An acknowledgement that Poker Networks must start focusing on recreational players rather than the pros is undeniable in the online gambling industry today. A short while ago shark bait was king until networks and skins discovered the hard way that they were suffering from poor poker eco-systems due to shark overload.
Bodog Network launched their recreational model a year and a half ago, Party Poker and Revolution Poker (Cake) have recently launched their versions of “player segregation” and now Equity Poker has just launched, “A Network [that] has been created to ensure a balanced ecoculture”, according to founder and online gambling industry veteran, Clive Archer.
I sat down with my friend Clive to learn more about the concept behind Equity Poker, the history of the launch, where the software came from, the reward for recreational players, his view on rakeback and what types of operators would benefit the most from this model.
Becky Liggero: How did you come up with the concept for Equity Poker?
Clive Archer: I have run or been involved in Poker businesses over many years , initially in the beginning of the Prima Poker Network with the Gaming Club and Riverbelle brands and then in Sportsbooks . I ran Action Poker Network for a time back in the 2000’s and also established the ChicoPokerNetwork. So I have been involved in online Poker during its birth and through its passage to adulthood.
With the changes in the landscape since Black Friday my investors have been looking at how best to create a sustainable Poker offering, and when we looked at the current networks we could not see that any of them provided a long term and profitable opportunity. They all suffered from the same problems of being too expensive – through fees and through unbalanced ecocultures with cross cage losses to shark pools damaging Operators businesses and too often Poker has been the black sheep for gaming operators.
The rule sets of the networks seem to have become too complicated and prejudicial as they try to deal with the balance issue. We did not set out to run a network but we quickly realised it was the only way to allow us and others to run successful Poker businesses
BL: Why did you decide to launch Equity Poker Network as a non-profit?
CA: We did not want to run a network – we wanted to be able to operate Poker businesses more effectively and profitably whilst providing fun, excitement and a safe environment for players and found there was nothing which suited our needs in the market. We therefore decided to create it ourselves. We felt it was best for the liquidity of the network and its longevity to make it a non-profit business so that all members of the Cooperative can run their businesses optimally including low fixed fees and redistribution of any profits. Lack of profitability by many operators led to recruitment of unfavourable players. 100% can only go so far and if the network retains up to 20% rake fee’s, the affiliate up to 50% and you pay 10% processing costs, there is not much revenue left to pay operating expenses and thereafter attract and grow a healthy business.
BL: How does the Cooperative work?
CA: It runs as Cooperatives run across the business world. The customers run the business so in this case the Operators on the network form the management committee of the network with voting power based on the volume they bring to the network. They then decide as a group what rules and behaviour are acceptable. The Network Operator (the person who runs the network) is decided by them and answers to them. In order to guarantee predictability for operators, some rules can only be changed by unanimous vote.
BL: The software has been in use for 10+ years- where has it been used and where did you get it from?
CA: It was initially developed in Canada and was purchased in 2006, by a daughter company of Playsafe, a Norwegian public company. It was used to run the Action Poker Network with brands including ActionPoker, TigerGaming, Paynorake, PokerinCanada etc. The network was sold to Julian International in 2011 and is currently used by them to run the ChicoPokernetwork. Since Playsafe sold its operations, it now runs a software business for the gaming market. I purchased a version of their software to start the Equity Poker Network.
BL: Many networks have realized over the years is that you need net depositing players for a healthy poker ecosystem. Equity Poker Network clearly understands this, but how exactly will the network reward operators who bring these players?
CA: This is a fundamental part of the Equity Poker Network ethos. The Network has been created to ensure a balanced ecoculture and to ensure that Operators get the benefit from their players and retain those players. Therefore there are several elements in the rules that address this. The top four are; Firstly, the Shark Tax (or Winning Tax or Rake Fine) penalises the operators who bring an unhealthy balance of sharp players to the network. They can have them but they have to pay for them and this tax is redistributed to the losing Operators. Secondly, players always benefit the Operator who brought them to the network; there is no benefit to stealing players from other operators. Thirdly, the Clearing House ensures that funds are always in place to meet liabilities to the network and to the other Operators. Fourthly, since it a more profitable and fair environment, Operators have more funds to attract proper players.
BL: Guaranteeing player funds for all operators is a very good thing. In the past, players have lost money on UB and when operators on Microgaming have gone bankrupt, for example. How do you plan to guarantee these funds?
CA: The network does not guarantee Players funds for any specific Operator. That is the responsibility of the Operator. We do require that any Operator is licensed and holds enough funds to cover player balances as does his license, but we have no way of overseeing this. However we do protect other Operators from failure of any Operator. This is done through the Operation of a Clearing House which works in principal as a simple version of the Securities Clearing Houses around the world like the London Clearing House. It works by requiring the posting of funds to meet expected liabilities. These funds are held separately and are used to settle with other Operators and the Network. The funds held are subject to a regular mark to market to ensure that the minimum amount is held thus not tying up cashflow for the Operators. This approach means that any Operator failure does not impact other Operators on the Network and also since the funds are kept separate, network failure is also covered.
BL: Equity Poker Network allows Rakeback up to 50% while it seems that everyone else in the industry is banning or cutting down on Rakeback. What is your thinking on this and how will you try to prevent cannibalism within the network?
CA: Equity Poker Network does not allow the use of Rakeback as an acquisition tool but does as a retention and reward tool. It allows Rakeback and promos’s up to 50% of rake. However since the Network also ensures that any Player always benefits the Operator who first brought him to the Network then there is no benefit in cannibalising the network.
We have set maximum reward or player comp to 50%. We think that is a healthy number and we leave it up to the operator to decide how it is used. It can be Rakeback, bonus or it can be giving out free Rolex watches, we do not mind. Our concern is that the ecology is healthy, that there is a level playing field for all operators and that the operators make money. That is when you get healthy profitable growth.
BL: What type of operators are best suited to join this network?
CA: Any network that would benefit from paying low fixed network fees (lower network fees). Really all types of Operators will benefit from this network (other than pure shark pools), but it also opens the doors to many who have stayed away from Poker due to the problems of balance and cost. It appeals to sportsbooks, who historically have suffered most from sharp players on networks and also any business operating on an agent-based structure as the software caters for multi-level agent’s structures.
BL: What else is different for Operators who join the Equity Poker Network?
CA: The fee is fixed and is as low as possible to ensure break even for the network. Therefore no matter how big you become the fee remains the same. As stated previously, the Operators manage the Network through the Network Operator and so the majority can change any rules for the good of the network. The Network allows worldwide marketing as long as allowed by the license of the Operator. Overall the network is operating purely for the benefit of the Operators and therefore has no vested interest contrary to the goals of its members. It is a completely fair environment to ensure maximum benefits to players and operators