Hey Dikshit

[Dave D]

The MTT is usually my home, but I ventured out today for fun. I'm going to try to respond to OOO's main point.

I understand OOO's point about the "source" of rake being the fish, and that makes perfect sense. Everyone is paying rake, but the fish are basically providing it for the pros, the pros are using the fish's money to pay the rake. That's all well and good. You're also saying that if the pro/fish ratio becomes too tilted towards pros, Party makes less money because everyone plays tight and the people fueling the system (fish who deposit) all die off and stop depositing. This is all well and good, however...

1. You're talking about Party. You're telling me *the* (arguably) fishiest site on the internet has any forseeable problem with luring enough fish. If party is in *any* danger of a problem, then imagine what the situation is for the next tier of competition like stars. Now imagine what it must be like for full tilt and Bodog etc But those sites are only growing, I don't think this is a problem. I don't think party is anywhere *near* that kind of situation. They might be having issues with *growth*, but if you grow 5% one year, and 4% the next.... You're still growing...

2. A more subtle point. You're basically assuming that methods of attracting fish and pros must inherently be mutually exclusive. That is, you either cater to the fish, or the pros and party is choosing the fish. This is wrong for two reasons:

A. I consider myself a "pro", at least that I make money off the site. I have signed up around 5 friends. 1 was break even, 1 is a winning player (but only after about a year), and at least 1 is a HUGE loser. I know for a fact that he has stopped playing, and he lost around 400 in the system. I'm probably the "worst case scenario" for Party. I'm sure tons of pros attract losing players by telling their friends "it's so easy, I've made so much", and the friends lose a ton of money. So my point is, every player, winner or loser, has value as a means of attracting others. I have a friend who set himself up as an affiliate (doesn't pay any rakeback to people who sign up under him) where he basically signup bonus whores them, and gives that money to them to start. He tells me 90% of those people usually bust in a month and don't come back, and maybe 10% become producers for him. My friend is definatly a pro (he lives off online/BM), and has a HUGE network where he's probably signed up several hundred players who are friends of friends of friends. If you alienate my pro friend, you cut yourself off from literally hundreds of potential players.

B. I think the key is basically marketing. Basically, party needs to either implicitly or explicitly treat its two types of customers differently. I don't think going after the two types of players is neccessarily mutually exclusive. All party needs to do is secretly reward the better players, ie let the affiliates move skin accounts to party and keep the same deal they had before. Just don't tell the fish about it. Same as it was before. Just like BM casinos do it, they never advertise their poker rates, or that you might get a Comp for whatever, they just do it for their returning players. I'm sure there's plenty of people who go to a B&M and don't even know there's a poker rate, and pay the full rate. Oh well, sucks for them, like many things, if you do some research you get paid.

Or they could even do it explicitly, like I think they are, by offering these wierd points bonuses which are basically based on play. The second way is a little annoying because people like knowing x amount of work is going to get y reward, but whatever.

3. I think this whole argument is WAY WAY assuming that the world market for poker is even NEAR saturated. I *seriously* doubt that's true, and I think it's all about marketing right now, just like it was a year ago. Time magazine recently had an article where they cited a reputable source that said something like 25% of the population of the US had been to a casino LAST year. That number is probably lower than this year. That's the US ALONE, roughly 75 million people. Witness the explosion in real estate value in Las Vegas (though I don't wanna go too far and say it's all gambling related, whatever). Party has ONLY 9 million accounts. Nevermind the world market, especially in places where gambling isn't as restricted as it is in the US generally. I think there's still COLLOSSAL room for growth for party. So the issue becomes marketing to the general population. Cutting out rakeback I think is *nothing* compared to the gains the could still make in the world market. Yet possibly alienating members and making them leave, only hampers their ability to expand, see 2A

