@cmcdonnell 231955 wrote:
Between affiliate costs, rake back bonuses, sign up bonuses and thin margins in online poker in general, it is really tough to make money. It is not likely that any company/investor could take on that kind of debt and presume to make a dime.
All of these poker companies that are paying their managers and executives large salaries, operating out of lavish offices, spending millions on marketing and advertisement, etc, are all likely operating under a flawed business model. They are all ponzi schemes in one way, but then again, a bank does operate in a similar way. Is operating an online poker company any more a scheme then a bank? I am not one to speak well of the banking system, however I would have to say that the online poker industry is a far cry from legitimate. Currently, it is not regulated, there are no strict guidelines on how much escrow they need to keep, and quite honestly, there are plenty of unscrupulous characters in the industry.
I tend to agree here, but you can make money if enough scale is behind you (obviously Stars and Tilt both were putting away hundreds of millions, legitimate or not). The business model itself is clearly not flawed, it is more so the behaviors of the guys running these unregulated companies.
The real question is – how much scale does/did FTP have outside of the U.S. and is that maintainable? Surely a new owner can do away with the inordinate amount of expenses Bitar and others were putting through the company and make this business profitable. It would be a real challenge getting affiliates to promote them again and obviously the new owners would need to address the availability of player funds through some 3rd party to alleviate that concern going forward.
FTP does have a product that millions of players enjoyed and were fiercely loyal to so now it comes down to really what potential is left. I still think it’s still a salvageable business…at the right price.