How to fix rakeback

[RakeReduction]

I'll throw in my 2 cents after having done daily \ cashout your rakeback anytime for several years now.

We love it, the players love it, some of the rooms even love it and I explain why.

Why do the players love it?

First off the players love it because if they bust out, they can reload themselves instantly with their rakeback. They don't have to wait a month, or a week. They know (With us at least) cashout anytime means just that, cash it out and get it within hours.

Players also love it because they save on re-deposit fees at most rooms now.

Why do we love it?

It keeps the players playing and makes them happy. That is the key, whatever makes the players happy. We have 1 person dedicated to doing cashouts all day, everyday and we get hundreds of them per day.

Like the players, we save on deposit fees.

Why the rooms love it?

Mostly the same reasons we do. Keeps the players playing and makes them happy. Also, THEY save on the deposit fees.


We are not a really big fan of the way cake does it, we would much rather pay the players daily rather than monthly. I am not saying that we hate it, we just prefer to let the players have their money everyday, it keeps them playing. If a guy rakes $400 at Cake in the first week, then busts out.. He might not redeposit, he might wait until the next month. That's 3 weeks this player COULD have been playing had he got his rakeback early.


Just my thoughts.

Rake Reduction

[Beanie]

what you haven't mentioned is that you are taking 100% of the risk for 10% (or so) of the profit. Doesn't it make sense that the card room should be administering it. You are essentially loaning players money that you don't have yet. They would be giving the players money they have earned.

BTW, you don't have to do Cake automated. You can choose the regular option. FYI

[RakeReduction]

We have asked cake several times to allow us to pay the players ourselves, they have refused everytime

Maybe Shenaz can shed some light on it.

Yes we are taking 100% and essentially loaning out the money, but it is the cost of doing business and gaining some seperation from other affiliates. I noticed some affiliates started going to cash out now, which for them means cashout anytime you want, but we'll pay you in 3-7 days.. *shrug*

[Beanie]

Originally Posted by RakeReduction

We have asked cake several times to allow us to pay the players ourselves, they have refused everytime

Maybe Shenaz can shed some light on it.

What I was saying is you could set up as a non rakeback affiliate and just pay it yourself. So I don't think it is a matter of Shenaz clearing anything up really.

Originally Posted by RakeReduction

Yes we are taking 100% and essentially loaning out the money, but it is the cost of doing business and gaining some seperation from other affiliates. I noticed some affiliates started going to cash out now, which for them means cashout anytime you want, but we'll pay you in 3-7 days.. *shrug*

Whether it does or does not is irrelevant to my overall point that if you are trying to differentiate yourself for 3%, have at it. Just seems like taking 100% of the risk for 3% is bad math. Part of the reason is on the one time you are wrong you lose 500k because everyone is going to cash out on you. Besides if people are broke it isn't like they aren't going to IM you, so the good majority of people are cashing out for no reason.

I actually brought it up in the podcast that we both did that at about the same time and I still think it is one of the best ideas I ever had. So I do think it has value, I am just not sure it has value at 3%. But that is your decision and clearly it gets you business, so go with what works.

[kdollar]

Originally Posted by PPP

Daily rakeback is on the one hand absolutely crazy. It tells the players how much they are getting raked, and yes about half the players don't have clue how much is being taken. This is one reason rakeback is a nutso idea at its core. No place that has offered poker in the b&m world has ever deemed it a good idea to say "here is 100 of the 300 dollars we raked from you today." Bad bad idea.

Not-bright players like rebates, just like a lot of people like tax refunds instead of having the money all year round.

There is an inevitable cycle here. Daily rakeback will lead to lowered rake because it is an incomprensibly illogical idea to take $1 from a person and give him 30 cents back ten minutes later. One reason rakeback survives now is it is so screwed up. Doing it "right" renders it stupid (say giving rakeback after every HAND).

The only way rakeback makes sense if done "right" is if it is a tiered bonus system -- at the end of the week (or month) if you have been raked something above a certain level, you get back more. Players get chunks of money, but there has to be a motivational bonus point. All players just getting 1/3 back is stupid, just lower the rake 1/3, and you save millions or hundreds of thousands of dollars in overhead. Make it so some people get 20%, some 30% and some 40% (so the cardroom pays out 1/3 total), and there you have something logical that also encourages play.

I like the approach of making it a bonus scheme kinda like the Poker Stars VIP program. This seems logical and I think eventually the industry will tend to move in this direction.

[PPP]

Originally Posted by RakeReduction

First off the players love it because if they bust out, they can reload themselves instantly with their rakeback.

Which of course is a major point of why it is a terrible idea.

Players losing will often/usually be playing on tilt, below their optimum skill level. This is preciely the time you DON'T want them to continue to play, if you are either an affiliate or the cardroom. You want them to cool off. You want them to come back at least one day later (ideally several days) when they have let off steam and now view $100 as $100, not 1/5th of $500 (meaning they were stuck $400 the day they busted).

If rakeback occurs, daily rakeback is an idea that anyone with experience in the poker business would want to avoid. It costs affiliates and cardrooms money, and kills fish which is bad for the fish and bad for the better players in the longrun (the non-tilting players benefit in the shortterm).

[Beanie]

Originally Posted by PPP

Which of course is a major point of why it is a terrible idea.

Players losing will often/usually be playing on tilt, below their optimum skill level. This is preciely the time you DON'T want them to continue to play, if you are either an affiliate or the cardroom. You want them to cool off. You want them to come back at least one day later (ideally several days) when they have let off steam and now view $100 as $100, not 1/5th of $500 (meaning they were stuck $400 the day they busted).

If rakeback occurs, daily rakeback is an idea that anyone with experience in the poker business would want to avoid. It costs affiliates and cardrooms money, and kills fish which is bad for the fish and bad for the better players in the longrun (the non-tilting players benefit in the shortterm).

In his defense it is rarely a great deal of money on a daily basis. But I might amend to weekly. I think both are more than acceptable and I lean to more to your opinion now.

Weekly it is.

[PPP]

True, daily rakeback will seldom be much, which kinda begs the original assertion... if somebody busts out, how the hell will they ever buy back in on one day's rake? If they do, it will be a tiny amoutn of money they will almost certainly lose.

Obviously I'm no fan of the whole concept, but daily rakeback seems entirely stupid. There is no positive to it. Just lower the rake instead, benefit all players and save a bunch of money in overhead. (And have players on tilt less because they will always be stuck less.) The idea of a chunk of money at the end of the week can be motivational, protective of tilt-monsters, and actually do a bit to save deposit costs... and if the cardroom has the money they make some interest.

[mjmurphy53711]

Daily/Weekly/Monthly is an argument for each room don't you think?

I lean towards weekly myself, but I'd still like to see this conversation continue as a beltway towards what needs to change outside of the frequency specifics.

[LadyHoldem]

People WILL still play without rakeback, though theyre less likely to switch rooms from rakeback to non rakeback, and it is likely that when they find out they can get it, they will go find it if it's offered anywhere.

It's also likely that it will also, at least to some degree be offered. It's also marketing in reverse. As in marketing to the guy that's already sold, or preaching to the chior.

Some fresh new ideas will be great though, I can't wait to read the article.

One of my favorite comp ideas is buying into land based games with points.


The daily payout option might be a bit much, and a successful poker player isn't going to use it much. However, knowing that it's there.. incase I ever want it.. that might just sway me.