4. No one has talked about the competition with other sites. The bottom line is, not everyone (even "pros") knows/believes Party is the best site in terms of fishyness. Though I've never personally played on stars, everyone pretty much knows that Stars has party beat in just about everything, except the fish ratio. By alienating its base, all party does is give people reason to say "hey, i'm going to stars", or some other site. In the MTT forum, I'd guess around 1/3 of our posts are from other sites, namely stars. That's a lot. Anything that makes your base leave, only fuels other sites. I think when we're talking about online poker, and the pros, we are talking about a zero sum game. Yes I know what I said earlier about the market, but that really doesn't matter. The world computer market is huge too (not nearly as many people have computers as could), but Dell still activly tries to bring in new customers and still probably sees every customer lost to HP as a bad thing. Further, once you buy a Dell, and nothing bad happens, you're more likely to stay a Dell customer in the future. HUGE RADICAL CHANGES (like taking away rakeback) just makes your customers want to substitute what you're providing with someone else's almost as good product (quality of Dell computers aside). Party really shouldn't have given its users any reason to try to substitute its product.


So the bottom line is. If Party were smart, they would have allowed their affiliates to transfer existing accounts to Party, and maybe set up some sort of deal with the affilaites as far as their %. That way, they wouldn't have alienated their existing pros, and yet done the right thing for themselves busineswise (obviously) by getting more rake. The whole skin idea never really made sense to me, but whatever.

[SomethingClever]

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People who cash out regularly and show a profit are not a source of rake.

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Ya lost me here, bro. Oh, wait, I forgot, you're retarded.

[crunchy1]

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Do you know the meaning of the word 'source'? Do you understand the context I used it in?
Pros generate action, that's all. Over the long term a profitable pro IS NOT a source of rake. Please get back to me when you can understand this fairly simple concept. Thank you.

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To find the truth of this, would Party make less revenue and profit if the 10% who generate 70% of the income stopped playing?

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Yes, Party would make less revenue because they have now lost 10% of their player base.

However, the 10%/70% ratio would remain. Out of the remaining 90% of the player base a new 10% subset of those players would now be the winning, high volume players. It would be this new subset of players that will now be the ones generating the majority (~70%) of the rake.

[crunchy1]

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Your idea is so convoluted and wrong that its scary.

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His idea has merit actually, if no new money comes in to be lost, then the games will disappear and so will the players.

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You're correct that money drives the machine as so long as money is being taken out by the winners, money needs to be refreshed by the losers. What some people are failing to realize is that there will always be winners (aka pros) and losers.

The food chain might go something like this:

LOSERS ---lose money to--> WINNERS ---contribute money to rake--> POKER ROOM ---markets it's product to acquire new--> LOSERS (and WINNERS) ---these players deposit (and broke LOSERS RE-deposit)---> (the chain returns to the beginning)

(of course a portion of the loser's money is also contributed directly to the rake)

This isn't a difficult concept guys - PLAYERS fuel the food chain. It's basically irrelevant if the player is tight, loose, winner, loser, pro, amatuer, etc. Poker rooms need players to survive. There will always be winners and losers and in the poker room's point of view I doubt they really care what kind of players they're bringing in. Each player type serves it's purpose in the food chain and it's not about who's more important - it's about maintaining the correct balance in the food chain.

[thuja]

The big picture here is that Party Gaming is trying to take care of the Empire "problem". We (Empire's core customers) are just pawn's in the big picture.

Party gaming was evasive about its business relationship with Empire. In Party Gaming's 200 page IPO prospectus, Empire online isn't even mentioned even though the propectus dwells in great detail on a dozen other potential risks the company may face. The fact that Party Gaming was mute about its business relationship and obligations to Empire in the prospectus was enough to make me pass on purchasing Party Gaming shares.

The nature of Party Gaming's business relationship with Empire online became an issue with the investment community about a month ago when Party Gamings big competitor Sportsbetting PLC made a 780 million britsh pound takeover offer for Empire. The takeover soon fell apart when Sportsbetting realized how fragile Empire's position was with Party Gaming. Empire has an office staff of 16 and the server, cashier, website, & customer service are all done by Party Gaming. Sportsbetting was hoping to get all of Empire's customers to switch over to its Paradise Poker website. I'm sure they were also scared that Party Gaming would also try to lure Empire's customers back. Sportsbetting cancelled the takeover bid.

