Microgaming Poker aims to hook more fishes without losing the sharks

Ladbrokes’ poker provider Microgaming is to introduce a new rake allocation method aimed at incentivising its licensees to bring in more casual, net-depositing players, or “fish”.

At present, the Isle of Man-headquartered provider allocates poker rooms on its network, such as 32Red, a share of the rake, or commission fee charged on the total pot for each poker hand, based just on volume. However, the forthcoming True Value system will also allocate rake to operators based on “activity and win/loss ratio”.

According to Microgaming, this system will also give “greater value to new players”, encouraging operators to invest in the marketing needed to acquire, retain and reactivate casual, net depositing players, rather than on poaching high-raking – but net-winning – “whales” or “sharks” from other poker rooms.

The Microsoft Poker Network (MPN) however emphasised that its new method would be introduced using a “dual layer” system, leaving actual players unaware they were being valued in this way and their existing promotions intact.

“Any players earning rake-based promotions, like bonuses, will clear those promotions at the same rate on True Value as on the current method”, said head of Network Games, Lydia Melton.

The True Value system is clearly aimed at building a more profitable poker network for Microgaming by helping its licensees strike the balance between marketing their poker rooms to the masses while also keeping high-volume players on board. Ongame and Bodog’s strategies aimed at attracting recreational players – Essence and anonymous tables – have not proved altogether successful with the high-volume players who typically present around 10% of a room’s player base but provide 80% of its rake.

True Value follows Microgaming’s move to the “weighted” from the “dealt” method of rake calculation in January 2010. This rewarded loose or “fishy” players who invest most in the pot with a higher percentage of the rake, over “grinders”, who under the dealt method were able to get an equal share of the rake regardless of how much money they put into the pot. This method has since become the industry standard, now used by PartyPoker and PokerStars.

All the leading European poker networks – Playtech, GTECH G2/Boss Media, Microgaming, Ongame – have taken steps in recent years to incentivise operators to focus on bringing on new players and away from competing with each other based on the percentage rake they are giving back to a group of high-raking players, usually via rakeback affiliates.

Rakeback affiliates hand most of the lifetime revenue share payments they receive from the room to the player in the form of a rake-based bonus, or “rakeback”, while keeping a cut back for themselves. The affiliate-stoked competition between rooms to put increasingly better offers on the table to keep high-raking players on board effectively cannibalises existing traffic and progressively shrinks the money left in poker rooms’ marketing budgets for recruiting recreational, depositing players, thus starving rooms and networks of the liquidity they need to grow sustainably.

The importance of new players to networks was demonstrated in 2005, when PartyPoker cut off rakeback-led skins on the Empire Online Network from its own player base by excluding them from its software upgrade. Party, having settled for US$250m with Empire over the damages caused by the split, eventually bought Empire’s depleted assets for between US$30-US$40m in December 2006.

The world’s largest poker network, Playtech’s iPoker, that unlike Microgaming has imposed a formal ban on its licensees offering rakeback, was reported late last year to be considering ringfencing its main poker licensees such as bet365, Paddy Power and William Hill, whose above-the-line marketing spend and sportsbooks bring in most of the recreational players on the network. The mooted split of its network into two pools of players was aimed at ensuring recreational players don’t immediately lose their money to “sharks” preying on them from white label skins offering under-the-table rakeback deals, thus ensuring these types of players continue depositing.

Microgaming also announced Friday that it would be suspending all play in the poker room of licensee 5050Poker with immediate effect, “for a material breach of its contract.” It said that gameplay would be reintroduced once the breach had been satisfactorily rectified, but declined to provide further details.

Casino Choice journalist

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