How the illegal Rakeback system works

In this post I want to explain how “under the hand Rakeback (RB) ” works. I chose the title illegal, but I hope it is not misleading . Coining it “illegal” with all the bad connotations is not doing it any justice. However, it’s a great headline ;)))

In addition to this, I hope to sharpen your perception on how many industries, and especially the poker industry works. Fine tuning between what is almost illegal, but still kind of ok. Grey zones where everybody does whatever they want contain lots of chances, but at the same time, it’s equally risky as well.

NON-OFFICIAL RAKEBACK:

This blog is not censored, as I am the writer and publisher. As promised, I will give you insight to what´s going on behind the curtains.  Some stuff that you will read might shock or surprise you. Many things you maybe haven´t heard of, because nobody talks about it. And when somebody does, the censorship army like on forums are already fighting.

Wherever there is a lot of money to be made you can expect many competitors, predators and good business to be there, waiting for YOU.
Official, “normal” rakeback has been covered in another article about Affiliates . And I´d recommend you to stick to official Rakeback if you want to play it safe. What I am talking about now is for the experienced and savvy reader.

In some rooms/networks like Ipoker, there is no official Rakeback and affiliates are only allowed to advertise some sort of Bonus/VIP System, which often has a real money value of around 5-25% RB, depending on how much you play.
I´m using Ipoker here as an example to illustrate. But the same/similar forces are at work at the Ongame and Entraction/24h network.

Under The Table Rakeback (UTRB)

I had been receiving under the table RB (= UTRB) for 2 years on Ipoker. Have never been screwed, because I was lucky enough to meet the right people at the right time. Many people get scammed, because UTRB is often based on a non-solid business foundation.

Dangers associated with UTRB

Since it’s a private deal, the people don’t have to worry about long term problems that a company would have to face. If xy scams you, what is really going to happen? If a company does the same, they´re out of business pretty quick. For that reason, I´d be very careful with those deals and you should only take advantage of them if they provide you with significantly and substantially more income than the “official” VIP- System of the site.
The extra amount you gain, should also justify getting scammed 1% of the time because it’s UTRB, so be aware that you have NO “right” to claim that money. Your business relationship is based on trust and your power to threaten his reputation. So make sure the guy has a reputation in the first place! In the worst ever case, get your Bankroll frozen on the site. I don´t want to scare you and this rarely will happen because the poker site will often have to face too much negative publicity that will not make it worth to keep your money. I just wanted to warn you, because it does happen at times.
Usually the user is an idiot though, so if you´re playing it right, you should be fine. If you play with fire, it can get pretty hot, but if it’s too hot, be prepared to get burnt.

How I used UTRB

I´ve personally used UTRB on Ipoker, because it was worth the risk at certain times. Please don´t ask me who I got it through. I´m not going to answer any questions, nor recommend anybody for UTRB. One reason why this is working, is because they can rely 100% on my confidentiality.
Not everybody gets those deals. You don´t have to be a member of an elite group or secret society, but they´re not giving deals to random people. Risk of getting caught is too high. I´m sure you´ve heard about UTRB before and basically it is – oxymoronically speaking – a very well known secret. But very similar rules apply to getting your normal affiliate deals. Connect with somebody who has been reliable, has a reputation to lose and has a history of at least serving 1 year to 5 professionals.

If you are interested in some game theory in simple words and how in my view, part of the economy works, you can read the following paragraphs.

- You might ask why they can’t have a RB policy that allows everybody to give out whatever they want.

—-> I will answer why it makes sense to have UTRB, but also how it is a double-edged sword for the network.

- You might ask why it’s a well-known secret but people still need to be confidential about it.

—-> I will answer why things sometimes look silly ;)


Understanding UTRB : The history of the Ipoker network in the last 3 years

RB on Ipoker is not a secret. I have to dig deeper to explain why it is a secret but why everybody knows about it.
Basically Ipoker is a network, not a single site. Many skins (the equivalent to the site) share the same room together. Think of Ipoker as an house, and the skins being different entrances to the same house. Player 1 from Skin A, can play against Player 3 from Skin C, etc…
Now, in order for an economy to work, the fish:shark ratio needs to have a healthy balance.
I don´t know what the exact nash equilibrium balance looks like. But we all know if it is healthy or not by looking at our monthly paycheck.

