they are dead wrong. In fact, I think that we can expect to see the trend of higher rake that we see on sites like Pokeroom and Pacific to continue. There are a few dynamics here that lead me to this conclusion, and they violate the assumptions of the standard argument that competition leads to lower prices.

1) The “consumer,” in this case the poker player, is very ignorant. This does not mean you, faithful 2+2 poster, but the average customer. Interesting anecdote: every time I talk to my brother-in-law about poker, I have to re-explain what rake is! The recreational player does not think about rake like the thinking serious player does. He/she does not consider the effect it has on winning or losing. I think many of you would be surprised to learn that some people don’t even know what rake is! Most that do have no clue of the implications. “Oh that’s only 2 dollars out of a $50 pot. No big deal at all!” When rake is increased, most players don’t notice.

2) It is not in the interests of the sites to inform the customer about rake in order to get their business. Internet poker is seen as “iffy” by many American players already. If they start making rake salient, then they will probably be less likely to deposit anywhere. No poker site is likely to get business on the argument “our rake is lower!” except of course from poker geeks like us. (And no offense guys, but I don’t want you at my table!)

3) The players that do notice a rake hike who will be less likely to play the site are typically better than average players. This is not critically important, but it does factor in, and makes raising the rake that much more profitable. A winning player is less prone to making multiple deposits. The recreational players (“fish”) are more prone to pass money around between each other, ultimately making it a –EV game for everyone (assuming no sharks) since over time, the house takes enough of a cut to make them all losers. You see, the sites understand that raising the rake will make some players leave, but these are not the most profitable customers. Even the high volume players who play rake are good but suboptimal customers. They pay lots of rake, but they also remove a lot of money from the system that would otherwise go back to the house in the form of recreational players passing it around in the form of raked pots. If they loose these high volume sharks, it’s not the end of the world.

This logic has an interesting implication: there are going to be several high rake sites with relatively soft games, and some low rake sites where the better more informed poker players will go. Pacific is known as having both the highest rake and the worst players. I think over time Pokeroom will start to get softer and softer because of this dynamic (especially if they start offering fewer bonuses). In the meantime, we will either be breaking ranks and paying higher rake to play where the less serious recreational gambling poker player is, or we will be TAGing it up against each other eeking out meager winrates and worshiping our rakeback deals (and that is the best of us!).


However, I don’t expect this to be a stable equilibrium, it’s just something we will be likely to see in the relative short term. Eventually, I think it will be in the interests of all poker sites to steadily increase rake. That’s right, rake will keep getting higher and higher everywhere.

A lot of poster I like and respect repeatedly come to the opposite conclusions, that eventually good old economics will kick in and the sites will have a rake war. I’m sorry, but as much as I would like for this to happen, I don’t see it occurring. The conclusions of lower prices resulting from competition as based on certain assumptions about the consumer as being highly informed and an optimal decision maker. Neither is the case here. There will be no rake war. Instead there will be a near universal raising of the rake.

Of course, I could have made a mistake somewhere in this post, and am welcome to criticism regarding this argument and its conclusion. There is nothing I would like more than to be proven wrong here!

[jwvdcw]

I agree with a lot of what you say, especially point #1. And I agree that a low rake war is not likely to happen.

However, I'm not sure I agree with point #3. The good players are the best consumers for the poker sites because they play the most. Just because they take money from the bad player and the bad players stop playing, doesn't matter. Even if there were only poor players at a site, you would still have differnet categories, only then it would be "average", "bad", and "terrible" instead of "good", "average", "bad", and "terrible." In short, I think that players would still go broke and stop playing- the only difference being that luck would be more prevalent in who goes broke.

[ QUOTE ]
There have been many posters constantly discuss how market forces will force rake down. The logic is simple, and based on the idea that fair and open competition will lead to a lowering of prices. It’s a common assumption in economics, and it is really a logical conclusion. A lot of posters I highly respect have this view. But I think they are dead wrong.

