if rakeback is so important how come PokerStars is a major player?
 

If rakeback is so important how come PokerStars is a major player?

I know thier rake is lower, but it is not 25% lower at most levels.

Re: if rakeback is so important how come PokerStars is a major player?
 

Stars isnt that much of a "player" in the cash game department. I play 3-6 and 5-10 and there are often 10 or less games going at those limits. When I do happen to play there, sometimes I can't even get four tables going.

Pokerstars cornered the tournament market right from the beginning with far superior structures. They earned a great tournamnet rep and backed that up by "producing" two World Champions.

The real question is: "how big could Stars be IF they offered rakeback"?

Re: if rakeback is so important how come PokerStars is a major player?
 

In the general scheme of things, rakeback is not important, because very few people understand either how much they are raked when they play, or what rakeback is.

It is important to the players here on 2+2, because the average player here understands these things and is trying to maximize their returns from playing poker (as they should).

Re: if rakeback is so important how come PokerStars is a major player?
 

similar to what sniper said, RB isn't important to the 3 biggest rooms. Paradise, Pokerstars, and Party don't allow it. That should give you a good indication of what the major players think about it.

The percentage of RB players to the total amount of players is pretty small. Only 2+2 frog's out about rakeback.

Re: if rakeback is so important how come PokerStars is a major player?
 

is this a trick question?

most people don't know about rake-back.

most people DO see their ads on TV.

Re: if rakeback is so important how come PokerStars is a major player?
 

[ QUOTE ]
If rakeback is so important how come PokerStars is a major player?

I know thier rake is lower, but it is not 25% lower at most levels.

[/ QUOTE ]
Everything I read seems to say that Stars has by far the best product in the industry in terms of software, service, and rake schedule.

Let me turn your question around. Party has mediocre software, poor service, and an onerous rake schedule. Why does Party have several times as many customers?

Party motivates their affliates with a share of the rake and Stars doesn't. The affiliates steer the fish to Party and away from Stars and (former #1) Paradise. Rakeback-motivated players undoubtedly also play a small role on this.

Of course Stars and Paradise have much lower affiliate expenses. Since the real idea is to make money they may be doing very well. The biggest companies are not always the most profitable.

Re: if rakeback is so important how come PokerStars is a major player?
 

Based on information I know I would say that rakeback accounts for no less than 20% of all revenues online. More importantly, some form of rake reduction is going to become more common. Could be rolexes or cars but people will give value and that will drive future play.

Re: if rakeback is so important how come PokerStars is a major player?
 

beanie...

Taking Party as an example, and using round numbers for simplicity...

In 2005 Party will rake roughly $1 Billion
Party will pay affiliates (roughly 10%)... around $100 Million
Only a few million of that was/is being returned to players thru rakeback affiliates, at best.

Re: if rakeback is so important how come PokerStars is a major player?
 

I think TV advertising plays a much bigger role than rakeback or affiliates ever could.

The only reason I use an affiliate is because I HAVE TO (I have nothing against affiliates though). If sites where willing to return a portion of my rake directly to me (without an affiliate), they could keep the affiliates profits for themselves.

Re: if rakeback is so important how come PokerStars is a major player?
 

My point is and will always be that even with your numbers that is a lot of money.

5%-20% of revenues when you start throwing around the B word is a lot.

Re: if rakeback is so important how come PokerStars is a major player?
 

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My point is and will always be that even with your numbers that is a lot of money.

5%-20% of revenues when you start throwing around the B word is a lot.

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I haven't looked to closely at Party's reports. I should, but just saying a Billion dollars is alot of money simpifies things too much. That Billion is a gross dollar figure and if it costs party 1.2 Billion to service that Billion, well it might as well have been 4 nickles and a happy meal.

As an invester I'm concerned that Party would have a 10% of gross revenue cost for player retention that really isn't retaining players. Once an affiliate brings the player to party, continuing to pay for that player 5 years down the road to a 3rd party is just silly. What value does the affiliate provide in this case? How can you justify that type of expenditure?

