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I am sure Dom will write volumes about it when she gets back here to the states, its one of her favorite topics to discuss.
Was very divided. Overall I think there were programs that currently allow rakeback re-thinking their situation. Some of them clearly like it and need it though.
I will – probably tomorrow.
I need to shake the jetlag and clear my thoughts.
Was a fun session and really surprising.
It was an interesting talk – the 2 top rakeback affiliates gave their points for rakeback. Such as how it attracted the big money players and aided player rention.
They also encouraged the affiliate programs to begin some kind of screening process for rakeback affiliates to reduce the accidences of players being cheated out of their rakeback deals – this led onto a suggestion that there should be a cap on the amount of rakeback (as many new rakeback affiliates undercut the other rakeback affiliates to break into the market – of course past a certain point you just don’t have a business anymore, so the rakeback affiliate stops paying their players).
Depending on your politics you can either view this as a genuine attempt to regulate rakeback or simply an attempt by the 2 top affiliates to limit future competition and protect their interests.
There were quite a few arguments against rakeback, one of which was that player incentives were not allowed by most operators at the time it began – however unlike other cash back scenarios the poker rooms, weren’t being ripped off by the affiliate so the ones which allowed it didn’t care.
The main argument against rakeback surprisingly came from Party Poker – the argument was that rakeback was essentially parasitic which only recycles the existing player base, never expanding the market.
Since Party Poker is probably the biggest driver with regards to expanding the poker market, I can understand why they completely against it – if it became mainstream it would take a really dent off their profits.
The smaller poker rooms however, will probably view rakeback as the ideal way of poaching the best players from their competitors. The very players which rakeback attracts are also the players who start games and keep the tables busy, so they are the ideal player to have. As long as the poker rooms doesn’t have to deal with calls relating to ‘not being paid their rakeback’ the ones who currently allow it don’t care.
Given what the 2 rakeback affiliates achieved within 2 yrs – I can see a lot of regular affiliates jumping on the bandwagon but then stop a couple of months down the line when they realize the amount of paper work it involves.
My personal thoughts, if you’re not on CPA better start thinking about it.
Quote:simply an attempt by the 2 top affiliates to limit future competition and protect their interests.Bingo! Oh when they were stealing everyone elses big players everything was hunky dorey, now that the worm has turned THEY want protection. What a MASSIVE CROCK of hypocrytical self serving shit.
I have always said this; As a business model Rakeback sucks and is a profit black hole.
Now that black hole is swallowing up the affiliates who created it. That’s good, send us a post card from the other side of the universe.
Oh, cant afford a stamp anymore… what a shame :hehe:
This is one of the those subjects which no one is going to change their minds on, whether you’re for it or against it. I personally don’t do rakeback and don’t plan to, but I do wish I’d thought of it first.
I think the industry as a whole wishes that rakeback was never created, even those poker rooms that allow it – ok in the short term nick some good players, it’s profitable so it’s all fair game etc.
But in the long term they know it’s going to erode the profitability of the industry. Problem is, no knows how to kill it off.
Here is a movie from Amsterdam, in the end there are some sections of the rake back session.
http://www.cac2006.com/video-amsterdam-2006.php
There is a way it seems to put an end to affiliate driven rake back, if a good number of us really wanted to. It would be a nightmare to many rooms, and my bet is that the software providers would put their foot down and stop it asap.
Dom I expected volumes of commentary from you about this meeting…
Was anyone else there that can fill us in on all the nitty gritty of the Rakeback Meeting?
Actually, I just can’t decide on what course of action I want to take.
There were a lot of the poker rooms sitting very quietly in the back of the room. There was also a camera outside and some of the owners were watching at a safe distance that way.
What is happening is that rake back is heading for exactly the self destruction I always predicted.
About 18 months ago it first reared it’s ugly head. As Party Poker so aptly pointed out (by the way, they were the only group to speak up and eloquently so.
All other rooms were as quiet as church mice while affilates got rather heated.) rake back affiliates never bring in new players. Only us non rakebackers provide growth for the industry. This is a very important point. Rakeback affiliates only syphon off the players we brought online and trained until they played well enough to be profitable to a rakebacker.(who makes a very small %)Without us non rakebackers, the poker industry would literally shrivel up like a prune. This is one of the reasons rakeback is getting more and more hush hush. Rooms don’t advertise it. Microgaming even issued a gag order. They all still offer it quietly to those who ask, because they want to steal the whales from one another. In the process, they are all guilty of stealing them from us.
That is why no one will talk about it. Well, I will, even if it involves some people I much respect and trust on other levels.
These rooms fear that if they don’t do it, they will not have any of the bigger players. But they also fear that it may become popular. Right now abut 15% of poker players get rake back. I have been told that once this number climbs to 50%, the only people making any money are the players.
