Why Rakeback Caps are Necessary

My rakeback experience dates back to the very beginning of rakeback sites and rakeback offers. I entered the industry with my rakeback directory concept in November 2004. At that time few affiliates had websites. Most did their business in forum PM systems and by email. One after another rakeback websites like Rake Tracker started coming to the scene. It became the Wild West and the great online poker land grab. Otherwise civil level headed affiliates were playing cutthroat over .5%. My rakeback directory, something that from an affiliate or poker room operator perspective was a terrible thing, caused much of this as it helped force rakeback out in the open. While it was great for players it caused quite a few problems.

The most obvious was the fact that margins got smaller and smaller. One affiliate would offer a percent higher, then someone would match them, then someone would beat them by .5%. If that wasn’t stopped rakeback could have never survived. Affiliates were going to poker rooms wanting a bigger cut just to give it to the player to compete if they even got the raise they wanted.

Also affiliates that now work so closely together sometimes had animosity towards each other because of the fierce competition. One affiliate would give a raise cutting into margins and that would make the other affiliates unhappy with them. This would either force the poker rooms or the affiliates to take smaller margins, something that could only go on for so long before poker rooms would either lose their marketing partners or go bust themselves from not being able to cover their operating expenses and licenses.

Quite a few affiliates got together and proposed changes. Reasonable margins that covered costs but gave players good deals were proposed. Once those numbers were agreed upon a pitch to the poker rooms was all it took. Most if not all poker rooms liked the idea of a cap of rakeback percents.

While players sometimes complain about every affiliate offering the same percent at each room it is actually in their benefit because without the caps there would likely be no rakeback as we know it. Now we can use those margins to offer quality support, software and promotions and the poker rooms have the margin needed to cover their marketing and expenses. It is a win for players, affiliates and site operators.

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