My take on the leaking of %'s leading to the end of rakeback

rusty JEDI · #1 10-03-2005, 11:57 PM

Please excuse my poorly written mess below, im making it up as I go, and I am working with incomplete information.

There has been a theory stated by at least two people, off the top of my head I think it was Morgant and Sublime. The theory goes something about open %'s leading to the margin being closed to 1% through competition and eventually ending rakeback. Or, something along those lines.

I think there is only more room for improvement. Lets look at some history of rakeback that leads me to what I am thinking here. Rakeback started with someone saying I will kick back half to you. At this time the max the affiliate could get was 20% and you could get 10%. Eventually someone came and said, I will give you 15% and lessen the margin but bring in more players and more profit by getting all the new people to rakeback. Eventually this led to an affiliate talking the sites into giving him 25% and giving 20% rakeback to players. So now this person was getting all the new players because he gives the most. However, what he really did is up the total take for all players and affiliates. Eventually this led to subaffiliates getting under regular affiliates and making it 30% from sites. So now affiliates can offer 25% to attract the new players and the players are making more, and the affilates are making the same.

So what I am saying is making the %'s open to all will only lead to everyone getting a bigger piece of the pie from the sites. I think that is WAY more likely than the margin getting down to 1% and the end of rakeback. But, if you ask me 1% is viable eventually, affiliates just arent ready yet. However, the sites have more room to give first. If any affiliate comes along and says that the sites have reached the end of what they are willing to give, I call bull***T.

rJ

rwesty · #2 10-04-2005, 12:04 AM

I think both the affiliates and the poker sites have a lot of room to adjust the percentages. The argument that affiliates deserve to make $100s/month from every high volume player for calculating rakeback is bullshit. It would not be all that difficult for poker sites to have built in rakeback.

B00T · #3 10-04-2005, 04:42 AM

[ QUOTE ]
It would not be all that difficult for poker sites to have built in rakeback.

[/ QUOTE ]

Sites have tried it and failed. (See: Pokerchamps)

If a new Party skin opens and offers a direct 20% rakeback directly into your acct, how many players are they going to get? Everyone getting 25% or higher which is (98%) of the people who currently receive rakeback. Nobody with their Empire, Eurobet etc. accts are going to switch over for a lower %'age. They'd gladly let their current affiliate take a chunk of their MGR since they are still getting more anyway.

And just for the record, there is no chance in hell Party will ever let a new skin open that gives more than 20% in autorakeback back to its players.

GoblinMason (Craig) · #4 10-04-2005, 04:46 AM

I see someone got an A in microecon. [img]/images/graemlins/grin.gif[/img] [img]/images/graemlins/confused.gif[/img] [img]/images/graemlins/frown.gif[/img]

Mr_J · #5 10-04-2005, 04:48 AM

Maybe sites will get more competitive and lower the rake enough to make up for what rakeback would've been worth (if it gets cancelled).

Is rake something that you can market though?? It's not like sportsbooks where it's obvious to the gambler if the vig is higher or lower (eg -105 vs -110). Poker site marketing probally focus more on how large the site actually is (and try to keep the amount of rake in the dark?).

rusty JEDI · #6 10-04-2005, 04:48 AM

[ QUOTE ]
I see someone got an A in microecon. [img]/images/graemlins/grin.gif[/img] [img]/images/graemlins/confused.gif[/img] [img]/images/graemlins/frown.gif[/img]

[/ QUOTE ]

I honestly know so little about microecon. that I dont know if you're being sarcastic because my theory is so bad or if you're serious because its so good.

I majored in human kinetics and minored in math.

rJ

GoblinMason (Craig) · #7 10-04-2005, 04:52 AM

No sarcasm. A fairly commodotized good like rakeback should in theory eventually end up in perfect cometition (i.e. no profit). In reality it would probably end up more like you described.

Daliman · #8 10-04-2005, 08:40 AM

[ QUOTE ]
[ QUOTE ]
It would not be all that difficult for poker sites to have built in rakeback.

[/ QUOTE ]

Sites have tried it and failed. (See: Pokerchamps)

If a new Party skin opens and offers a direct 20% rakeback directly into your acct, how many players are they going to get? Everyone getting 25% or higher which is (98%) of the people who currently receive rakeback. Nobody with their Empire, Eurobet etc. accts are going to switch over for a lower %'age. They'd gladly let their current affiliate take a chunk of their MGR since they are still getting more anyway.

And just for the record, there is no chance in hell Party will ever let a new skin open that gives more than 20% in autorakeback back to its players.

[/ QUOTE ]

That site didn't fail beause of rakeback.

somapopper · #9 10-04-2005, 09:26 AM

The only problem with that analysis is that you're cutting more and more into the poker rooms profit. When the room feels it's bottom line is threatend, it will essentially say "screw it" if its games are healthy. At the end of the day you need to play at party, and slowly raising the percentage until somebody reaches a breaking point isn't good for the health of any party involved.

Unabridged · #10 10-04-2005, 11:18 AM

[ QUOTE ]
[ QUOTE ]
It would not be all that difficult for poker sites to have built in rakeback.

[/ QUOTE ]

Sites have tried it and failed. (See: Pokerchamps)

If a new Party skin opens and offers a direct 20% rakeback directly into your acct, how many players are they going to get? Everyone getting 25% or higher which is (98%) of the people who currently receive rakeback. Nobody with their Empire, Eurobet etc. accts are going to switch over for a lower %'age. They'd gladly let their current affiliate take a chunk of their MGR since they are still getting more anyway.

And just for the record, there is no chance in hell Party will ever let a new skin open that gives more than 20% in autorakeback back to its players.

[/ QUOTE ]

they could give autorakeback, they just need to set a minimum MGR with some kind of tiered system
MGR 500-999 = 25%, 1000-1999 = 27%, ...
its not like party & skins need affiliates anymore to attract customers, everyone has heard of PP and i'm sure they all realize they are just shuffling players back and forth between skins. if they started offering guarenteed rakeback(at a competitive price) paid directly into your account, they could eat up all that money lost to the middlemen(affiliates). better for players and better for the skin.