Now comes the part that is almost funny.
Rakeback affiliates would like for us to help them. They said so during the presentation.
18 months ago these folks came and saw a market opportunity. Nothing wrong with that. They started their rake back programs, which are very heavy in player support. You need to be in constant contact with these larger players. So, while they were making a very small percentage, they needed staff. Some of them have like 20 or more people working for them. This gets expensive. I was shocked when I realized how little money they were making, despite working very hard and moving lots of very large players about.
Now – enter the NEW RAKEBACK affiliates. They don’t have so many players to take care of. They go to the poker rooms and say: Give me 50% and I’ll give the player 45% and I’ll bring you 100 huge players very fast. Give me 52% and I will give the players 48% and I will bring you the big players in a jiffy. The greedy and hungry poker rooms will do it. This is where the rakebackers are coddled and given perferential treatment. They get a much higher percentage than we do, so they can pay out the rakeback. And, mind me, this is where the poker rooms are biting themselves in the axx. No profit margin for anyone after a while. Anyway, now guess who is crying bloody murder?
The 18 month old rakebackers. They cannot keep up. The new guys are stealing their players. Isn’t that a crying shame. Stealing the players. Who ever heard of such a rotten , lousy thing to happen to a person!!
So, they would like for us to get together with them and the room and set a ceiling for rakeback. So that no one can steal the players from them that they stole from us.
I am really a very nice person and as CAPPERS well know, I always help people out. So what will I do for these folks? You got it! I will let them do this to me: :kissass:
So what did I mean with us having the power to put an end to it?
Simple. We all start offering rakeback. I will bet you what that the software companies will put down their foot, and fast.
Poker, bursting on the scene with such promise and possiblities, is a mess and every day it’s getting messier. Greed rules and ethics have left the house.
Yuck! :Pisser:
Good threat – and good post by Dom.
I would rather take my chances with large volumes of small rake players, then deal with the mess of rakeback.
If all the rooms would simply put an end to the practice instead of supporting it we would all be better off.
Imagine going into a store and you are already at the cash register and they offer you a 30% discount just for being there.
The two “large” rakeback affiliates you refer to – who stole our whales that were acquired through genuine marketing practices in the last few years are now getting their payback. The demands for reporting and increased rakeback percentages are going up, increasing their administration and essentially wiping out their already small profit margins.
With respect to the “new breed” of rakeback affiliate going for 50% and giving back 45%…the rooms who are offering this practice will soon not be around as they cannot have enough revenue coming in to handle their overheads.
I agree with Dom with respect to “helping these original rakeback affiliates” – ya right, watch what happens when they close up shop and keep their last 1-2 months of large revenue from the rooms as their profit and screw their players.
The biggest threat on the horizon is the over exposure of Poker with really no marketing plan, no pushing of personalities, etc. and the fact that the supply will outweigh the demand.
What happens to these rakeback players when a room is acquired or consolidates – that is the question?
a fasciniating insight – many thanks Dominique.
What surprises me is that the Poker Rooms are prepared to squeeze their margins so easily and give away 50%-52% of total rake.
I guess that the feeling there is that 48% of a whales rake is better than 70% (assuming stand affiliate share of 30%) of a departed player ?
Some questions pop up in my mind :
1) I’m a small time poker player so I’ve never really noticed the extent of the rake – what share is it really of my bankroll over the course of a month?
It’s 1-2% of pot total isn’t it? and it usually caps off at a couple of bucks per hand at my level. That seems like it might only be 0.5% of turnover ??
Doesn’t seem much.
2) How do whales differ ? Is it higher or lower because of the cap?
3) In real life casinos offer whales complimentary things. That’s the form that “rakeback” takes – and it doesn’t need sneaky middlemen. Why does the online world differ?
So I feel the the poker rooms should :
a) Simply squash transferal of players between affiliates (immediately eliminating the commercial drive for rackback within a room)
b) go back to a standard set of affiliate payouts – drop rackback referrals completely.
c) most importantly – poker rooms and casinos can take that money saved – and start rewarding their whales directly with gifts and freebies.
Imagine getting a bottle of fine wine / scotch / brandy, or cigars, or a poker set, or quality crystal glasses, or a trip to vegas (or whatever). Make your whales feel appreciated or special with tangible rewards !!
:la-de-da:How do you think a top player is going to feel when they receive this? What will they think about the poker room?
:inlove:Set up a customer relations area and talk to your whales and comp them ! It’s a model that has worked well in the physical world for decades. Real world Poker rooms do not hand back cash and say here – this is half of what we’ve taken from you !!
:omg:
In my experience the “emotional value” associated with a physical and enjoyable comp far outweighs the monetary value and does make players feel “appreciated”.Online poker rooms and casinos have the stats to quickly identify and reward whales. The first poker room to start doing this well will take a market lead.
