There’s been a lot of discussion lately in the online poker world on the subject of rake distribution. It’s no secret that the braintrust at the Bodog Network had proposed a radical shift in the way rake is distributed between operators, affiliates and players. The drawbacks of the traditional arrangement, in which revenue was split per hand, had become all too apparent, and Bodog Network VP Jonas Odman thought it was time for a change.
Bodog Network’s poker powers believe that there’s no long term value in preaching to the converted. If the ecosystem of online poker is going to thrive, it needs to be constantly replenishing its waters with a fresh supply of minnows. Make no mistake, Bodog Network has no desire to needlessly antagonize sharks, they just don’t see the point in paying them a premium for showing up at the dinner table. (Seriously, what are they going to do, stop eating?) The game can withstand the loss of a few sharks. It will not survive the disappearance of fresh minnows.
Needless to say, word of Bodog’s new scheme has provoked intense debate on poker forums, in particular this thread on 2+2, in which a lot of regular winning players, uh, we guess the polite way of phrasing it would be ‘express concern’, that their under the table rakeback deals with Bodog affiliates are no longer being honored. In turn, the Bodog folks counter with the reminder that the deals these players are referencing weren’t agreements made with Bodog, but with the affiliates. And things, well, ‘kick off’ from there. When their verbal arguments failed to carry the day, some disgruntled winning players chose to depict VP Odman as either (a) a clueless dunce, or (b) a wannabe Jedi unsuccessfully attempting to work a mind trick over the players’ critical faculties. “This is not the rakeback scheme you’re looking for…” We encourage you to head on over to the 2+2 forum and read the whole thread, if for no other reason that by now someone may have Photoshopped Jonas’ head onto a naked woman’s torso or something…
At any rate, this discussion may already be a fait accompli, as other poker networks have begun to introduce schemes similar to that outlined by the Bodog Network, but there are some clear distinctions that need to be made. So without further ado, here’s Jonas Odman’s view of the field…
An Analysis of Different Poker Rake Distribution Systems
by Jonas Odman
When Bodog Network presented the concept of a new rake distribution system last year there was enormous debate and, inevitably, flattering imitation. But as they say ‘the proof is in the pudding’ and we can now assert that we are delivering on our promises to players, affiliates and, next year, to other operators.
As we hoped affiliates with a high proportion of net depositing players now earn more money from their revenue share deals than before and the all-important ‘leisure’ player is also much better supported.
Ongame Network, iPoker Network, and Microgaming Network have systems designed to achieve the same thing but in different ways, and in this article I will give my view on the strengths and weaknesses of the different systems.
Most agree that the old way of splitting the revenue between operators was skewed, and operators/affiliates bringing in net depositing players were not rewarded enough. The root of the problem was the way rake was assigned to players in the back-end, and that is where Bodog Network has addressed the problem. Bodog Network is the only poker network which has stopped splitting the revenue per hand. Instead, at the end of each business day, Bodog Network uses a proprietary algorithm to split the revenue which rewards net depositing players. And unlike all competitors’ models, the Bodog Network model works for all players from day one.
Ongame Network call their system Essence. Based on the players’ results and playing style during the last 90 days, players are assigned a coefficient. The rake is split per hand, just like the old system, but the coefficient is used to correct the flaws of the old system. A player’s share of the rake will depend on both his coefficient and his opponents’ coefficient in that hand. This is the second best rake distribution system in the industry but there are some obvious problems with it. Firstly, it takes 90 days before the system starts working, so new winning players will be assigned much more revenue than old winning players. Secondly, we know that 50 % of the players never make a second deposit—these players will not stay long enough for their operators to be fully rewarded for bringing them in. Thirdly, the system can and will be abused—by creating a new account on the network every 90 days, winning players with under the table rakeback deals can sustain too big a value for their operators/affiliates.
Microgaming Network and iPoker Network have a blunt system where operators with too many winning players are fined each month. The networks are basically keeping a rake distribution formula they know is wrong and then punish operators who benefit too much from it. This creates big problems for operators who get fined, because it is impossible for them to then split that cost between the operator’s affiliates with revenue share deals. Some operators have reacted by blocking winning players which is a natural and understandable reaction but at the same time bad for the networks’ reputation. Why would anyone want to play on a poker site or network where winners get blocked?
All systems, including Bodog Network’s, have in common that they lack transparency. However, from an affiliate’s or an operator’s perspective, the old systems were not that transparent either. Yes, players with 1) hand trackers and 2) knowledge of how the network split the rake between operators could calculate their share of the rake (and hence their rakeback), and now all networks are removing that transparency. Here it is important to remember that the rake distribution models were only meant to regulate the business relationship between a poker network and an operator, as well as an operator and an affiliate with revenue share deals. Rakeback deals were just an unwanted consequence which is now being dealt with.
Net depositing players are the bread and butter for a poker network, and it is a good thing for online poker that poker networks are starting to acknowledge that. This will lead to more healthy poker ecosystems and in the long run all players will benefit from this.
Jonas is the Vice President of Bodog Network.