Playtech poker chief: rakeback price war "killing the industry" 29/07/2009
PLAYTECH POKER boss Danny Frishman has entered the rakeback debate that has taken place on EGRmagazine.com, saying that giving players linear percentages is "killing the industry" and that banning the controversial retention model has played a key role in the growth of the company’s iPoker network.
Speaking to EGRmagazine.com this week, Frishman explained why Playtech decided to completely ban rakeback rather than capping and policing it as many other networks do.
“Giving players linear percentages from the rake they are generating creates a price war, reduces the bottom line to a minimum and does not incentivise loyalty. It is killing the industry by taking money from developing better platforms and promotion,” he said.
“Our card rooms now focus more on recruitment of new players to grow the overall liquidity instead of circulating players between the different card rooms in iPoker, and we have players that are more loyal.”
Responding to views aired by Karim Wilkins of RakeTheRake that the number of skins given out by networks made rakeback and its effects hard to police, Frishman said all new licensees are made aware of the policy and that the network ban is rigorously policed. “If someone does not comply, we do not hesitate in cutting to the policy to make sure they comply in future,” Frishman said.
Wilkins’ comments followed William Hill Online COO Peter Marcus’ rallying call to poker operators on rakeback earlier this month, when Marcus told operators to “get together and be strict” on preventing affiliates and poker skins offering it.
Frishman continued that a further factor in the strong growth of iPoker was the number of sportsbooks on the network, including Bet365, Paddy Power and William Hill. “They bring in massive traffic of new, depositing recreational players. It gives us a big advantage over other networks. They are very good for the network ecology,” he said
Playtech’s head of poker also defended the affiliate lifetime revenue share model, which has been the focus of mounting criticism from some commentators for reducing the amount of money operators have left to spend on retention. Frishman said the model provides a strong incentive to affiliates to bring in quality traffic and enables operators to reach emerging markets and niches they would otherwise be unable to.
However, Frishman agreed that both poker rooms and big rakers, which the industry spends significant sums rewarding, would benefit if some portion of this spend was re-allocated towards educating new players about poker and recruiting new players.
“Maybe it’s better for these players to leave more of this money for the industry to invest in penetrating new markets and getting new players, because those grinders that generate so much rake and get it back will then be making much more money from winning from other players than they actually make from rakeback. So it’s also in those players’ interest that poker keeps recruiting a lot of new faces,” he said.
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Posted: 29/07/2009
User comments
Anonymous
"Playtech’s head of poker also defended the affiliate lifetime revenue share model"
Perhaps Frishman should read Bet365's affiliate terms and conditions... anything but lifetime!
Anonymous
“Giving players linear percentages from the rake they are generating creates a price war, reduces the bottom line to a minimum and does not incentivise loyalty." Ermmm, welcome to the real world where evrything is about price and where price breeds loyalty. Nothing wrong with your average player trying to get value.
John R.
Very sensible, although rakeback can't be "killing" the industry since all but one of the largest operators prohibit it.
Anonymous
Good to hear that iPoker is on track now with their view on the issues & problems around rakeback & player poaching.
Still, there is one important thing a network can do besides policing: carefully selecting their skins!
iPoker had a history of handing out a skin license to virtually anyone without checking whether they had a valid business model / traffic stream.
Most of the most harmful skins could have been identified by just looking at their abilities to bring in players - besides poaching, it is none. By the way: same counts for many of the affiliates!
Anonymous
lol..what a joke, I have 4 ipoker skins in my mind which still pay flat rakeback.
ipoker should overthink thier strategy regarding business developement. wouldn't be a surprise if they start a online shop for white labels soon.
AnonyMouse
QUOTE "iPoker had a history of handing out a skin license to virtually anyone without checking whether they had a valid business model / traffic stream.
Most of the most harmful skins could have been identified by just looking at their abilities to bring in players - besides poaching, it is none. By the way: same counts for many of the affiliates" END QUOTE
Couldn't agree more. Networks should get a valid business plan from wannabe skin owners who should have a minimum five hundred thousand dollars set aside for marketing and advertising, and should have to provide accounts for this each year.
And if iPoker (and other networks) give skins to affiliates, then what do they expect other than those affiliates to poach traffic from existing skins across to their own skin where they can earn an extra 15-25% margin! Hello!!!? Mcfly??
As far as the affiliates go, all rooms should gather proof of company registration from any affiliate wanting to offer rakeback before just giving them the go ahead. In fact all affiliate contracts (for rakeback permitting rooms) should include a clause prohibiting the offering of rakeback without explicit permission from the room itself or perhaps even the network. This would make sure (as best as possible) that people offering rakeback were of a reliable and trustworthy nature.
Anonymous
Joke... Sadly, Danny isn't telling the truth.
iPoker knows all about their rakeback problem but have been too busy developing new licensees to face the issue head on. Now, with Playtech's biggest deal (William Hill Online) costing them in the stock price there is panic in the air.
Playtech's options are limited. William Hill is upset about iPoker rakeback? Well either they didn't ask iPoker the right questions, or iPoker lied when they were asked.
Anonymous
Ipoker own about 30% of william hill and rake the rake are owned by will hill
didnt mention that did he ;)
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LekoPoker
My 2 cent,
Rakeback will probably stay and for me as an affiliate there is no way around it. Before i just needed 20 to 30 signups to make my living as an fulltime affiliate.
In a perfect world there would only be rakeback for high rollers who rake in +1000$ a month, but we don't live in a perfect world , do we.
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