iPoker Network to Change How Revenue is Assigned to Skins
In the ever-growing effort to increase the proportion of “recreational” players at their tables, a major online poker network is making a substantial change to how it distributes wealth to its member rooms. Originally reported by PokerTube.com, the iPoker Network has announced that it will now assign revenue figures to players based on a “Source Based Rake” (SBR) formula.
The whole point to this is that the iPoker Network believes that the usual way of doing things in the industry is all wrong. Poker rooms and, by extension, the networks to which they hand over a piece of the pie, earn their money through rake at cash game tables and fees tacked on to tournament buy-ins. That is far from a secret. On a network, several member rooms can be represented at a table, so part of the rake taken from the pot is assigned to each player, usually based on how much that player contributed to the pot. Makes perfect sense.
Naturally, then, the players who have been most desirable are the ones who generate the most rake. Those players are usually the high volume, high stakes grinders that play hundreds or thousands of hands in a session. They participate in lots of raked hands and therefore contribute lots of rake to their respective poker rooms. Poker rooms and networks should want those guys, right?
Wrong, says the iPoker Network. It has rethought the situation and now looks at the most important players as those who put fuel into the poker vehicle, the ones who deposit money that gradually ends up distributed as rake at the tables. These are not typically the experienced, regular grinders, but rather the type of player that poker rooms call “recreational” or “casual” players. They are not always “fish,” as the pejorative goes, but are also not generally as good at poker as the regulars and are therefore more prone to losing their money, re-depositing to have more fun, and losing it again. Without deposits, there is no rake. Thus, the shift in focus for the iPoker Network from rake contributors to depositors.
We’re not going to get into actual formula, partly because we don’t know and partly because, from what PokerTube published, it is pretty complicated, so who really cares? The point is that the skins on the iPoker Network will need to heed the change on January 1st and concern themselves with recruiting players who deposit a lot of money and don’t take money out of the economy by winning. The stereotypical recreational player.
Players will not feel the effects of the changes directly; the rake charged will stay the same. Where they will likely feel it is in the loyalty schemes offered by the poker rooms. Because high volume grinders will not be as valuable anymore, speculation has it that the poker rooms will reduce the attractive of rewards, which are take advantage of most by grinders. Then, if grinders start to be turned away, the tables might become filled with a higher percentage of casual players, making the games more attractive. The latter part is the hope for the network, anyway.
PokerTube reports that industry insiders to whom the site has spoken believe some of the skins could be very hurt by the new SBR scheme. Some rooms have concentrated their marketing on grinders, so if they are now suddenly going to get credit for less rake as the result of having fewer depositors, they could see their revenues slashed by as much as 50 percent. Some of these rooms could close up shop or at the very least be absorbed by another skin.
And there is the future of the split iPoker Network. Two years ago, the network decided on what is essentially a relegation format, dividing the rooms on its network based on certain monthly player statistics, revolving around how well the rooms recruit recreational players. The bigger rooms, which were also generally the ones who had larger populations of recreational players, were put into Tier 2, while many smaller ones were sent to Tier 1. Players in low stakes games in one tier were ring-fenced from the other tier, supposedly rewarding the Tier 2 rooms with better games. Supposedly. With the switch to SBR, though, the iPoker Network could potentially reverse the divide, as very little incentive to recruit hardcore “regulars” will exist and thus the recreational/grinder split at each poker room may even out. Simply put, the motivation put in place by SBR will replace the motivation put in place by the network tier division.
It all remains to be seen what will happen, but it will be interesting to watch the iPoker Network come 2015.