From a common sense perspective Party Gaming is the logical business partner for Empire. From a business perspective Sportsbettings aborted takeover of Empire was very bad for Party Gaming. First because it highlighted to the investment community the serious issues Party had with its skins. Secondly it was very bad because the price Sportsbeting offered for Empire was huge. If Party Gaming was to purchase Empire, Empire would want a simliar price.

Now this is where Party Gaming got down and dirty. On Saturday October 8, the had their shutdown and separated the skins. No one was told about this not even Empire. Party Gaming issued a press release on Saturday and said that they were upgrading the system, and that they where adding casino games (but not until 2006) and as a technical consequence, the skins had to be separated immediately.

OK now, name me one single public company that has issued a press release on a Saturday.

Co-incidentially, Empire had it's quarterly earings report scheduled for release to the market on Monday October 10. With the stock market focused on Empire, and the fact the Party Gaming had just cut it loose, Empire's stock was down 33%.

Also Party Gaming, reached out to the rakeback people and tried to put together deals to steal Empire's customers away over the weekend.

So, it doesn't take much to see that Party Gaming has put a gun to Empire's head. I'm certain Party Gaming's CEO is saying to Empire onlines CEO right now that Empire has 3 choices:
1) The can sell out to Party at Party's lowball price
2) or they can renegotiate the terms of their operating agreement such that Party gets the majority of Empire's revenues
3) or Party Gaming will win all of Empire Gaming's customers back through an aggresive and competitive rakeback program

As you can see, the big picture is all about Party Gaming's relationship with Empire. We, (Empire's customer's) are just the collateral damage in the fight.

Make no mistake the online pro's are very highly prized customers coverted not only by Party and Empire, but also the 100's of other online sites. Any poker website would kill to have the skins players as there own customers. This is illustrated by the 780 million british pounds Sportsbetting offer for Empire. If we are such suboptimal customers, why make such an offer?

I think that there is strenghth in numbers. We should seek out the best rakeback situation, the marketplace will offer us as a group. Think of it this was: Sportsbetting was willing to pay 780 million british pounds for the right to have us as it's customers. Why would they (or anyone else) not want to lure us away from Empire with a better rakeback deal, and save them the 780 million british pounds aquisition cost?

[Synergistic Explosions]

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Your idea is so convoluted and wrong that its scary.

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If it is, I haven't seen you refute it.

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Your premise would be correct if and only if Partys optimal business plan was to capture 100% of all deposits made to it's site in rakes and sidegames.

Possibly that is their goal, who knows. Maybe their mindset is that all money deposited is potential revenue. But that would seem rather megatonistic, even for Party.

This post reminds me of the why online gambling is bad article (posted on 2+2 at lease twice). The article states that nobody can win at online poker because of the rake. It gives the example that 10 people play each with $100, the site takes .50 cents a hand. After 2000 hands, the site has all the money.

That is exactly what Party wants, all the money. OOO is correct that "pros" are a problem because they TAKE CASH OUT of play. Party wants all cash in play, i.e., people playing until the site has all the money.

Whether pros pay rake is a bit of semantics. Yes, Pokertracker says you paid X rake this month. But when you cash out $1000, that is $1000 that Party wants to keep. What the pros do add is people at the tables, but above 3-6, how important is that? At 3/6 limit and below, the rake is highly proportional.

I have started to ramble, mostly because I, nor anybody on this site, has the data to truely analyze how multiple tabling rakeback whores affect Partys short and LONG term financial stability. In the LONG term, the more $$ going into your pocket is less money going into Party's, so I see OOO's point.

[CORed]

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You're forgetting the fact that pros are mostly useless customers, since they don't put any of their own money in. What Party is looking for is new money, not people to take money out of the system forever.

