RAKE BACK AFFILIATES

Submitted by Erik Smith on Wednesday, August 31, 2011 - 13:45

The first rakeback deals we know of here on PokerHistory.eu are from 2003. But to understand rakeback you have to know what rake is. A poker room takes a small percentage of every pot and this sum is called rake. Usually the rake online ranges from 3-5% of the pot with a cap of €3-€5. Generally in Texas Hold'em and Omaha you only pay rake if there is a flop seen. As late as 2005 the games on International Poker Network were however raked preflop making it very expensive to play. When it comes to online poker this trend changed though and rake preflop is nowhere to be found today.

HOW IT WORKS

Rake back was originally offered to players by affiliates of the poker room and not by the poker room itself. Traditionally affiliates received a part of the rake generated in the poker room as a reward for referring players. Affiliates would at that time typically earn 25-30% in commission. Affiliates soon began to give back to the players part of the money they earned.

The term 'rake back' refers to rake paid to the poker room later given back to the player. If an affiliate company is paid a 30% commission of all rake generated they would pay for instance 83% of their profit back to the player offering 25% rakeback while keeping 5% of the total rake generated. Naturally affiliates who had been working hard to recruit players over the years saw their players switching poker rooms creating new accounts to receive rakeback. A lasting war between affiliates and poker rooms emerged and remains an issue today on many networks.

POKERSTARS UNAFFECTED

Uncontrolled rakeback led to massive problems on virtually every network that exists. Only PokerStars which today is the world's largest poker room has never had any serious problems with rakeback. Their business model has been not to offer affiliates %-deals which potentially could lead to rakeback but instead paying fixed fees for players referred to PokerStars. From start PokerStars has had a system rewarding players with Frequent Player Points which can be exchanged for value in their shop or used to enter online tournaments and various events.

UNREGULATED MARKET

For several years the affiliates controlled an unregulated market. Affiliates were in some cases openly promoting rakeback while others did it secretly on MSN or within circles of friends. This way of generating traffic and revenue was new to the industry and most networks did not know how to handle it. Many networks did not consider what this trend could lead to if not contained and dealt with in a proper manner. The various rakeback issues relating to different networks are described in our network section. The impact rakeback had was colossal and an in depth analysis is required to understand how each network dealt with the issue and how they were affected.