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Rakeback in Online Poker

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Rakeback, and its place in Online Poker has stirred up many a discussion throughout the blogosphere, as well as on the Poker Affiliate Listings forum.  While rakeback has been a hot topic for quite some time, I recently decided to chime in with my take on offering rakeback in online poker.

I guess this might also be a good time to point out that the Online Poker Circuit is now offering rakeback to poker players desiring rakeback from many of the major online poker sites.  Click for details of the Online Poker Circuit rakeback offering.

Enough with the rakeback commercial, now onto the substance…

Rakeback Talk in the Blogosphere

I first entered the discussion of online poker rakeback when I read Bill Rini’s post regarding the Online Poker Industry’s Love Hate Relationship with Rakeback.  I’m not going to even try to summarize Bill’s take on rake.  He always seems to hit the nail on the head and can (and did) say it better than I could.  Essentually, rakeback is here to stay.

There are many problems with the current business model of rakeback within the poker industry, but the writing is on the wall regarding poker rakeback.  Its not going away, it will become a bigger focal point of business in the online poker industry as more and more players learn about rakeback and thus rightfully demand rakeback.

PAL Discussion on Rakeback

A bit after Bill’s great blog entry on rakeback, a thread popped up on PAL regarding rakeback, where a forum member suggested rakeback in the online poker industry should be regulated.  The member who initiated the thread suggested that rakeback become regulated within the industry to prevent “under the table rakeback deals” granted from operators (online poker skins, poker sites, and poker networks) and affiliates.  It is a well known fact, at least among frequent online poker players and affiliates that we can “secretly” negotiate a rakeback deal of some sort from sites such as FullTilt, Titan, microgaming poker sites, and other skins who do not officially offer rakeback.  Many poker rooms use rakeback as a means by which to retain players.

Current state of rakeback in the online poker world

Currently, if I am an online poker player, and I want rakeback, I have some options.  I can go to many of the websites offering rakeback and sign up to get rakeback.  If you shop around, you see that many rakeback sites offer a percentage of rake back to “their poker players” at a varying rate and throughout a vast number of online poker rooms.

There are many online poker sites and forums that drive a substantial amount of traffic to the poker rooms, which benefits the poker room by getting a huge volume of players.  The rakeback affiliate in turn should be rewarded with a higher cut, of which he can either rightfully pocket, or choose to pass on the pay raise to his players.  Either one is fine with me.  As a smaller site, one who does not have the volume of visitors coming in, I would not be able to compete without a little help…

The proposal in the forum suggested rakeback should be regulated to make sure everyone “can” offer the same thing to everyone – essentially so that no one receives an “unfair advantage.”  I have to disagree with this suggestion.

The Problem

If every poker room can only offer x% – say for arguments sake 30% rakeback is the industry wide cap, we’ve created a glass ceiling.  While one might be inclined to believe at first glance the smaller guys would benefit from a cap on rakeback, this is far from the case.

ABC Poker News site offers rakeback of 30% at all the online poker rooms, which is all he can offer.  Currently, ABC Poker News is the top online poker news site on the net.  They are getting the most visitors to their website driving mad traffic in terms of quality and quantity to all the poker rooms they offer – and of course, they offer them all.  Under the proposal of regulating, making it all a cookie cutter model, the affiliate who is driving revenue doesn’t benefit any further, because his earnings are capped in terms of percentage.  He can’t get a pay raise for his hard work, because we’re all the same.  The online players who have rakeback accounts with ABC won’t benefit either, as they are unable to participate in exclusive player perks – no special rake races, no rakeback freerolls, no bonuses no nothing…  Again, cookie cutter – we are all the same.

If you think as the small up and coming website that you have it any better if everyone is the same, think again…  ABC already has the traffic.  To make matters worse, you – the small guy cannot offer anything above and beyond ABC – so you’ll never get the business!

As a player, you don’t have it so hot either…  ABC can’t offer you anything more and really, there’s no incentive to give their poker players more.  You aren’t leaving their services, you know it and they know it!  They have no vested interest in improving their product.

Online Poker Skins will then begin starving off, because there’s no need to move from one skin to another – there’s no special rakeback deals.  Whoever has the players keeps them – and they need not try very hard to do so either.  With the cookie cutter model, we all lose!

Rakeback industry solutions

I could go on and on about potential rakeback solutions in the scope of this post.  However, I am making a blog post, not writing an e-book.  I’ll follow up over the weekend with a list of solutions or suggestions on the topic of rakeback – should it be regulated or organized, or should the marketplace dictate policy?

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