[/ QUOTE ]

Here's an example from another market of why you may be right. In the US real estate market, realtors charge in the neighborhood of 6% of the value of a home to sell it. In the Seattle area, the average home is now going for $400,000.

This means it costs $24,000 to sell your house in Seattle. This is totally insane, real estate agencies don't need to charge anywhere near this amount, they'd be profitable charging a third of this or less.

It's not an unbreakable law that market forces drive prices down, it's merely a tendency.

[Greg J]

Thanks for the comments. With point three I'm really trying to argue that it's better for the poker site to have the weaker players loose to other poor players and the house than to winning players who make many more cashouts than they do deposits.

You are right that there are degrees to how poor a player is. That was a (over?)simplification I made to illustrate my point. However, you certainly agree that money goes into a site primarily from deposits from mostly losing players. If the better players leave, then they just lose the money slower (as a whole -- certainly there will be expections). This means they play more hands, win more (raked) pots, and ultimately contribute more money to the site in the form instead of having it taken by a shark who cashes out to by a new fp2001. /images/graemlins/grin.gif

That is, in short, why the sites perfer "fish" to sharks. The high volume of fish makes up for the high volume playing habits of sharks.

[rusty JEDI]

Maybe its time for teams of spammers to start spamming as obsververs about what site/sites have the lowest rakes.

rJ

[ QUOTE ]
With point three I'm really trying to argue that it's better for the poker site to have the weaker players loose to other poor players and the house than to winning players who make many more cashouts than they do deposits.

[/ QUOTE ]

I don't see the logic behind this. What difference does it make whether or not people make cash outs? Regardless of the deposit/withdrawal frequency, you, me, bad players, good players, pay rake.

It seems that you may not understand what the pros and cons are for different types of players at cardrooms. You may want to consult Mason's Poker Essays where he talks about this. But basically, winning players help maintain games so that bad players can play. Good players tend to play more often at rooms with worse players. When the balance tips, good players will start to leave for greener pastures.

A cardroom needs a good mix of types of players as well as the luck vs. skill ratio in particular games for a room to be successful.

FWIW, I do agree with you about the rake war. I don't really see that happening, but I do think that rooms will offer reduced rake options and other methods to get players to play. A room can start to grow with a base of decent, consistent players and then eventually attract bad players to keep the good players, etc., etc.

I do think that economics apply to poker rooms. If the rake is too high, no incentives, etc., good players will leave for better opportunities. Good players do, after all, tend pay more rake as they tend to play more.

[Greg J]

[ QUOTE ]
I don't see the logic behind this. What difference does it make whether or not people make cash outs? Regardless of the deposit/withdrawal frequency, you, me, bad players, good players, pay rake.

[/ QUOTE ]
Thanks for the comments.

This is true. I don't think I'm articulating my point well. The idea is the poker sites would rather have recreational players pass money around amongst themselves >>> they play more hands >>> they pay more rake. A winning player wins that money then cashes much of it out instead of losing it to other players and paying rake.

The winning player does not pay less rake, you are right. But he/she prevents other (losing) players from paying MORE rake. Does that make sense?

As for Mason, he has forgotten more about gambling than I probably will ever know. (I would love to hear his comments on this topic!) I have never read that essay you are refering to, and perhaps that does change the dynamic of my argument somewhat.

[Matt Flynn]

Most customers are indifferent to rake.

[ QUOTE ]

This is true. I don't think I'm articulating my point well. The idea is the poker sites would rather have recreational players pass money around amongst themselves >>> they play more hands >>> they pay more rake. A winning player wins that money then cashes much of it out instead of losing it to other players and paying rake.

The winning player does not pay less rake, you are right. But he/she prevents other (losing) players from paying MORE rake. Does that make sense?

As for Mason, he has forgotten more about gambling than I probably will ever know. (I would love to hear his comments on this topic!) I have never read that essay you are refering to, and perhaps that does change the dynamic of my argument somewhat.

