BUSINESS

Cake & PokerListings deal: an online poker industry game-changer?

TAGs: Cake Poker, Pokerlistings

Last week’s announcement of the “strategic partnership” between the Cake Poker Network and prominent affiliate PokerListings prompted more questions than it provided answers. While the published details include a plan for PokerListings to drive up to 2,000 new players per month to Cake, industry figures were left wondering what level of ownership PokerListings may have taken in Cake as part of the deal. Neither party responded to questions from CalvinAyre.com as to specifics, but industry scuttlebutt puts PokerListings’ new stake in Cake at 50% or higher.

Cake-PokerListings-Deal1If these figures are accurate, this deal would mark something of a first in the online poker industry, wherein what is essentially a marketing entity chose to swim upstream by purchasing the comparatively complex (and lower margin) operations of a poker network. Cake, which has suffered of late from the loss of some high-profile poker rooms, the abrupt exits of a few prominent executives and, just for fun, a patent troll lawsuit, would clearly welcome the traffic PokerListings can steer its way. What’s less clear is how PokerListings benefits.

PokerListings’ existing business model is well designed and highly profitable. They do an exemplary job of driving traffic to online poker sites through stellar SEO work and by producing strong poker-related content. But how much do they know about the nitty-gritty aspects of running an actual poker site – payments, anti-fraud, customer service, scalability, product development, etc.? PokerListings’ relative inexperience in these areas will not be aided by Cake’s less than optimal business model. PokerListings could find itself as the new Doyle’s Room, i.e. offering up a steady stream of losing players as sacrificial lambs for the rakeback-receiving sharps on Cake’s 60+ skins.

Then there’s the optics of the deal, which has already seen Cake’s elevation to the number-one US-facing (and second overall) recommended site on PokerListings.com (and some of its related affiliate sites). In the press release accompanying the deal, PokerListings describes itself (in part) as a “poker site comparison website.” That mandate will suffer a significant credibility hit if PokerListings is now Cake’s controlling stakeholder. The issue of consumer fraud could even come into play if the precise nature of the relationship is not explicitly detailed on the PokerListings site.

There’s also the more immediate issue of how this will affect PokerListings’ relationships with other poker sites. Any site that has an affiliate deal with PokerListings will likely not appreciate the knowledge that it is now sharing revenue with a direct competitor. With or without a non-compete clause in its contract, a company like PokerStars could conceivably cite this as justification for not only severing its partnership with PokerListings, but also to kill all historic revenue-sharing deals. PokerListings could well expect its legal expenses to skyrocket over the coming year.

Cake will undoubtedly benefit in the short term from this deal with PokerListings, but without modifications to Cake’s business model, the network will continue to face significant long-term challenges. PokerListings, on the other hand, was doing just fine on its own before this deal. The effect it will have on PokerListings’ trajectory remains, like many other details of this deal, unknown.

Comments

views and opinions expressed are those of the author and do not necessarily reflect those of CalvinAyre.com