In summary – I’m not offering rakeback – I have nothing to do with rackback rooms – simply will not cover them. So I’m just a small time affiliate.But it seems to me that online gambling needs to go back to basics.
Would the first poker room that sees sense and starts this up please contact me by PM – I’d love to promote your site.And I believe that many other big CAP affiliates would too. A comping (non-rackback) online poker room would really make a difference and shake up this model !!
I’d be prepared to bump it up and make it my feature room.
Why not lead the market – don’t follow it down a dead end.
Food for thought affiliate managers ???
:notify:Great post Dom! I totally agree… Hopefully poker rooms will realize this is not a long term solution to the poker industry. I feel like poker stars is doing a great job with their VIP club… I also see more of the bigger rooms doing this and hope this will catch on and put an end to the rakeback programs.
Simple. We all start offering rakeback. I will bet you what that the software companies will put down their foot, and fast.
I don’t really see why the software companies would care about rakeback – they will still get their % cut of the rake and/or fees whether the operator offered rakeback or not.
If we all offer rakeback, it’ll be quite a scorched earth tactic – it kills off the advantage the rakeback affiliates have so we wouldn’t lose our future high rollers. But we’d be the worst hit by such a move as we have fewer high rollers.
Such a radical move seems impossible, unless the top affiliates began to do it such as poker listings, in which case you have no choice but to follow suit.
If you hate rakeback affiliates then start a loss leader rakeback site which offers the full 50% commission. I understand some poker rooms automatically refund the rakeback – so just feature those at first to keep admin down to a minimum. Once the site is established and you can guarantee x players per month charge the poker rooms a flat monthly fee to remain listed and rent space on your newsletters.
I think all the sites that condone rakeback should offer the service themselves. What do they need affiliates for? All the signups for rakeback is done by word of mouth. All the site has to do is post in a few forums the percentage of rakeback they are offering or just post it in on their website. If they want to do it more discreetly, they can make it known on the major forums that if an email request is sent to the marketing dept, they will get rakeback. For all other players who are clueless about the rake and do not make that request, they will get no rakeback. It is also better for the poker site to do it themselves because they do not have to worry about rogue rakeback affiliates not paying their players.
Go to the major rakeback sites and you will notice that they do not provide any information that attracts new players. They do not have pokerroom reviews, poker rules, poker strategy, or anything else that new players are seeking. They are just a bunch of parasites looking to steal existing players. A rakeback affiliate does nothing to attract new players, so they should not even be allowed to exist. They are parasites who need to be exterminated as soon as possible.
As the market grows and matures, it will consolidate and those sites who use rakeback now to survive, will not even exist. Rakeback will evaporate, it is only a matter of time.
si wrote:I don’t really see why the software companies would care about rakeback – they will still get their % cut of the rake and/or fees whether the operator offered rakeback or not.Not if there is no more profit margin for the individual rooms. What % of rake can you pay out and still be profitable?
si wrote:If we all offer rakeback, it’ll be quite a scorched earth tactic – it kills off the advantage the rakeback affiliates have so we wouldn’t lose our future high rollers. But we’d be the worst hit by such a move as we have fewer high rollers.Rake back affiliates actually often make less than we do. The overhead for the legitmate ones is way huge. I have a feeling the duration of this would be very short and rooms would stop accepting new rakeback affs very quickly. That would raise screams of blooddy murder, and the softwares would step in.
si wrote:If you hate rakeback affiliates then start a loss leader rakeback site which offers the full 50% commission. I understand some poker rooms automatically refund the rakeback – so just feature those at first to keep admin down to a minimum. Once the site is established and you can guarantee x players per month charge the poker rooms a flat monthly fee to remain listed and rent space on your newsletters.I don’t hate rakeback affliates. I actually found them smart and entrepreneurial and motivated and muy sympatico. I just think in the long run this is not a sustainable business model, and in the short run it hurts a lot of us, including the industry. I think the established rakeback folks are here to stay, they have what it takes to make it. They will just have to shift focus and go with the flow as we all need to do as things change.
I have great poker traffic and provide lots of useful content, but am not really monetizing the traffic. I see little point in it, as soon as I have created a major player due to the info/training you can get on my site, rakebackers snatch him. For now I am just enjoying the branding I am gaining, and not really feeding the industry. I am continuing to build the section, eventually I will do something with it.
I could optimize for rakeback and be very visible in a week. I have considered it. It’s likely the best way to run the thing into the ground. And yes, the programs that automate would be the choice here, rakeback is very labor intensive otherwise.
Just for myself though, at ths time I am content to build traffic, brand myself, and enter the industry properly when it’s cleaned up this mess.
