An answer-maybe not the answer, any thoughts?

[beanie]

This is a follow up to my last post where I identified the problems that are causing all of the rakeback fervor recently. Here are some attempts to answer those problems and talk straight about what the sites may or may not know they have created accidentally. Let’s start from the beginning. The first people to sign people up for Party Poker (or any other site) had it easy; they gave away nothing and didn’t need to give away anything to get their customers. At first there wasn’t the massive amounts of marketing affiliates carried the banner. Then once that money started to flow in so did the Ads that created the fish tank that is Party Poker. Currently they have such a huge lead on the market that they could virtually commit suicide in a business manner and still have 40,000 people signed on every night.

The reality is it was only logical that rakeback in some form would happen and once that money became available people would do whatever it took to get it. When you give affiliates money to help you promote your site it is only logical that some people would go with a high volume model. That is Rakeback and there is no going back at this point. Or maybe there is, some of the solution I will offer creates more of a fish tank on Party Poker so their value to players will likely always be high under any scenario.

All sites need to create a VIP program or some form of operator rakeback, any site that doesn’t is going to have a difficult time, this is why. The internet is not like living in Billings, Montana. If you want to buy groceries in Billings, Montana your options are fairly limited (not to mention Plasma screen TV’s). One wrong action by a site can cause thousands of people to leave instantaneously. This never had to happen is my point, if Party Poker had an option for VIP players no one would listen to that guys offer being posted in chat. They are being taken care of in a sufficient manner. I will post a poll in a bit to get peoples opinion my guess is people would take 20% operator controlled as opposed to 25% by affiliates. Affiliates then can go back to the task of getting NEW customers.

Let’s say as an example that affiliates were labeled in three ways VIP, MGR and CPA. The only one of the three that could offer a version of rakeback is the VIP affiliate, if for instance that affiliate got 25% and the VIP program paid 20% the affiliate would make 5%. If they gave anything more in terms of dollars they would lose their program. If an MGR affiliate gave rakeback they would lose their program. We as affiliates should organize teams to catch spammers after all they are taking our customers as well. We need to start working together. This allows rakeback affiliates to not be so concerned about the price wars and focus on providing a better service for the customers. The site gets what they want because they are tired of dealing with e-mails asking if this or that rakeback site is legit and they need CS help. The affiliates don’t get exactly what they want but they get to keep their businesses and this system will force them to work on services for their players.

The player does lose some percent here but I think in the long term this is the best system for the players as well it makes affiliates work harder for their money. It also has the added effect of getting the sites back focused on marketing and getting fish. That is always good for players.

Realistically if they don't do this there may be more fish value on the site. That is why I said whatever option they choose might be best.


This post is too long, so I will post again on how to deal with active players.

[slavic]

I think you are missguided in believing that the high volume players want rake-back. I personally don't like rake-back mainly because of the shady undertones that seem to follow it around. What high volume players really want is a way to maximize hands verus weaker players at the lowest cost possible. Well it just happens that rake back is the best option for doing that today.

If you were to make 2 poker rooms from party, and divide the players evenly among hte two rooms, if one room has a rake $.75 less than the other but the other gives rake back. I will make more money at the lower rake cost versus rake back. Yes I do recognize that the weaker players pay more of the rake and I will get an unfair share back from rake back, but that does not make up for my rake cost and the money removed from my opportunity pool (aka the fish).\

Just my thoughts.

[beanie]

I am not misguided at all. That is my point. Good players go where the value is, rakeback makes up some of the value on harder sites but it is completely possible that no rakeback is needed to keep a player at a fishy site. Can we also concede that bonuses and reload bonuses are just site rakeback?

Rakeback, also by the way keeps a lot of break even to losing players in the game. That often gets lost in this discussion.

[iMcompliKted]

"I think you are missguided in believing that the high volume players want rake-back." Slavic

Slavic, are you a high-volume player? Is so you are the first I've ever heard say this. I strongly disagree and I've had individual players make over 3k in rakeback monthly who might disagree with you as well.

[Sniper]

[ QUOTE ]
Rakeback, also by the way keeps a lot of break even to losing players in the game. That often gets lost in this discussion.

[/ QUOTE ]

60% of players come to party directly thru their marketing efforts (ie are unaffiliated)

40% of players come to party thru an affiliate link.