Common sense 101

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As long as there is a difference in skill level, ther will always be winners and losers in poker games. However, if the losers do not continue to deposit, or new losers come in with new money, the player base and total bankroll of the players will decrease. New money coming in is essential to both the cardroom and the pro player. If the less skilled players drop out, and are not replaced by new unskilled players, the less skilled winners will become losers, and the win rate of the best players will decrease. It is in the interest of both Party and winning players to bring new money into the system. It is not in the interest of the winning players for the cardroom to offer house-banked carnival games that transfer money directly to the house without the winning players getting a share.

I think it is very likely that we have reached the peak of the poker boom. This doesn't mean that the sky is necessarily falling, but it does mean that games are likely to get tougher, especially at higher stakes. One of the problems with internet poker is that it makes it harder for the fish to fool themselves. In live games, their poker funds are not separate from pocket money, most don't keep good records, and it is easy for them to kid themselves that they are winning or "just about enven". In an internet cardroom, the history window in the cashier will tell them the cold, hard truth: They have deposited way more money than they have cashed out. Some may decide that they are getting their money's worth in entertainment, but some will either quit, or start reading and working on their game. I'm not one who believes that all the fish will necessarily quit: After all, casinos continue to get slot customers, but I think the best of the poker boom may well be behind us. I'm glad I didn't quit my day job.

The problem with the winning skin players for Party is that they were generating little revenue while taking money out of the poker system. The skins and their affilliates, instead of bringing in new fish, were largely taking the winning players away from Party, so that instead of the full rake, Party was getting only the cut from the skins. Whether Party's move was good business or not remains to be seen. I certainly don't like the sneaky, underhanded way they went about doing it, but I understand why they did it. It doesn't seem to me that they are totally abandoning the winning player. They increased the number of tables we are allowed to play from 4 to 10. I think they are saying to the winning player, "You can play here, but we want you to pay the full rake". If the winning players choose to go elsewhere, it's not great for Party, but it's probably not a fatal blow.

[somapopper]

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How do 1000 multitablers account for 2,100 full tables, unless they play 21 tables each?

Assume each one 5 tables, that's 500 extra tables on top of the 900 existing. That's about a 50% increase in rake, not 333%.

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Woops, good point. [img]/images/graemlins/crazy.gif[/img] In my defense, the problem is that I represented the situation as a play/ hour thing. TAG's could play this much more than fish, but they'd have to be playing more hours of the day, week, month, in addition to multi-tabling.

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In addition, the games tighten up considerably (which reduces ave. pot and the 50% figure), and the fish go broke quicker and are more likely to not return. Less action is also a disincentive for new players. So it's far closer than it would seem.

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I agree, but the reduction in pot size and variance may have the benefit of allowing the worst/ unluckiest fish to survive longer.

Also, I have no idea how much of the 70/10 equation is represented by MT TAGS. However, I do think that if you accept the hourly rake argument, these highest volume players are the most important/ lucrative for the poker room, and unless they count for a truly negligable % of the total action (not my experience MTing myself) they're important to retain.

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Paying rake and being a source of rake are two different things.

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No, this is where you are WRONG. They are the exact same thing.

Whether the money a "pro" brings to the table was earned off of a lesser skilled player or washing dishes, it accounts for the same rake contribution as every other player in that game.

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In the short term, this is correct. For how much Party makes this week or month or year, it doesn't matter to them who pays the rake. But in the long run, winning players take away money that losing players would have eventually paid in rake instead of losing to good players. On top of that fish are more likely to bust out quicker if playing against all good players and will stop playing if it gets too expensive. So its kind of a trade off, and I think what ÖÖΘ is trying to get at. They make a lot of money off the winners that multi-table and pay a lot of rake, but at the same time, they realize that if too many winners are playing over-fishing will occur, and they can have no long term success without the fishies, b/c the minute the games are no longer good at Party, noone will player there.