[/ QUOTE ]

Yeah, I understand your point now. I'll have to think about this. I'm not sure if this is true either.

But I do believe that a poker room would rather have a player's longterm play and contribute to the rake for an extended time. Bad players will often play, lose whatever their point of pain is (unless they are degenerates /images/graemlins/smile.gif), and not play anymore. Perhaps that what bonus reloads are intend to do--keep bad players playing.

Rooms will probably get away with higher rakes as most people have no idea what the rake is or means. Either way, there will always be sites with reduced rake as a competitive measure. New sites esp. have reason to do this.

[SomethingClever]

I agree that most customers being ignorant of the rake factor is critical, but even a soft, soft game will eventually become unbeatable due to the high rake, and at that pointm even the TAGs won't play there.

And the fish will start noticing at a certain point.

Also, one thing you're ignoring is the possibilty of online poker becoming legal in the US, at which point the competition will get INSANE. Maybe it won't lead to a "rake war" per se, but it could lead to some sweet "bonus wars," which would have about the same effect.

[lefty rosen]

There is also implicit collusion between the sites. Ie Pacific copying every party bonehead/greedy increase and Pokerroom just thinking all of the players are drunk retards that want to play any two........

[Sniper]

There already is a rake war going on!!!...right under our noses, but as you correctly point out, most players are oblivious to it!

The war is for knowledgable & high volume players... with the incentives being refunds of their rake via rakeback, bonus, vip/point programs, and other incentives.

Party and Ultimate's recent actions only highlight some of the recent skirmishes in this War!

Neteller, has proudly proclaimed that this war is of great benefit to them, as players are shifting more $$$ around from site to site chasing these opportunities, which substantially increases Neteller's revenue stream.

A recent Citigroup Global Markets analyst report asks this question... "How bad is it if you run out of Plankton?... To continue the fishy metaphor — it is bad news if you are a whale and you run out of plankton. The bear case on PartyGaming is that the business model is based on very active successful players feeding off what we have termed Plankton and that the supply of Plankton is limited. The risk under this scenario is that the poker industry runs out of people who to try poker, lose a little, get bored and stop. Similarly the players we have termed ‘Fish’ may have an interest in playing for only a limited time. PartyGaming has an additional problem in that there are many aggressive competitors for the supply of such players and that it is a challenge to maintain market share."

The war is on... the poker room winners will be those who have reduced the true net effect of rake to the knowledgable high volume players (those players that will still be around when the plankton run dry).

[UATrewqaz]

I agree there will never be a rake war for reason #1 alone, most idiots don't know the huge impact of the rake on their chances.

An extra .25 a pot? Who cares, etc. When it in reality results in thousands more dollars a day coming off the tables.

There WOULD be a rake war if mos tonline player became aware of it, but then online poker wouldn't be worth playing, too many knowledgable players.

Like that tard that just busted my AKs with his 47o, calling down his pair of 4's the whole way and spiking a 7 on the river, god bless him.

But i do forsee a site where a low rake becomes their "thing" just like Full Tilt has all the pros, Poker Stars is the "tournament" place, etc.

There will be site X and their big thing will be "ULTRA LOW RAKE!"

Long story short, I disagree. The rake is high enough and if it goes any higher it will break thousands of winning players today. Sooner or later the poker room greed will put themselves out of business, end of story.

Winning players are making 1-2BB/100 hands, that really isn't much unless your doing this at 10/20 and higher.

[Uglyowl]

There becomes a point though where higher rake will bankrupt the consumer too quickly and won't be fun for them.

If they can get say $100 and play 10 hours at $2/$4 that may be $10/hour for entertainment.

Ever rake increase makes the money dwindle quicker, they may not know why, but they will notice.

[Greg J]

[ QUOTE ]
There becomes a point though where higher rake will bankrupt the consumer too quickly and won't be fun for them.