A very very small percentage of those affiliated players were/are receiving rakeback!

[beanie]

Though that small percent accounts for a great deal of their revenues.

[slavic]

Good players go where the value is, rakeback makes up some of the value on harder sites but it is completely possible that no rakeback is needed to keep a player at a fishy site.

I absolutly agree.



Can we also concede that bonuses and reload bonuses are just site rakeback?

In that rake back and bonuses are ways of reducing a players cost of playing, yes I think we can agree to that. It's even more so in the current structure of how bonuses are released since a terrible player won't have access to that money until he loses a significant sum. If he got it upfront, like many online csinos I think we could argue that a different dynamic is happening.

Rakeback, also by the way keeps a lot of break even to losing players in the game. That often gets lost in this discussion.

Now we have a difference of opinion. Rakeback won't be more helpfull to this crew than rake reduction would be. Again if you lowered the cost of rake they would be in action longer and possibly marginal winners versus marginal losers. Take the total of what these guys generate in rake and take a third of it, then compare it to the return they get in rakeback, the numbers just don't compare.

[beanie]

Reducing the rake as an overall solution is not going to heppen strictly based on the marketing potential of those dollars comparitively. The people it would benefit would also be the the people who wouldn't be there because you couldn't have advertised for them.

Reducing the rake through incentives is the way to make all sides happy. As affiliates we just need to be a little smarter and a little less greedy.

[slavic]

[ QUOTE ]
"I think you are missguided in believing that the high volume players want rake-back." Slavic

Slavic, are you a high-volume player? Is so you are the first I've ever heard say this. I strongly disagree and I've had individual players make over 3k in rakeback monthly who might disagree with you as well.

[/ QUOTE ]

What do you consider high volume? Do you want to count live play? Is it an hourly thing, amount wagered, or are we just going by hand counts?

Guess what it doesn't matter. I'm concerend with a couple of things. 1) that I get as low a price as I can in a safe fair profitable game and 2) the overall health of the game.

Ok let's take your numbers, 3k in rakeback. Now I'm going to make some assumptions.

15/30 or 30/60 ring player 2.50 in rake average 70% raked hands. 30% return on rake back. 6max or 10max


That means your player is knocking down 58K hands / month at 10 max or 35K hands at 6 max. Personally I could see 6max doing it but pushing 60K hands month in month out is just not sustainable if you play optimal. (I am open to believeing that there are individuals who could do this, but few of them would choose to)

So what does all this mean to them? Well it works out that the break even on you 3K a month to the player is about .75 in rake a hand. So great we reduce the players rake by .75 it's the same as 30% rake back, ah but it also has a game effect in that the money pool is not being removed at the same time. So our 15/30 multitabler will also gain a net benefit to the table of ~2BB/100 hands to the health of the table. This is the net equivalent of removing two tough winning players from his game. So yes he gets the same money back without having to go through the convoluted rake back structure and he increases the health of the game and his expectation in the same move.

If we wanted to extrapolate further it is possible that we could estimate the true break even point in expectation + lower rake versus rakeback, and I imagine it's a little closer to $.60 but it's late and I don't want to figure it right now.

This is also why I cringed when Party increased rake on the 6max tables form $2 to $3. There were many multitablers who thought it was great, but the truth is it hurts the game quite a bit.

[slavic]

[ QUOTE ]
Reducing the rake as an overall solution is not going to heppen strictly based on the marketing potential of those dollars comparitively. The people it would benefit would also be the the people who wouldn't be there because you couldn't have advertised for them.

Reducing the rake through incentives is the way to make all sides happy. As affiliates we just need to be a little smarter and a little less greedy.

[/ QUOTE ]

I almost agree with you except that Party exposed how large a small number of players effect their volume. These are the players that they are essentialy paying somone for their time, and it's substantial. So there is a number that rake could be reduced by, and then remove MGR based compensation to affiliates.

These high volume players pick up their extra cash in expectation, and this also reduces the cost to party for holding onto these players, and sets a standard cost to acquire new players.

Will this happen, probably not. I've seen to many companies dragged down by overpriced marketing systems that they can't get away from to believe that a fledgling online gambling house would make this type of move. With the move into casino games poker will eventually just be run as an afterthought.

Does this tick off the affiliates? Yes, but you have to ask yourself are you bringing value to the customer through the affiliate program by offering a % of revenue system?