Inside V Outside
Bill Rini has a very thoughtful look at poker as a business. It comes from a knowledgeable insider – even if he is on a mid-life hiatus. I really like that last paragraph as a bit of optimism that, sadly, I have a hard time sharing.
That might all sound a bit doom and gloomy but it’s not necessarily a bad thing. Eliminating the fly-by-night poker rooms and spammers is a good thing. It might also be good because hopefully it will inspire some innovative thinking. No longer will poker rooms be able to sit back and follow the ABC model to profits. If they want to have any hope of surviving they’re going to need to look under new rocks to find customers. They’re going to need to figure out more cost efficient ways of reaching out to players rather than relying on affiliates and cookie-cutter promotions. In other words, they’re actually going to have to fight for your business and that’s not a bad thing.
My one-word counterpoint is Harrahs. You can extend that to MGM and the rest if you like. While those U.S. facing sites are getting rich and richer in the manner he outlines – which we U.S. patsies are paying for – those waiting in the wings for the Barney Frank largess have business, funds, and goals to wipe out even today's cash cows.
The Yankee site are doing all the things he mentioned in redirecting our funding/rake outside the country. You can find things like German only freerolls or add-on tournaments. You can look on Stars and see rakeback icons for said players that we aren't eligible for. They are investing rake that used to be available to us elsewhere.
That is a business decision that plays right into the wheelhouse of the Vegas crowds strengths. While Bill rightfully points to using profits to clear the market for the strong players can eliminate the current weak sisters, those very entities are the weak sisters in Harrahs and fellow travelers' target.
That will, in both scenarios, bring about consolidation. Consolidation benefits the business and not the customer. Consumers may see temporary benefits but reduced competition will eliminate that over time. To accomplish that a Harrahs type can operate without a profit for extended periods. There we'll see great benefit. When they kill the completion who's revenue is fixed to online and thus destroyed, then the plan changes and we're had.
Vegas has loyalty programs down to a science. As long as our facing sites ignore us, the easier and cheaper it makes it for them. It looks like Full Tilt, Stars, and so on can't see the forest for the trees.