If they can get say $100 and play 10 hours at $2/$4 that may be $10/hour for entertainment.

Ever rake increase makes the money dwindle quicker, they may not know why, but they will notice.

[/ QUOTE ]
Excellent point. I don't think the rake can increase indefinately. I think my original post might have implied that, but that was not my intention. There is certainly an optimal point. I'm not sure what that point is, but I bet there are many people working for poker sites doing some research on that subject right now.

[Exsubmariner]

I honestly don't get your reasoning here, sniper.

What Potty and UB did recently was NOT good for volume players. I got bit by both. What the hell are you going to do? Go pay rake at Poker Stars because they are so aloof that they have never involved themselves with networks or affiliates and therefore smell like roses?

Come on. It's obviously in the interests of sites to take as much from volume players as they possibly can. That's why they keep trying.

I think Greg is right. The long dreampt of rake war will never come. If anything it will get worse before it gets better and the only way it gets better is if (and its a big IF) online poker has another boom.

The only thing I see happening is there are fewer and fewer sites around squeezing as hard as they can. Please tell me more about your thinking.

X

[Sniper]

[ QUOTE ]
What Potty and UB did recently was NOT good for volume players. I got bit by both.

[/ QUOTE ]

That is exactly my point.... Party and UB were getting destroyed by Empire and Pokershare, so Party and UB nuked them into oblivion.

Empire and Pokershare were rewarding knowledgable high volume players with better rewards (ie lower net rake), the larger rooms threatened by this had to act, and acted swiftly and decisively!

Unfortunately for Party (the market leader with 50% share), they can't use the same tactics against Absolute, Prima and Crypto. [This is good for the players]

Should Party buyout Empire AND replace their own marketing dept with Empire's, watch out as they will then have the knowledge to really damage the other rooms, and shorten the war (short term good for players, long term probably not).

[Exsubmariner]

I doubt Potty is smart enough to fire their marketing dept and replace it with Empires. The only reason Potty would buy Empire would be to suck up their player base and keep the profits. They would prolly fire everybody from the company they didn't think they needed. I imagine this would include the marketing group. After all, wasn't their marketing team the one that came up with the cruise?

I see Pokershare or something like it re-emerging with it's own platform. Now, if they hired Empire's marketing team........

Your argument is way too simple. You have failed to factor in the many middlin' players who are just barely beating the rake. I would imagine that these players comprise a significant portion of the so-called "sharks." If the rake goes up just a little bit, these players will no longer be able to win and will eventually stop playing.

If you were to plot a chart of winning players, with the win-rate on the y-axis and the percentage of players on the x-axis, it would be parabolic. There would be a few players that are beating the rake significantly and a bunch of players that are just barely beating the rake. If the rake goes up, these guys who are just barely getting by will probably quit.

Recreational players don't play a lot. Party needs the winning players for their volume. If the rake goes up even 5% from what it is now, a lot of the grinders will have to find some other way to make money. They will decrease their playing frequency and Party will lose money overall.

However, the big money for Party in the future will likely come from Blackjack, Sidebets, and other goofy games where all the edge in the game benefits Party. So, maybe they don't care if they scare away all the sharks by raising rake because they would rather have people play blackjack and roulette.

[mbpoker]

Both Empire and PokerShare were parasites on their hosts. They didn't spend millions in TV advertising or other real marketing to attract recreational players. Their strategy will not work if they get their own real platforms.

[Greg J]

[ QUOTE ]
Recreational players don't play a lot. Party needs the winning players for their volume. If the rake goes up even 5% from what it is now, a lot of the grinders will have to find some other way to make money.

[/ QUOTE ]
Well, this is true, kind of. "Grinders" may be high volume, but that does not make them optimal customers. The sites would much rather have 5-6 recreational losing players that play less. I have tried to defend my argument on other posts in this regard (see my exchange with CrayZee).

