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My Initial Thoughts On Rakeback Programs

I’ve been reading up on rakeback programs and the alleged problems with them and I don’t really understand why so many people are opposed to them, at least on ethical grounds.

The concept of a rakeback isn’t difficult to understand. It is based on the concept of the rake. Out of every pot the poker room takes out a percentage of the money as a commission. This fee is the rake. It’s how the poker room makes money. If you have contributed to the pot, no matter what amount, then you have generated part of the rake. How much have you generated? Your contribution depends on how many players there are in the hand. Approximately, your contribution to the rake for each hand you play is about %5 of the pot divided by the number of players in the hand. So, for example, if the pot is $60 and there are 10 players, then you have generated $0.30 for the poker room. And that’s just one hand! The rakeback is a percentage of the rake returned to the player as an incentive to play. In other words, the commision is “split” between the house and the player.

I believe that that many, but not all, online poker rooms offer rakeback, but it is the affiliates that by and large run these programs, and that you need to sign up with the poker rooms through them in order to get your rakeback. This means that the commission really gets “split” three ways, between you, the house, and the affiliate. I checked out rakeback.com and they said they get up to %40 rakeback of which they give %95 back to the player. Not a bad deal, or so it seems.

When I first read about rakebacks, I thought that it was a no-brainer. How could you not love them? If you were not getting rakeback, you were just wasting your money. I still think this way, but I am not so confident with my belief. After reading some articles and a bunch of posts in discussion rooms, I see that many affiliates think that rakeback programs should not be allowed. It seems to me that their main criticism of rakeback affiliates is that a number of them are unscrupulous, because they

(1) don’t always give the rakeback they promise

(2) spam poker chat rooms and forums and even hire players to spam for them

(3) try to poach players that have been signed up with other affiliates by teaching them how to create false identities to open up multiple accounts

These are, no doubt, all unethical practices. Is this a good reason to be opposed to affiliates who offer honest rakeback programs? Not in my estimation, unless the majority of rakeback affiliates are dishonest, which I see no evidence for.

I can understand why affiliates who do not offer rakeback plans feel pressure to do so. It is not in their financial interest to be in competition with rakeback affiliates. They can’t win. While this is a reason to be opposed to rakeback affiliates, it is hardly an ethical one, unless you are an ethical egoist. But I doubt that egoism is really an ethical theory. So as of now, I see no good ethical reason to be opposed to honest affiliates that run rakeback programs.

I think that if you do become an affiliate it would be in your best financial self-interest to offer a rakeback plan. And if you don’t offer one as an affiliate, then you may be swallowed by the rakeback wave of the future.

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