Over abd above this you will likely put together a retention plan for these customers anyway, plus you have a set cost for player aquisition. You are in effect paying for new players and paying double for old ones.

Re: if rakeback is so important how come PokerStars is a major player?
 

Slavic... no need to fear that Mr Dikshit is going broke anytime soon... Party operates on more than 50% profit margins [img]/images/graemlins/wink.gif[/img]

The affiliate network pays off big time for party, which is why they are so protective of it!

Re: if rakeback is so important how come PokerStars is a major player?
 

Party rakes in half dollars, stars waits till it gets to a full dollar. Also, Party takes the max rake at 60, stars takes it at 70.

So, at party, a 51 dollar pot is raked 2.50, a 61 dollar pot is raked 3

At stars, 51-69 is still just 2 dollars rake. So, if it makes you feel better you can think that for every pot in this range you're getting 15-33% rakeback.

Re: if rakeback is so important how come PokerStars is a major player?
 

[ QUOTE ]
If rakeback is so important how come PokerStars is a major player?

I know thier rake is lower, but it is not 25% lower at most levels.

[/ QUOTE ]


Raymer + Moneymaker + advertising = fish

Re: if rakeback is so important how come PokerStars is a major player?
 

If you keep bringing sites players who hit and run, they will stop paying you,or make the qualifiers so hard that you don't collect for all your players. Yet, if you bring them players who play a lot, and you take the one time deal...well the word "fool" comes to mind.

Two Plus Two was told they couldn't legally accept revenue sharing, and probably lost several million dollars in revenue until they realized they could participate in the income by raising ad rates and letting their members do the affiliate programs.

As a result, there are quite a few rich affiliates around here. Don't get me wrong, they work hard. However, most posters would have preferred to support Two Plus Two for providing the forum instead of affiliates. At least they would have preferred that until the days of rake back programs.

I doubt Two Plus Two would have ever been able to establish facilities to do rake back directly. Somehow if faced with a choice of signing up through Two Plus Two and getting no rake back or signing up through Joe Affiliate and getting 25% rake back...well, what do you think?

P.S. regarding the original question about Stars, Stars gives FPPS and Deposit Bonuses just enough to keep players coming back. Plus, tourney entry fees clear the deposit bonus more regularly than high limit games. I think there is a direct relationship for Entry Fees to bonus clearing but ring game rake is a max of one FPP per hand dealt.

Re: if rakeback is so important how come PokerStars is a major player?
 

Party had $400 mil in operating cashflow and almost 60% profit margin last year. That's ridiculous.

No need to worry whether Party is doing well or not.

and they on pace for about $800mil tops in Revenue according to Rueters, not to a bil yet.

Re: if rakeback is so important how come PokerStars is a major player?
 

but what will the market do when the players at Party realize there are other sites out there?

It may be a while until they see an ad for something that interests them at another site, but if they peek in here, they certainly won't want to pay full price, or as soon as one of their friends mentions that they can get a deal someplace else people will move from Party.

Remember it is only the 10 tablers who want to play 5/10 and have game selection who care about having 1000 tables to choose from. Joe Fish just plays a couple tables max, and usually $1/$2 or maybe $2/$4, but often lower limits than that, and many sites have plenty of games at lower limits.

Actually, more and more players will be playing tourneys, and that is another reason that Stars is so successful. Tournaments are the future of poker and online poker as well. Players can budget their costs. They don't really expect to win, but they feel really great if they do! and they don't go broke so fast that they don't have any fun playing! Plus, you can play no limit, which is exciting, but not lose too much real money too fast.

When the fish realizes his $100/month goes farther at site B rather than site P, they will make a change, and getting a partypoker hat won't keep them hanging around.

Re: if rakeback is so important how come PokerStars is a major player?
 