You are right there are a greater spectrum of players than I initially gave credit for. I did that to simplify my post.

Thanks for the comments.

[grinin]

[ QUOTE ]
Should Party buyout Empire AND replace their own marketing dept with Empire's, watch out as they will then have the knowledge to really damage the other rooms

[/ QUOTE ]

Could you please explain the above quote?
Me thinks Empire's marketing department sucks donkey balls and don't understand how anyone could come to such a conclusion. Maybe you mean some other department?

[Harv72b]

I agree with the conclusion, but not with all of the reasoning.

It's been mentioned before in this thread, but I believe you're pretty far off with point #3--the major sites need the high volume (and, typically, better) players. Why? Because they are high volume; they keep the games going by playing the tens of thousands of hands/month that they do. The recreational players? They are recreational. They play when they feel like it, typically far fewer hands than the sharks, and at any point might decide to just quit playing because poker represents a passtime for them, and not a profitable side business (or primary source of income).

Your point that the grinders are less likely to make more deposits on the site is also faulty--at least when you're talking about micro/small limit grinders, they probably tend to make more cash deposits (certainly more regular ones) in order to take advantage of various reload bonus offers. The typical recreational player probably does not bother with these bonuses, and only deposits when they run out of chips. That, of course, assuming that they decide to keep playing poker when this happens.

The poker sites also fully realize the need to keep their player base over time (which is why you see some sort of frequent player/rewards program on every online poker room). Simply put, the grinders are the ones who are most likely to stay put over time, especially if the site in question can also attract a large pool of donators.

What you are looking at is not a case of an industry ignoring the traditional conception of how market forces work--the market forces are working normally here, too. It's just that you're looking at it from the wrong angle. What the sites are attempting to do is find the perfect balance of the maximum rake they can extract from us (the grinders & winning players) while we still make enough of a profit from the fish to offset this rake and make playing on their particular servers +EV. Pacific, I believe, is an exception to these rules because, between the terrible software & the inability to multi-table, I doubt that many of these grinders & high volume players spend a lot of their time there anyway. If anything, Pacific is trying to carve out its own niche in the industry by being more friendly to the recreational players, by making it unprofitable for most winning players to play there.

What I think you'll see instead of a trend towards more sites carving out their own little niches, as was mentioned already, and more in the way of bonus wars and promotional gimmicks to attract new players.

Just my 2 cents.

One other point: for the regular players, such as most of us here on 2+2, who understand rake, one effect that increasing the rake will have is to drive us up in limits. The higher the limit, the less effect that rake will have on our profits. This also serves the poker sites well, as it means fewer sharks to clean out the new players on the smaller limits, which in turn makes it more likely that these new players will enjoy good enough results (even if it just means a steady but small loss rate) to continue playing.

[Harv72b]

[ QUOTE ]
Me thinks Empire's marketing department sucks donkey balls and don't understand how anyone could come to such a conclusion. Maybe you mean some other department?

[/ QUOTE ]

I think Empire's marketing department did an outstanding job. Their Royal Flush club is a great way to reward (and therefore keep) loyal high volume players, and they have some of the best stuff to purchase with their FPPs of any site I've played on. Far better than Party's selection, anyway.

I finally cleaned out my Empire account last week because it was just too difficult to find decent games there anymore, and I'll admit that it saddened me to do so. I have nothing but fond memories of my time there.

[grinin]

[ QUOTE ]
I think Empire's marketing department did an outstanding job. Their Royal Flush club is a great way to reward (and therefore keep) loyal high volume players

[/ QUOTE ]

This is not a good example of a great marketing plan. Although I am a also RFC member, the RFC club had nothing to do with why I played on Empire and obviously little to do with why you were playing on Empire, since as you mentioned you no longer play there. Most of the other high volume players were there because of rakeback and the ability to play against the fish that the Party marketing dept landed. As a matter of fact this is an example of a waste of marketing dollars since it brought in only minimal new business and did not provide much incentive to modify the behavior of the existing player base.

