In the absence of any clarity on the AP/UB possibly going tits-up situation, Wednesday’s biggest Black Friday news came from the Merge Gaming Network, which has decided to end its rakeback program effective June 1. The timing of the announcement was somewhat botched when word leaked to the public ahead of schedule, apparently leaving Merge unprepared to offer specifics on precisely what this means for players and affiliates. (Requests for comment on the situation went unanswered by the time this post went live.)
Players with existing rakeback deals will reportedly have their deals grandfathered in, but for how long? Will players who sign up before June 1 get the same grandfatherly treatment? There’s been speculation that Merge’s ‘leak’ is a high-pressure sales tactic to get already panicky players to sign up now, while Merge still appears to be the prime candidate to rule the US poker roost for the foreseeable future.
What will the change mean for the 70+ skins on Merge, some of which have been offering players rakeback percentages in the 40+% range? Will they follow Merge’s lead, or simply take their offers underground? If Merge actually enforces the no-rakeback scheme on their white label sites, it might compel the skinflint skins to find ways of bringing in new traffic instead of just poaching existing players from other sites on the network.
Merge has been one of the few beneficiaries of Black Friday, their traffic having surged by more than two-thirds since PokerStars, Full Tilt and the Cereus sites exited the US market. Has their new status as the top US-facing online poker network convinced them that they no longer require such overly generous kickback schemes? Was this gambit cooked up at the same meeting in which Merge’s owners Sportsbook.com decided to announce their exit from the US market (but in reality just pretended to do so in order to reduce their marketing spend and hopefully turn down the DoJ heat)?
Sportsbook.com could well end up being Black Friday’s biggest beneficiary. If all goes according to plan, they will be able to build Merge’s liquidity on the cheap, while decreasing the capacity of rakeback-reliant white labels to drain liquidity from their sports bettor base, resulting in – ta-da! – a profitable network (at last). The only question now is eCom: specifically, are they using ACH and other financial methods that have proven to be DoJ catnip? Or are Merge/Sportsbook just that good at moving money around? By having Sportsbook.com and Merge so prepared to take advantage of the situation, new Sportsbook.com chief Aaron Gould is looking like a genius.
Given that CalvinAyre.com has taken great pains to point out (again and again) the folly of the rakeback business model in the online poker industry, we’d like to think that our message may have finally gotten through to the brain trust at Merge/Sportsbook. Would that be evidence of evolution, or proof that some folks really do need a weatherman to tell them which way the wind blows?
