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Figures don’t lie; but…

October 20th, 2010 Leave a comment Go to comments

Bill Rini is one of my RSS feeds. He can make you think. But, he is a warped little sucker – poker blog wise. His approach is from the business side that sucks away our mobney. He's the one that recognize the part of poker most players ignore.


I really don't have a great problem with businesses operating. I am not the President. But then, John D. Rockefeller's Standard Oil had a business plan too. And that and other trusts were busted to the citizens benefit. “The industry” is closer to Barnum in outlook. You never give the sucker an even break. Las Vegas is predicated on that and was the existing model when online poker and associated online gambling models came along.


So Bill has a slant that is accurate and reputable. But, it is diametrically opposed to the client's hopes and wishes. That's far more predatory than other business models. That results in a cash cow.


Party Gaming, operator of partypoker.com and partycasino.com presented a quarterly income of $112M. This means a 5% decrease compared to Q3 08 and an 11% increase compared to Q2 09.


To get to that point, they shared their profits in a system called affiliate marketing. The auto industry has a similar system called 'bird dogging” that is frown upon and quasi-legal at best. Another affiliate system provides rakeback to the player and is also about as dumb as it gets. It is all predicated on finding warm bodies. Because warm bodies mean profit, casinos and online operators will go to great length to find them. But there is little or no benefit to the bodies found. In the final analysis it just adds to the cost.


The current business model is under attack. It started with the UIGEA and is playing out further in the Frank's proposal for legislation. Bill Rini has blogged about the fallout that will occur. So, the business that are doomed to failure in this process are looking to get as much as they can while they can. One outfit has already attacked their affiliates with a big reduction in their agreement. Another has bared winning players.  Those kinds of actions will only get worse.


The worst affiliate marketers are parasites. The better ones return some value to 'the client' in freerolls and such. As the affiliate system degenerates, less will be available to the players involved. Yet, the rake remains a constant. The price of poker is going up.


Bill mentions another out of work guy in the industry and pointed to his blog in his latest blog. Bill has struggled with the business plan more than any other I can identify in the business. It is an ongoing struggle that he can't resolve. He knows how flawed it is; he just can't come up with a better working plan beyond minor, incremental improvements.


The post he points too is knowledgeable but hardly as thoughtful. That approach is rationalizing. For example, he says that rake isn't paid by most players. It is only paid by the person who wins the pot. He's rationalizing. It is like saying the government lets us keep all our money except once a year – April 15th. In casino play at higher limits, the truth is acknowledge with fixed fees collected from every player. That player may not win a hand in the half hour that cost him $30.


I'm not really knocking what is going on. But, business plans for online business have been breaking down since the UIGEA was implemented. What I am saying is that the benefits to the players have long been under pressure. If you didn't play before the UIGEA or never thought about it, you don't realize the benefits that were taken from your participation. That continues to deteriorate and can only get worse.


So at least go find rakeback. That is a stupid system as implemented but it is the best of a bad lot. Even at the level most of us play it is the only +EV event you can get from the current structure. It is a nice lagnappe. Be selective of the sites you choose. Many are going to go away and your deposit may disappear as they do.


And pay attention to Bill's blog. It is like having a good broker in an active market. Pay attention to what he says and it can help you avoid costly mistakes.

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