Re: Ahead of the curve=>Next step: Confiscation.
 

No, he's saying that you don't need to keep enough cash on hand to cover ever dollar held on deposit all the time. That's overkill, because the odds that every account holder will withdraw every dollar in their account on the same day (barring an event you could react to) is effectively 0.

If you look at a bank, and totalled the amount of money as "available balance" for all customer accounts, then looked at all available cash on hand (with which they could fulfil withdrawl requests), you'd see that the former is far larger than the latter.

If you held all of the cash you were given as deposits, you'd never be able to use that cash to generate profit. A bank takes deposits from people, and uses that money to provide loans to other people. They charge more interest on loans than they on deposits, and pocket the difference (among other things).

Guaranteeing a deposit can be withdrawn to each customer assumes that not every customer will want to do that at the same time.

Re: Ahead of the curve=>Next step: Confiscation.
 

[ QUOTE ]
A bank takes deposits from people, and uses that money to provide loans to other people. They charge more interest on loans than they on deposits, and pocket the difference (among other things).


[/ QUOTE ]

Actually they loan out 10-100 times as much as they have on hand, if you can believe it.

Nice racket.

Re: Ahead of the curve=>Next step: Confiscation.
 

[ QUOTE ]
No, he's saying that you don't need to keep enough cash on hand to cover ever dollar held on deposit all the time. That's overkill, because the odds that every account holder will withdraw every dollar in their account on the same day (barring an event you could react to) is effectively 0.

If you look at a bank, and totalled the amount of money as "available balance" for all customer accounts, then looked at all available cash on hand (with which they could fulfil withdrawl requests), you'd see that the former is far larger than the latter.

If you held all of the cash you were given as deposits, you'd never be able to use that cash to generate profit. A bank takes deposits from people, and uses that money to provide loans to other people. They charge more interest on loans than they on deposits, and pocket the difference (among other things).

Guaranteeing a deposit can be withdrawn to each customer assumes that not every customer will want to do that at the same time.

[/ QUOTE ]

I understand that right or wrong, this is how banks work. However, an internet poker site is not a bank. They are not in the business of investing the money in your account, they make their money from the rake. When a site starts using player deposits to pay the bills, you end up how Pokerspot/Dutch Boyd did.

Re: Ahead of the curve=>Next step: Confiscation.
 

It does not matter if pokerstars NEEDS to have the cash on hand to cover every persons account ballance, the fact is that they do have the cash on hand ... needed or not. Yes it is overkill but this is something they do to ensure that people are confident in putting large amounts on money on there.