Rakeback discussion in Amsterdam

[Beanie]

Both the guys from RaketheRake and RakeRebate.net did a fine job presenting the case for why Rakeback is a needed thing in the industry. The meeting certainly got heated at points and I will just give you some highlights some lowlights and what my opinion is.

1) Part of the discussion was how the industry has changed. Many of the affiliates that got traffic 5 years ago didn't need to give incentives because the industry was in a frenzy. Some of the people in todays market are quite savvy and rakeback fits for them-it keeps them loyal to the sites once they have it.

2) The Party Poker people came in late for the meeting (which seemed odd since they are against rakeback) after talking to all involved it was apparent they were there just to yell at us. Many people in the room have relationships with Party Poker so many people were quiet when the marketing manager vowed to "crush us all". I don't have a relationship with Party Poker so I was free to speak my mind. I certainly see why they feel the way they do but as I pointed out their position was hypocritical because they are trying to look back with 20/20 vision. Party Poker has certainly made many mistakes that caused rakeback to flourish and thrive.

3) There was a lot of discussion about rakeback affiliates taking things more seriously. There are too many rogue affiliates doing things damaging to the industry and I really hope I can be part of something that will be a cooperative with the only sites so rakeback can be done in a respectful manner to our partners.

Party Poker is too centered on bringing new customers to the market (which I agree is not all bad) but they are way overboard with that mission. Many rakeback affiliates are in essence "executive hosts" for their players. Certainly Party Poker sees no value in us in this manner and who can blame them. But certainly newer sites see the value in rakeback affiliates. With the industry having fewer and fewer new customers we provide that one to one personal relationship that sites need.

I totally get why Party Poker is upset and felt the need to essentially come into our meeting and reprimand us (and then promptly left-literally one of the funniest things I have ever seen) they have been the site most affected by rakeback and they have the most to lose since the have a no rakeback policy and vow to eliminate rakeback.

What they don't get is that the customer will ultimately decide what is best for themselves. High value players want to be respected and compensated. You bring in a gambler to the Wynn that generates a million dollars and you can best believe that the Bellagio will do anything to get that guy.

I think online poker needs rakeback but the way things are currently we need to be doing a few things.
1) we need to help sites police their spammers-our players are playing at these tables daily-lets help the sites maintain their database.
2) lets not advertise in the same trade publications as the sites we partner with.
3) lets leave some sugar on the table-if someone says I would like rakeback on xyz site the first question should be "do you already have an account there?"
4) In this way Party Poker was right-the guy was yelling that we do not generate new customers. Lets focus on fewer sites that we believe do a good job and try and steer people to those sites.
5) Sites need to be in or out. The rules need to be clear. We can help them no their customer base in a better way but it is difficult to do that without a clear understanding of what people want accomplished.
6) The rakeback industry needs more of a network marketing approach. Our sites need to be upgraded to the point where customers want to tell everyone they know about us. This is a more respectful approach to our partners.
7) Lastly-its a new day for rakeback. We need to take things seriously and sites need to involve us in the discussions regarding the industry.

(I apologize-my comma key is jammed so I use dashes)

[Acapulco]

Your rationalization/justification is well written, Beanie. How about if we ALL just become rakeback affiliates? That way we can cut affiliate margins from ~30% to ~3% all across the industry, essentially destroying all our livelihoods competing for the 3%.

On a less cynical note, points #1-6 would be positive changes.

[checkingout]

I had an interesting question regarding rakeback from someone I work with, is offering a chance at sponsorship for good play considered a form of rakeback?

[Beanie]

The funny thing about what you are saying is that you are correct but that is ultimately what the market may dictate. The more competitive an industry gets the less profits there ultimately always are. I could easily be an affiliate with 4 million in revenue all I had to do was do everything the same way everyone else did. Instead I found a way to use comps as a means of recruiting active customers from sites I don't promote to sites I do promote.

I did hear your question a lot "what if we all did it"-I have a staff of 4 people. I still may need more people to ultimately see my vision come true. I visualize a scenario where I am in contact with customers very regularly and my systems have provided me everyway possible to communicate. I just don't see that as a model everyone can emulate easily.