[Quicksilvre]

I think the reason for why rakes will stay the same is a little simpler.

Assuming reasonable consumers, as soon as the rake goes down at one site, players will flood that site and all the others would lose business. Therefore, all the other sites would have to cut rake, and there would be less profit for all. Obviously, then, rake won't go down.

If the rake goes up at a site, the other sites would simply keep their rakes the same, and the rake-boosting site would lose business. Obviously, then, rake won't go up. This sort of thing is very typical for oligopolies.

Of course, consumers are not reasonable. Still, there are enough sites out there, that if one site hikes the rake by a large degree, it would lose business.

[augie00]

nice post. i think the cliff notes version would say "fishies are dumb and don't even know what the rake is"

[Greg J]

I guess we'll have to agree to disagree on this point. I do appreciate the reply. One point I would like to clarify (not to get the last word in): I did not mean to imply market forces were not at work here. I think they are -- you are right. It's just that certain economic assumptions about what occurs to create a price war are not met. My argument is not so much "economic forces don't apply" as "certain traditional (academic) economic theoretical assumptions don't apply." (I'm sure you see the difference.)

[Greg J]

This is just some general comments of the feedback this thread has recieved about point three. First, my argument about how the poker sites view more serious players who play lots of hands is not the heart of my argument. It's number three because I thought it was the third most important of the three factors I listed (it just happens to be the most controverial). Second, on a player-by-player basis, most of you are correct. Any single high volume player is more valuable than and single recreational player. I was speaking more generally. A site would rather have 4-6 recreational losing players ("fish") than a single high volume, serious, winning poker player ("shark"). My argument implies they (the sites) are looking at this from a more "ecological" perspective.

Think of this for a moment, not player-by-player, but hand-by-hand. Okay, I beleive they perfer "fish hands" more than "sharks hands." The reason is that a "fish pot" is likely to have money that will eventually go to another player, from which the house will get a cut in the form of rake. Meanwhile a "shark pot" has money that will go towards that second Dell fp2001. I think that my discussion with CrayZee best laid out my argument.

Thanks for the intelligent discourse in this thread.

[FlFishOn]

"You may want to consult Mason's Poker Essays where he talks about this."

There is a self-serving/self-deluding nature that one must confront. Pro poker players like to believe they are not bottom feeding scum. Much rationalization goes into many arguments put forth.

I'm content to believe I'm bottom feeding scum. When asked what I do I tell folks I'm a bum and laugh.

[ QUOTE ]
There is a self-serving/self-deluding nature that one must confront. Pro poker players like to believe they are not bottom feeding scum. Much rationalization goes into many arguments put forth.

[/ QUOTE ]

Hey, I never said that I wasn't bottom feeding scum. /images/graemlins/smile.gif I just was pointing out the economic nature of a good/bad player ratio.

And I like to use the term "opportunist," thank you very much. This makes me feel all warm and fuzzy inside.

[timprov]

I imagine the ideal poker site from their perspective would be one that operates on the Peter Principle. Low-limit grinders and mid-limit pros are screwing everything up by refusing to rise to the level of their incompetence.

[Sniper]

[ QUOTE ]
A site would rather have 4-6 recreational losing players ("fish") than a single high volume, serious, winning poker player ("shark").

[/ QUOTE ]

Greg... since the average player is worth about $100/month, any knowledgable player can easily determine who many fish they are worth on an absolute basis and then factor in your "ecological" factor!

In the grand scheme of things though, the sharks don't take as much out of the poker economy as I think you believe!

[Greg J]

[ QUOTE ]
In the grand scheme of things though, the sharks don't take as much out of the poker economy as I think you believe!

[/ QUOTE ]
I would love it if you (or someone else) would elaborate on this.

[AAAA]

part of it is that poker players only lie when they move their lips.

