Attacking ZeroRake

[Gator]

There are a number of “attacks” on people who mention ZeroRake in any kind of positive light. I wonder if that confirms some of my own concerns.

First, my background. I have no connection to ZeroRake. I’m a long time 2+2 reader (and occasional poster). I’ve been playing online for over a year. I consider my play to be above average (because I make a little money after the rake) and well below accomplished 2+2 play levels. My guesstimates are: 70% of online players lose money (because of rake and because of the skill level of the very best players); 20% +/- players make a little bit (this is where I put myself) and 10% of players do very well. Of course, little bit and very well are relative terms. Thus, I use these estimates to put my play somewhere in the 70th and 90th percentile of on-line players. I’d love to know how everyone feels about my 70%, 20%, 10% theory.

I have a strong interest in seeing how ZeroRake does because I’m working with some individuals on opening an online poker room. Interestingly, our first business model was a rake free model. We abandoned that approach for something we believe to be even more attractive to players, more compelling, and having a stronger business case.

Which brings me to the “attacks” on ZeroRake. One of the questions we asked ourselves is if someone comes along with a dynamic business model that threatens the big guys, how would they respond? Party rakes more than $30 million per month. What might one of the larger established players do if a revenue stream of tens or hundreds of million dollars a year was threatened? How hard would one or more of the other established players try to thwart a disruptive business model? Think of the hundreds of individuals involved in the on-line poker rooms. Might a few of them decide on their own to try to discredit people who think rake free is a good idea? What about the thousands of affiliates making thousands a month? Is it possible that a few of them might react if they found their income stream threatened?

Anyway, I think most of the individuals posting about a positive experience at RakeFree are legitimate. I question, a little bit, the motive of the people trying to hold RakeFree back.

That’s my two cents on the subject.

[daveymck]

The main problem with rake free's model is the payment up front, the casual player is not going to pay for a month when there is no game going.

There will be no games going until people sign up so its a bit of a catch 22 situation at the moment, there is a lot of competition people may download the software look see nothing is happeneing and not look again fo months.

I looked last night and there was 1 heads up 1/2 game going and 1 play money table, this was at peak start time for european gamers, compare that to ladbrokes which had a couple of thousand online at the time (as a euro only site) or any other cardroom and it just isnt at this point worth looking at.

They need growth and games and need it quick, they should have made the first month free somthing like that.

[Arnie]

People have to realize that new internet poker room will have 100% satisfied customer base, there will always be people unhappy with them, just like any other business

the 70/20/10 is an interesting breakdown, how did you come up with it?

[Syntax]

In Dutch Boyd's business plan for rakefree.com he states that 75% of internet poker players lose. While he is a theiving bastard and shouldn't be trusted, he did operate a cardroom for a while so I assume this number is accurate.

[Inthacup]

Syntax, are you and Gator the same person?

The reason I ask is because you once wrote this:

I first started posting on the 2+2 forums in 1999, back then I was a UF student and posted under the name "Gator".

Thanks for clearing this up for all of us.


Cup

[Alobar]

[ QUOTE ]
Syntax, are you and Gator the same person?

The reason I ask is because you once wrote this:

I first started posting on the 2+2 forums in 1999, back then I was a UF student and posted under the name "Gator".

Thanks for clearing this up for all of us.


Cup

[/ QUOTE ]

I'm not sure but I think syntax said someone had taken the name "gator" when he came back to posting here

[SlickRick]

Hey we got a 7 handed 2-4 game going and a 4 handed 10-20 going at 9:00 pm est. I think some guys are trying to get a guts game going as well. So far in a half hour I saved $8 in rake.

[GrannyMae]

why are you talking to the person who is talking to you?



edit: oops, just saw cup's question. guess that is a different gator. funny that he sounds like a rakefree employee too though

[Gator]

The 70/20/10 breakdown is a guesstimate. It’s actually based on SitNGo play (but I think it applies in a similar fashion to ring play). Here’s how I came up with it. In a single table SitNGo, the average player finishes in the money 30% of the time. Thus, if I were to add up the in the money % for all the players in the SitNGo, it must equal 300%. So, I estimate that an average SitNGo has one player that finishes in the money 45%, 1 at 40%, 1 at 35%, 4 at 30%, 1 at 25%, 1 at 20% and 1 at 15%. Using that assumption, I constructed the table below to determine each players expected value. You’ll see that the sum of the expected value must equal the SitNGo fee (rake).

Expected Value based on In the Money Percent at various buyin levels (assumes equal distribution of first, second and third place with 50, 30, 20% payouts)

Player ITM% $5 $10 $20 $30 $50 $100
1 45% 2.00 4.00 8.00 12.00 20.00 41.00
2 40% 1.17 2.33 4.67 7.00 11.67 24.33
3 35% .33 .67 1.33 2.00 3.33 7.67
4 30% (.50) (1.00) (2.00) (3.00) (5.00) (9.00)
5 30% (.50) (1.00) (2.00) (3.00) (5.00) (9.00)
6 30% (.50) (1.00) (2.00) (3.00) (5.00) (9.00)
7 30% (.50) (1.00) (2.00) (3.00) (5.00) (9.00)
8 25% (1.33) (2.67) (5.33) (8.00) (13.39) (25.67)
9 20% (2.17) (4.33) (8.67) (13.00) (21.67) (42.33)
10 15% (3.00) (6.00) (12.00) (18.00) (30.00) (59.00)
= = = = = = = = = = = = = = = = = = = = = = = = =
300% (5.00) (10.00) (20.00)(30.00) (50.00) (90.00)

Using the above table, collectively the ten players have a negative expectation of $20 at at $20 SitNGo which equals the $2 fee (rake) times ten players. A 45% in the money player has an expected value of $4 in a $10 SitNGo. A 20% in the money player has an expected value of negative 8.67 in that same $20 SitNGo. In all of the above examples thee players have postive expectation and seven have negative expectation.

You can tweak the percentages a bit – but it’s unrealistic to think that more than four players have positive expectation (and I think 3 is more realistic). That’s where the 70% comes from. Dividing the remaining 30% (number making a lot vs. number making a little) is a bit more subjective.

[Arnie]

How do you think that would transfer over to ring games? I would thing that the brakedown of lossing player would increase due to increased rake and the chance to lose much more than a tourney buy-in.