See-in essence you are right-as things exist currently there will be this great divide between rakeback affiliates and everyone else. I am saying if people use a model similar to mine they will certainly leave some sugar on the table but they will be able to look people in the eye when they talk to them.

While I don't agree with Karim (raketherake) about price fixing I do favor a system where executive hosts recruit active players and the site themselves administer the comp and take it directly from our percentage. I also favor no tiering at all. I believe all affiliates should be operating on the same playing field. Too much (or too little) does cause some of the great disparities that effect everyone.

All of that said-whatever the market is-I will need to adjust. As will everyone else.

When you say "justification-rationalization" it implies that I am apologizing or making an excuse. The people that need to apologize are the people that enforce the terms and condidtions for these sites. In that sense rakeback has done a better job policing people than anyone else. We need to take it a step farther if we are ultimately going to be a positive force in the industry. I certainly believe it is possible.

Although I do not give rakeback I did make the statement at the conference that it is the players driving rakeback and not nessacarily the rakeback affiliates. I believe this is the case at least 80% of the time.

So to Beanie's defense, he is not out poaching our players nor is he even advertising anywhere. (all word of mouth) It is our big players that are going to these rakeback affiliates asking to be switched. I feel confident in saying that Beanie or a few of my other friends who do rakeback would NOT encourage a player to sign up a new account, but the reality is that most will. Or they will simply get them to another room which in essence has the same end result for us non-rakeback affiliates.

This is such a complex issue the industry is currently facing. And unfortunately I don't believe it is going to get better anytime in the near future.

At the end of the day the responsibility falls on the double standards of the card rooms themselves. Most have no policies about rakeback and in fact make under the table deals with rakeback affiliates offering higher percentages right from the start.

Likewise none will say it publicly but if a high producing player were to sign up with a new account after learning about rakeback, some card rooms will turn a blind eye before they will risk losing that player to another site ........trust me, it happens.

If rakeback is such a great assett to the poker industry in general, I would ask why NO live card rooms give it and why the top 3 online poker sites dont participate in it either?

[Beanie]

They do offer it. Hosts are paid crazy money to leave one casino and go to another. Affiliate systems have worked in Vegas for many years. There are many people benefiting from hunting out the big whales.

The dirty little secret involving rakeback is this-the smaller card rooms need it and would not like to admit that they know it is used to take players from their competitors. Guess what, that is basic market economics coming into play.

Someone asked me if I could buy a companies database would I? Certainly I would, this happens in every form of business. The key difference on how I differentiate myself in the market is that I work to get know my customers in a personal way.

The reality is that the rooms themselves need to enforce their rules. Or hell, here is a novel concept, make clear what your rules are. I have never said this before but I will say it now, I absolutely do not believe that rakeback should be advertised anywhere (no qualifiers) I feel it is disrespectful to our partners. All of that said, the rooms themselves don't seem to hold this opinion so most affiliates need to do it to compete.

The reason I made the bet about Party Poker ending their affiliate program is because that is essentially the only way to end rakeback. As long as they have Hand Histories affiliates will have access to those stats and Party Poker knows this. You can say what you want about Empire but Party Poker has certainly shown that they are willing to blow up the ship to what they think is the best course of action.

One affiliate manager told me that the reason they will never do that is because they are loyal to the people that built them. My question to the people that actually built them is do you feel that is the case? I think the overwhelming answer will be no, though I could be wrong (according to my wife I am wrong a lot).

Lastly, cardrooms are being built to cater to rakeback. Bonuses are rakeback. I hate the damn word rakeback. My web designer puts it on my site occasionally and I always ask him to take it down. Comps are good, making the players focus on rake is bad.

[PPP]

Originally posted by Jeremy@Apr 15 2006, 10:23 AM
This is such a complex issue the industry is currently facing. And unfortunately I don't believe it is going to get better anytime in the near future.....

If rakeback is such a great assett to the poker industry in general, I would ask why NO live card rooms give it and why the top 3 online poker sites dont participate in it either?

I don't see it as complex. It's actually pretty simple, and it makes sense in a capitalistic way.