[ QUOTE ]
As an invester I'm concerned that Party would have a 10% of gross revenue cost for player retention that really isn't retaining players. Once an affiliate brings the player to party, continuing to pay for that player 5 years down the road to a 3rd party is just silly. What value does the affiliate provide in this case? How can you justify that type of expenditure?

Over abd above this you will likely put together a retention plan for these customers anyway, plus you have a set cost for player aquisition. You are in effect paying for new players and paying double for old ones.

[/ QUOTE ]

The great thing about the model from party's perspective is that paying this way (% of MGR) they only pay the affiliate some of the revenue that the player generates, rather than paying $100 for someone who deposits, plays a few hands and then gets bored and cashes out. It also rewards affiliates who get players who are more likely to play a lot on the site.

Re: if rakeback is so important how come PokerStars is a major player?
 

and if a site stops paying an affiliate, they are likely to encourage plaeyrs to go to a different site. At least most rake back affiliates have some relationship with the players, and if the site stops paying the affiliate, the player is likely to move on to another site. In the old days, affiliates had no contact with the people who signed up on their banners, and had almost no way of verifying they were getting paid correctly.

Then affiliates started giving away books or rake, so they had a reason to get an email address from the player, and could offer bonuses to players who generated a lot of income.

Re: if rakeback is so important how come PokerStars is a major player?
 

Vast vast majority of players don't know about rakeback. Personally, I don't play at Pokerstars specifically due to their lack of rakeback. It doesn't matter how good a player you are, rakeback has the same absolute effect and that is very large indeed.

Say I 5 table the 10/20 short. I pay $180 an hour in rake. Even at 30% rakeback I am paying $54/hr more to pay at Stars, which just isn't worth it, even more so bcs I am on way more than 30% with a variety of sites. If I ever move up to 30/60 or higher I might play a bit at stars as though rakeback becomes more important in absolute terms, it becomes less important in relative terms, so I would consider playing at Stars if I found a good game.

Re: if rakeback is so important how come PokerStars is a major player?
 

except that their $100 still probably last longer at Party in the first place.

they don't analyze the rake. the players are generally worse at party.
there is also something to be said for brand-loyalty.

your posts make it seem like the average fish actually cares about rake-structure...which they don't.


To imply that so many of these party players are going to look at other sites, and when they see what they're missing will NEVER return to party, is incorrect.

They'll go to the other site, and if they win they'll stay because the 'cards run better for them there'. If they lose at the other site, they'll return to party, because more fish at party playing bad hands helps everyone feel like they have a chance to win.

Re: if rakeback is so important how come PokerStars is a major player?
 

Pokerstars is a major player because a large majority of people don't know or care about rakeback.

As for grinders? I imagine the tourneys, the software, and some decent games have to do with it.

I get your point though I think, I whine hardcore about not having RB on certain sites and even avoid playing at them but then I log on PS without thinking about it for whatever reason.

Re: if rakeback is so important how come PokerStars is a major player?
 

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If sites where willing to return a portion of my rake directly to me (without an affiliate), they could keep the affiliates profits for themselves.


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If only party would do this, life would be so easy [img]/images/graemlins/frown.gif[/img]

Re: if rakeback is so important how come PokerStars is a major player?
 

[ QUOTE ]
Vast vast majority of players don't know about rakeback. Personally, I don't play at Pokerstars specifically due to their lack of rakeback. It doesn't matter how good a player you are, rakeback has the same absolute effect and that is very large indeed.

Say I 5 table the 10/20 short. I pay $180 an hour in rake. Even at 30% rakeback I am paying $54/hr more to pay at Stars, which just isn't worth it, even more so bcs I am on way more than 30% with a variety of sites. If I ever move up to 30/60 or higher I might play a bit at stars as though rakeback becomes more important in absolute terms, it becomes less important in relative terms, so I would consider playing at Stars if I found a good game.

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How many hands an hour do you average 5-tabling?

M