The Truth About Rakeback

[Ridge]

So, after our discussion on Jeremy's blog last week, I finally got around to blogging about rakeback and the common misconceptions most people have. I want to say that this post is intended to spark some debate among all of us, and hopefully educate the non-rakeback affiliates as to how everything works.

I'm sure there is quite a bit I need to add to my initial post, but right now I think this is a good start.. I'm looking forward to hearing everyone's take on this and having a healthy debate. Also, feel free to discuss everything here in this thread. I know not everyone will agree with me, and that's ok. We all have our own business models and theories.

So here it is:

The Truth About Rakeback

[MJ]

I agree with almost all of this post but would add that AP/UB are the only two rooms that aren’t available on an automatic rakeback plan.

What this means plain and simple is that rooms other than FT/AP/UB take care of the support and payments to players. This is GREAT for the business because no affiliate can simply stop making payments or run with an affiliates MGR, and this is how it should be.

I realize big affiliates have interest in protecting the “need” for affiliates and promos and support - but the flat out truth is it will be better for our industry if this is not the issue.

This is why player forums are full of “can I trust this affiliate” type of queries, and it’s not “ideal”.

I look forward to the debate of a lot of people more knowledgable than me in this thread, but I know there needs to be serious change in the rakeback industry that accomplishes to things:

a. giving all players the best deal available, it is stupid for cardrooms not to facilitate this somehow.

b. deal with the issues of affiliates breaking caps and offering rakeback on non allowed rooms.

For the most part I'm going to stay out of this thread, both because I'm on vacation and also because I think I should tip my hat to those who have been doing it longer.

[MJ]

Also - cheers to Randy for bringing this post up. It's something I've thought about for awhile myself, I started to write this all up awhile back at this link:

http://rakebackaffiliate.org/

I meant to go back and improve it and still probably will but there is some good unbiased info there for a new affiliate.

[ih82lose]

Interesting read. I did not know the commissions where as high as you mention. You may have just taught this old dog a new trick.

[thefarang]

Like many other things in this industry, rakeback is misunderstood because the rooms haven't really figured out how it fits into their model. The poker rooms don't want newbies to get the rakeback but they don't want the bigger players to leave because they don't offer rakeback. So everything is done hush-hush. And at the same time they're trying not to anger their non-RB affiliates by bending over backwards too far for the RB affiliates or advertising that they're allowing RB.

I wrote a similar article about the love/hate relationship the industry has with rakeback on my blog:

The Online Poker Industry’s Love Hate Relationship With Rakeback ? Bill's Poker Blog

[Ridge]

Good point MJ, FT does now offer some affiliates direct automatic rakeback now though, I don't deal with UB and AP much, so I didn't know much about them.

[Hazo]

The affiliates are also in a similar battle over rakeback. Traditional affiliates detest rakeback. They spend a lot of money creating valuable content that they might not otherwise be able to produce if they had to give the lion’s share of their affiliate fees back to the players.

On the other end of the spectrum you have the rakeback affiliates who don’t mind working on slim margins because they can still make money on the sheer volume of players. Also most rakeback affiliates don’t create expensive content (tournament coverage, actual journalists, etc) so they operate with far less overhead than the traditional affiliates.

I have a simple solution. Make all poker rooms handle rakeback in house if they want to offer it.

That way affiliates are fairly paid for the work they put in. The player gets the best deal. Everyone is happy.

Like Bill said, it is the normal affiliates working hard on the content. Rakeback affiliates offer a more personalised approach, but the rooms should handle this. What value do rakeback affiliates (same with bonus code sites) actually add to the industry? (serious question, not cheap hit)

This will stop rakeback affiliates telling players to delete cookies and stealing a signup from a conventional affiliate.

You might argue that rakeback affiliates are there because they offer the best deal. Fact of the matter is rakeback is a backwards marketing approach from the get go. But if poker rooms want to have it they should manage it all themselves.

I've probably rattled some cages here, but if we can keep this discussion professional instead of a hating/bashing thread that would be awesome. Look forward to reading rebuttals.

[TonyG]

There are a ton of misconceptions regarding rakeback. Randy pointed out a few in his blog. Some believe rakeback affiliates are ALL poachers. This simply isn't true. Sure there are a few bad apples but they eventually get weeded out by their own shortcomings.

Randy is right. You do not need a ton of volume to be successful as a rakeback affiliate. Serious grinders add up and they have friends who are looking for a reliable rakeback affiliate as well.

Randy and I have different opinions on certain aspects of the business. This is largely due in part to a difference in business models.

Randy, I do think some of your numbers are misleading. I assume you are referring to the smaller rooms/networks, cause if you are getting 20-35% at the major rakeback rooms, I would like to meet your AMs

FTP is a major player in our industry and is where most rakeback affiliates do the majority of their business. Their tiers make it almost impossible for new affiliates to offer rakeback. Their bottom tiers have you losing money if you are giving the player 27%. Our solution allows affiliates to make money from day one of promoting FTP rakeback.

We will have to agree to disagree about cash out backends and rakeback reporting. Obv I feel there is a ton of added value. In 2004 this wasn't a big deal, but now players want everything within seconds. Look at all of the cool features poker rooms have added for players in the recent years. They aren't adding these amenities to flaunt their tech skills. They feel these features add value to the player experience, thus increasing sign ups and retention.

Unknown Webmaster pretty much summed up my thoughts on Rake Races.

I will add, Rake Races get players involved in your brand. They log in every other day to view the race standings and what do they see... YOU!

I think this discussion is terrific. Rakeback has always been the pink elephant in the room that few in our industry wanted to talk about.

Thanks for posting this in the Rakeback Forum Randy. I was getting tired of reading through Jeremy's blog


Tony

[rinky9888]

Nice work done,absolutely loved reading the article, thanks for sharing and looking forward very much to see more .

[nirva]

FTP is a major player in our industry and is where most rakeback affiliates do the majority of their business. Their tiers make it almost impossible for new affiliates to offer rakeback. Their bottom tiers have you losing money if you are giving the player 27%. Our solution allows affiliates to make money from day one of promoting FTP rakeback.

This isn't true, new affiliates start at 3% when giving away 27%.