Rakeback remains a tiny aspect of the business because the cardrooms representing 80%+ of players prohibit it... and make no mistake about it, they do. You can fit in a thimble the amount of cheats getting away with anything. (Also the biggest affiliates could not possibly even do it logistically.)

At the same time, small rooms in general don't want to stay "small rooms". So, they try more desperate tactics. These tactics have no chance of great success, but if you can turn .023 market share into .037, you just increased your business over 50%.

We really are now at a pretty clear place: some places don't allow one thing, others do. That's not complex. That's just a marketplace fact that everyone has to deal with. Nothing good or bad about it, now that cheats have been marginalized. (The remaining complex thing is poaching players at cardrooms that allow rakeback.)

No live cardrooms or casinos offer rakeback because it is a horrible idea to talk about "rake" ever. There is no need to reinvent the wheel here. B&M casinos have taken care of big players forever, but they have never focused an exact percentage of house income to do it. It's just a pretty darn bad way to frame the discussion.

The big cardrooms could kill rakeback tomorrow if they wanted to if they judged it a serious threat. The day the cardrooms cut their rake in half is the day after rakeback has moved from a nuisance (to them) to a real market threat. You can see we won't ever get to that day as rakeback has reached the point of too many players getting screwed, at least one cardroom having a better VIP program than rakeback would be, and all the issues swirling around the "price-fixing" concept (like how can one affiliate getting 25% compete with another that gets 30% and kicks back 27%).

[Georgia Poker]

I'm so sick of rake back I could vomit!

That's it, I'm done with poker.

I just signed up for my affiliate account with Wal Mart and Target, I'd rather settle for 1% of gross sales than deal with this rake back BS



I really get tired of the "big" affiliates bitching about rake back. I don't do rake back, I never will. I don't have the desire nor the time to admin such a program. I refer thousands of players every year to various sites and there is no question I lose players to rake back sites. Jeremy and I had a conversation about this awhile back and we're both on the same page. It's just not worth it to try and compete against these morons (present company excluded). If they really want to bust their ass for a 1 or 2% net profit, let them run their stupid asses into the dirt doing it...

[Beanie]

I love posting on here so I can be called a "moron" and a "cheat". Why is it not reasonable that my model to move active players to cardrooms they do not have an account on, reasonable?

I don't mind your business models, I hope they work well for all of you. I wish nothing but the best for everyone. This just happened to be the path I chose. I really do feel the tide changing however, more and more rakeback affiliates are trying to go with my methods of steering traffic.

Where PPP is correct is almost 60% of the players on the internet are losers. They have no thoughts of rake and shouldn't be made to do so. Those people aren't my players, if they were I would do CPA. My goal is poker players that will be around for a long time.

The ironic part and I hope I have made this clear in many of my posts since day one here is that many non rakeback affiliates are the same. Many rakeback affiliates don't even know what they are doing to the market. If you were new to the market wouldn't your focus be to send people to newer sites where you can credit for a player?

IMO PokerStars is the best site by far and the standard by which everyone should be measured. All of the other major players have made huge mistakes along the way. To me it is not inconcievable that some of the smaller sites could penetrate the market. PokerRoom and Bodog have done a phenomenal job in the last year to 2 years.

I have had 2 months without at least 10% growth. Both were extreme circumstances in the market that would have been hard to predict. So that tells me that my business model is likely working. If yours is too, congratulations, there is a lot of pie to be eaten.

[Kyle]

Originally posted by Georgia Poker@Apr 15 2006, 04:38 PM
I'm so sick of rake back I could vomit!

That's it, I'm done with poker.

I just signed up for my affiliate account with Wal Mart and Target, I'd rather settle for 1% of gross sales than deal with this rake back BS



I really get tired of the "big" affiliates bitching about rake back. I don't do rake back, I never will. I don't have the desire nor the time to admin such a program. I refer thousands of players every year to various sites and there is no question I lose players to rake back sites. Jeremy and I had a conversation about this awhile back and we're both on the same page. It's just not worth it to try and compete against these morons (present company excluded). If they really want to bust their ass for a 1 or 2% net profit, let them run their stupid asses into the dirt doing it...

I needed that