Inside V Outside

September 16th, 2009Leave a commentGo to comments

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.

 

  1. September 16th, 2009 at 09:10 | #1

    Hey Ken,

    Thanks for the follow up.

    Actually, I don’t really disagree with you. However, I think the US legal situation and this are two distinct issues. Let me explain why . . . If you run a poker room in Europe that isn’t US facing right now, this is your current reality. You can’t hope that the US is going to open its doors and welcome you with open arms as a business strategy. So this is a problem everyone outside of the US facing poker rooms has to tackle immediately.

    The US legal issue is completely different in that it could go this way or that way or even that other way. We simply don’t know how it’s going to work out and what things are going to look like after the dust settles. We can speculate and I don’t think you and I are too far apart on what the outcome will be but that could still be months or even years away.

    But, I do agree that when the dust does settle the land based US casinos are going to have a massive advantage. And yes, it will lead to consolidation. And yes, it will lead to less competition. And ultimately that is a bad thing for consumers.

    So, please view my thoughts in that context. An immediate and real problem facing all non-US facing rooms right now vs. a potential problem at some undetermined point down the road. Not to diminish the impact of a legal US market but unless some of these sites get their act together today they won’t be around to even worry about the second problem.

    And I’m not sure I would call it a mid-life hiatus. I’m probably working harder now than I was when I was working for The Man. πŸ™‚

    Though I’m glad you didn’t call it a mid-life crisis . . . because I haven’t even looked at convertable sports cars. lol

  2. September 16th, 2009 at 14:38 | #2

    Sorry, didn’t realize those Thai gin mills required such dedication!

    As to the car, rest assured I don’t think of you as a DrC…

    http://pokerdoctor.blogspot.com/2009/09/guess-what-i-did-today.html

    As to sites, it seems like a time for all of them to make difficult decisions. Poor folks! I’ll have to send in more rake. πŸ™‚

  3. September 16th, 2009 at 20:24 | #3

    Well, I do have to admit that less than 3 blocks from my apartment is a Ferrari, Lambo, Maserati, and BMW dealership. I might have been tempted to go take a look but in Thailand they have a 100% or 150% (I forget) tariff on cars not produced in the country (Honda, Nissan, and Toyota all have small plants here). So yes, a 3-series BMW starts out at around $130,000. I can’t even imagine what they ask for a Ferrari.

  4. September 17th, 2009 at 07:39 | #4

    I guess it is like they say about restaurants that have those price free menus…

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