The case against RB

[Fnord]

I'm not very good at this sort of thing, but I'll get the thought process going and perhaps the more sophisticated can expand or refute my points.

Lets look at this from a poker economy perspective…

Fish input money into the system. Party foots the bill for advertising, etc. to bring them in and a bonus to spiff their account.

Fish plays, good players take their money and Party collects rake until fish busts or becomes a better player.

Consider that RB, was just another way of sending money to the players savvy enough to collect it when it was really intended to be spent developing new players. It was also calculated in a screwed up way. MGR was your share of the rake generated on the table. Not a % of the rake you paid. Hence, it became profitable to just camp out hands on as many action tables you can find since you were getting a cut of the other guys capping it off 6-way. There have been fleets of these guys at tables of all limits and it’s certainly more profitable than farming WoW Gold.

Consider the long-term implications of this towards retaining your action players. Do they want to play with these guys? Do you want a fleet of sustenance farmers taking up 4, 6, 8, 10 seats each?

It’s been hella fun playing at tables like this with such a split of player types. This has been a typical hand for me lately:

A fish or two limps with god-knows-what out of position.
I raise two pretty looking cards from late position.
Blinds fold (they probably have AA on one of their other 7 tables.)
I play a short-handed pot with position against god-awful players with dead money in the pot. Screw hand groups, it’s +EV.

…or I run into a hand, get 3-bet and call knowing I’m playing against a very well defined hand.

That’s got to be murder to the fish. At least in a 6 way pot they get schooling protecting their behavior and some exciting action. Not to mention that they probably like it better that way.

Finally, consider this. Is there much a difference between having a rake-back revenue stream vs having softer games to play in? Of course, this assumes Party really puts the money into keeping the pond fully stocked… Sure you paid $100 of rake today, but if that went towards spiffing a fish a bonus is it really a cost in the sense of what you paid for you lunch? If the fish hadn’t been there, would you have made the $50, $100, $200 or whatever of earnings? Will trimming the fleet of rocks help attract and maintain the players we all love?

Obviously rake should be defined as the amount a player actually paid, not as 10% (or whatever) of the total amount paid at the table.

If done properly, rakeback for high volume players makes sense. B&M casinos provide lots of expensive comps for their high volume players, from luxurious hotel suites to tickets to shows, free plane tickets, meals paid for, and god knows what else.

Online casinos can't offer things like that, but what they can do is kick back 25% or so of rake. What I've heard is that 25% is the amount of the average player's losses that B&M casinos kick back to players in the form of comps.

[fnord_too]

Just one quick note:
Affiliates make money for referring whomever. Anyone who does not sign up directly is diverting money from the site regardless of whether they are a fish or a shark. The economics of the situation, as interpretted by most sites, is that paying people this commision to wrangle business is better for growth than just reducing rake across the board.

Given that said rake is effectively taken from the site, but that the site's rake is the same, it does not really matter where it goes after it is diverted. Basicaly there is price discrimination for everyone who signs up through an affiliate from the sites perspective regardless of what happens to the money once it disappears.

It is a shame the analyses the sites have done did not suggest just slashing rake by a third or something, because that is best for everyone around (except the affiliates and maybe the site itself, since sites profit from players being ignorant of the price discrimination aspect of affiliates.)

[scrapperdog]

Am I the only one that did not understand the point of this? What exactly are you trying to say? You raise pretty cards in position? Yawn.

Why do people have to keep going on about the fish/rocks in the poker economy. We all know how that works.

[Nicholasp27]

looking at it economically, rb is better than an across-the-board rake cut

the rb segments the market...the fish that come in from marketing/ads/word-of-mouth, etc and don't know or care about rake will pay full price and party can keep all of that money

the ones who are price sensitive and knowledgeable will still come, but only if u offer them a lower rate, ie rakeback

their flaw in the plan was having skins with rakeback and no 'official' rb for party...so this caused this other segment to simply go to skins...so now they have separated the skins and may offer rakeback officially and increased table number to 10 for multitablers in an effort to get back these price elastic consumers that have a much higher average rake per month than the full-paying customers

[Fnord]

[ QUOTE ]
Am I the only one that did not understand the point of this? What exactly are you trying to say? You raise pretty cards in position?

[/ QUOTE ]

That having fleets of profitable 8-tablers subsidised by RB creates table textures that aren't very exciting for the fish because you no longer have to play as much poker to take enough money off the table to generate a profit.

[Nicholasp27]

the fish don't know about table texture

they don't care about the pros

they just wanna play poker in their pajamas

[otctrader]

I think the best way to look at this is to examine the alternatives; and bear in mind I really have no grasp of the macro online poker economy so take it as jibberish.

In a non-rakeback utopia where all RB is cancelled, and every penny of those payments is diverted exclusively to fish (let's say Party devised a scheme to pay fish proportional to their bad play, i.e. mega-losers get a mega-bonus), the money would simply filter its way to the best players anyway, as they swarm on the uber-fishy games. I'm not sure how this changes anything.

The other alternative would be a RB cancellation, and rake cut across the board. It's not going to attract fish, since uber-fish only care about bonuses, giveaways, and such. And it will, over time, be more advantageous to the elite players, since they are the ones dragging a majority of the pots.

I really don't see how either alternative would change the online poker dynamic for better or worse except for short run ramifications. In the long run, the fish-shark dynamic should always balance out from supply/demand.

[scrapperdog]

[ QUOTE ]
[ QUOTE ]
Am I the only one that did not understand the point of this? What exactly are you trying to say? You raise pretty cards in position?

[/ QUOTE ]

That having fleets of profitable 8-tablers subsidised by RB creates table textures that aren't very exciting for the fish because you no longer have to play as much poker to take enough money off the table to generate a profit.

[/ QUOTE ]

I would agree. A lot of fish create their own excitement though, forget what the rest of the table is doing.

We all know rakeback is crap for the fish. Not only do they not take advantage of it, it tends to attract a certain type of player to a site. If party changed to contributed rakeback all of these tight players would take a hit, that is for sure.

Good points, I agree.

This situation is solved so easily. Only pay money to affiliates for the first 3 months of each player they introduce. This gives them a huge incentive to keep new player volume coming into the site. It also eliminates rakeback. Easy.

The other thing they have to do is stronger cross checking to prevent current/previous customers signing up under a new account and getting rakeback. There needs to be a zero tolerance policy, the poker sites are just giving money away for no gain by allowing this.