Also, players have selective memories. They remember the big wins, but forget the losses. Plus, many people are playing low limits. They just aren't taking that much out of the sites. Go through even the players here at two plus two, and you will find many playing fifty cent dollar or one two! They aren't going to break a cardroom.

[Greg J]

I for one have never hidden the fact that I'm a lower limit player. That would be disengenuous of me. /images/graemlins/smile.gif 2/4 and 3/6. I will still play 1/2 if there is a juicy bonus to clear. I still like to think I am a decent player though (not world class by any means).

[pokerplayer28]

winning high volume players play where they make the most money. If you lose a winner the game becomes that much better if you lose a loser the game become that much worse.

Lose a couple losers and you have to replace them or youll lose a high volume player. Lose a winner and a winner will replace them, you dont have to do anything. If the winner is not replaced, its that much money getting passed around that much longer.

I net $10k/week and pay 5k/week rake I move my play to a new card room who currently have 1000 players 10% playing at any given time. 50% of all players play on average till they lose $300. The site is currently bringing in 10 new players/week. Do the managers see me and think "woohoo 5k extra revenue/week"? if you do youll never be a manager of a poker site if they do they wont be managers for very long.

[Sniper]

[ QUOTE ]
Me thinks Empire's marketing department sucks donkey balls and don't understand how anyone could come to such a conclusion. Maybe you mean some other department

[/ QUOTE ]

Empire is a 40 person marketing company... with a NET profit of over $1 million/employee, they certainly did something right this year /images/graemlins/wink.gif

Its my belief that they have a better grasp on how to reward players than Party (although Party's massive datamining project is a step in the right direction to understanding their customer base).

[_And1_]

[ QUOTE ]
Its my belief that they have a better grasp on how to reward players than Party

[/ QUOTE ]

I ll give them that, thou that doesnt mean that they are great in any sense. I'm still waiting on a site that take real good care of their customers... and yes, taking care of the "old" clients is also marketing...

[grinin]

[ QUOTE ]


Me thinks Empire's marketing department sucks donkey balls and don't understand how anyone could come to such a conclusion. Maybe you mean some other department

[ QUOTE ]




Empire is a 40 person marketing company... with a NET profit of over $1 million/employee, they certainly did something right this year

[/ QUOTE ]

[/ QUOTE ]

Empire's growth had less to do with the concerted efforts of a hardworking marketing department and more to do with massive amounts of hardworking grinders switching to them for rakeback.

All someone at Empire had to do was "flip the switch" that condoned rakeback and the rest was history. One bright idea that builds a company from nothing overnight does not a great marketing company make. Afterwards, Empire could have laid off 35 of those 40 marketing employees and still made the same amount of money. One thing about marketing departments, though, if the company is doing well, they damn sure are going to let you know that its all because of them.

[ QUOTE ]
Its my belief that they have a better grasp on how to reward players than Party (although Party's massive datamining project is a step in the right direction to understanding their customer base).

[/ QUOTE ]
As I said in an earlier post, the idea that Empire knew how to reward players better than Party is a fallacy. The majority of players were there for two reasons:
1 Rakeback
2 Ability to play against Party's Fish
Once the combination of those incentives was removed the site was destined to shrivel.
Worse still, additional marketing dollars aimed at this "majority" were simply wasted as the majority was going to play as long as 1 and 2 were true anyway.

[Sniper]

[ QUOTE ]
I net $10k/week and pay 5k/week rake I move my play to a new card room who currently have 1000 players 10% playing at any given time. 50% of all players play on average till they lose $300. The site is currently bringing in 10 new players/week. Do the managers see me and think "woohoo 5k extra revenue/week"? if you do youll never be a manager of a poker site if they do they wont be managers for very long.

[/ QUOTE ]

If a site has 1000 players and is only bringing in 10 players/week, and they are not a skin, then they are losing players faster than they are gaining them, with or without your play.

If the same site is part of a larger network of skins, they are very happy for your playing there!