The problem with the most wanted & easiest customers

The problem is that sharks aka wining players (= WPs), who also usually contribute a lot of rake, are very profitable for a site. They don´t cause much trouble, they play a lot and although the sites have to give them plenty of RB, it is still way cheaper than running ads on TV, inventing creative marketing ideas, just to recruit some fish (= loosing player = LP) who generate 1/1000 of the rake that the shark produces. So goes the theory.
Also, the LP goes broke and sometimes (I don’t have numbers on this) doesn’t come back or tries his “luck” on a different site. This is a typical problem for “network sites” like Ipoker. They compete not only against other networks/sites, but also among each other.

The fight for the RB players

Now, what happened on Ipoker is that skins were competing like crazy for the WPs. This was of course very good for the sharks, because every week the RB % was increasing. And if a site wanted to keep a player, they had to stay competitive. Free markets are very good for customers, let me tell you this. The sites had to improve, add features, increase service.
But it got to the point where at a certain time a grinding machine could receive well over 100% RB (rake races included: this used to be the case at NOIQ poker). As a consequence, WPs were no longer as profitable to the sites as they used to be. Competition among the skins got to a point where sites have to even accept small losses in hopes of muscling out their competitors.

The inevitable bad consequence of the concentrated fight over RB players

On the other hand skins stopped marketing for fish, because the sharks of the other skin, eat the fish of their own skin. Basically skins, who were trying to recruit fish, not only cost themselves money, but at the same time, fed the sharks of the other skins!

Now, fast forward. Players, who used to be WPs, turned into marginal LPs, because there weren’t enough LPs to keep the Ecosystem running. The problem of course is home made, but all of the sudden, the value of the whole network decreased, because as a priority, WPs want LPs and if that´s not given, no RB in the world can make them stay (if they go broke).
Oh and as a second, LPs also loose their money way faster if there are too many WPs, and if they feel they have no chance at all, they´re not going to come back. So not only WPs, but also LPs lose interest in the network.

Reaction of skins who were not specialized in RB players
—-> Ipoker reacts

Skins, who were actively recruiting LPs, complained to Ipoker. Ipoker saw the long term problem and took some strong measures by banning sites from the network, who were overdoing UTRB. There is not a big rationale for this decision. Theoretically they could be banning about everybody. Some were more equal than others and stayed ;)

Basically Ipoker wanted to “get rid of the sharks”, but then again, they did not .
It must have felt very dirty though that Ipoker officially wanted to get rid of many grinding machines, but the month after they banned those skins, they ran the biggest RakeRace promotion in History. Well, the reader can make up his mind on those coincidences.

Post NOIQ ban time / Winning players getting booted :

After this, RB still existed and especially due to new skins joining the network, there was still a way to get some good deals.  But no longe at the magnitude of pre-ban times.
The problem with the fish:shark ratio was not completely solved. It didn’t get worse, but further measures had to be taken. In the beginning of the year 2010, Ipoker announced new rules.
Every skin had to have a balance of fish and shark. I do not know the exact rules, but basically from now on, a skin had to bring enough fish into the system in order to make up for the money that the sharks take out of it. This lead already in the end of 2009 to many players getting booted from many skins for winning to much! Now the players were in need, and thus the sites gained back some negotiation power.

A fair solution for a network (imo)

By the way, I don’t know written details, but in a network, I think it’s the most fair solution that a skin has to put in as much money into the economy, as it takes out. This way, they have to advertise to a wide range of players. Having high stakes winning players can be very costly, but well, skins will have to restrict limits or winning players have to switch to a big skin w/o rakeback review in order to play the higher limits.

Ipoker does need WP’s / high volume players

Nevertheless, Ipoker does need sharks. They are the ones who give the fish the opportunity to choose the game and stake of their preference. Also, at a table full of ratholing fish, there would  be so much hit’n'running, no constant games would take place. Due to many sharks, a huge variety of different games are running 24 hours. It is a win-win situation and for this very reason. The sharks make it possible for the fish to play any game any time and are in a way a partner of the site.

Making sense of the mess / conclusion

Ipoker has to “officially” forbid RB to please some skins and prevent an extra fast increase in the shark population, but on the other hand they do tolerate it in moderation. “If I didn’t see it, it didn’t happen” is the motto. But everytime the skins flex their muscles too much, Ipoker finds a way to keep them humble.

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