In a move that has come as a shock to many players, a poker room on one of the largest networks on the internet has started, for all intents and purposes, shoving loyal players out the door. VC Poker, the poker arm of UK gambling firm Victor Chandler group, has sent an e-mail to a number of players informing them that their play is no longer welcome at the cash game tables at which they have been regularly playing. The e-mail reads as follows:
“If you are not already aware iPoker will be implementing a new policy in the New Year which will categorize players depending upon certain criteria. The new policy will also impose penalties upon card rooms that in essence, have a high proportion of winning players in relation to losing players.
Regrettably therefore, we are being forced to restrict a number of accounts in order to comply with the new policy and to avoid penalization by iPoker and it grieves me to inform you that we have no option for the time being other than to restrict the cash game stakes at which you can play on Victor Chandler Poker.
We sincerely regret having to take this action and hope that the policy will change in the future so that you may once again enjoy playing cash games at Victor Chandler Poker. In the meantime, please accept our apologies for any inconvenience that this action will cause but know that you can still play in our tournaments and on any other of the Victor Chandler suite of products.
Victor Chandler International”
The iPoker network has had a no-rakeback policy for a few years now, but has failed to properly enforce it with its member rooms. This was great for players, as there were some “under the table” deals to be found for as much as 60 percent rakeback at some iPoker rooms (note: no reputable poker affiliate has offered iPoker rakeback since the network began restricting it). But in the meantime, rakeback’s continued existence on the network hurt both the network and its member rooms, also known as “skins.”
Rather than spending money and making the effort to market to the large potential pool of casual players, some skins took the easy route to attracting new players by offering “illegal” rakeback deals. Attracted by the high rakeback percentages, players would jump skins on the network to whomever offered the best return. The effects of this were numerous, creating a cycle of decreasing profitability for the rooms and the network:
1) The room from which the player left was damaged, as it no longer brought in that player’s revenue.
2) The profit margins decreased at the player’s new room, as that room was now giving a large chunk of the revenue earned from the player right back to that player.
3) The majority of players seeking the generous rakeback deals are tight, winning players, who typically withdraw more money from the site than they deposit, which reduces the potential revenue for the poker rooms.
4) As the games get tighter because of the influx of “sharks”, the casual players leave because they aren’t having fun.
5) In order to win back the players they lost to another skin, the original skin would offer better rakeback deals, cutting into profit margins even more.
6) With profits so thin, there is little money to use to market to casual players, who are the ones who provide the cash injections to the tables. Games continue to get tighter and tighter.
iPoker has penalized a few of its member rooms in the past for violating the rakeback policy, including suspending or even removing offenders permanently from the network. But it still did a poor job overall in policing its members, allowing rakeback to flourish.
Now, iPoker is requiring its rooms to focus on bringing in casual players, who are typically losing players. Those rooms who have more winners than losers (likely based on an analysis of total withdrawals versus deposits) will be penalized. Therefore, rooms will need to stop offering rakeback. And now, it seems, at least one is just flat-out refusing to service some customers in order to get in line with the network’s policy. It is unfortunate that it had to come to this and both iPoker and its member rooms have nobody to blame but themselves, but hopefully make the network stronger in the long run.
iPoker was not the first network to ban rakeback. Party Poker did so several years ago when it was still the top online poker room in the world. PokerStars, the Microgaming Network, Everest Poker, and the OnGame network also do not allow rakeback. Of course, they all have some sort of loyalty program to still try to reward customers for heavy play. In fact, Party Poker even compares the rewards players can earn in its program to rakeback.