Thursday, December 15, 2005

The future of online poker

I’ve made a minor decision regarding online play.  I’ve pulled $1K out of my various accounts, leaving pocket change at FTP and PokerStars.  For now, I’ll let the money fester in Neteller, ready for that rainy day that is likely to come with joblessness.  It’s close enough that I can get it within a couple of weeks, but far enough away that it won’t be accessed unless the situation becomes dire.

Of course, that didn’t keep me from coughing up a quick $20+2 at FTP last night, running my flopped set into a flopped straight.  Sigh.  One would have hoped that 98o would fold to a preflop 3xBB raise from my 77, but once he called that bet, I was cooked.  765 on the flop meant I hit top set and I’m not nearly a good enough player to NOT push all-in right there.  Nice to hit top set and still be a 2-1 underdog.  

Anyway, some more money will hopefully be coming from the FFL playoffs.  I’m in the playoffs in two leagues, and I’m also guaranteed some rebate from a pick-em league, so my football managing has been +EV for this year.  Scary how income from fantasy football becomes family INCOME in times of financial stress.  Actually, it isn’t stress yet, since I’m still getting paid to occupy this desk (until 12/31), and I’ll get a severance that will pay me through February.  I estimate that the cash flow from unemployment and various other ventures should be adequate to keep us out of cat food scrapings for at least six months.

UltimateBet is really scrambling for users lately.  I got a disk in the mail with the frightening visages of Hellmuth and Duke, ironically teaming up in the sinking UB ship.  Like I mentioned in the past, I foresee a general shakeout of the online poker industry during the next year with the likely survivors being Party (obviously), PokerStars, and FullTilt.  Most of the other sites are giving away money to try and drive traffic, which leads to short-term playing and bonus whoring.  Once the bonus is cleared and withdrawable, it is withdrawn.  The main benefit to this is that investors might look and see x thousand users at a given time and think that the site is viable, when in reality almost all the players are either house shills or playing to clear bonus money.

Think about the cycle many of us have followed.  RinkyDinkPoker has a great 50% deposit bonus for XX raked hands.  They don’t have much traffic, but the bonus is attractive, so we plunk down some cash, roughly based on our own self-set play rate, and likely time to complete the bonus.  We play until that is satisfied, testing out the site and the other players.  Let’s say we drop 30% (maybe 25% to other players and 5% in rake) of our original deposit clearing our bonus, creating a net 20% increase in our investment.  We immediately withdraw the deposited amount, maybe even including the bonus money, to wait for the next whoring opportunity, play out the remaining funds (house money), and leave the site indefinitely (after all, we lost 30% while playing).  The house has gained NOTHING, and we’ve essentially played for free.  Umm, that’s not a strong business model.

Profitability is based on rake, juice, and interest income (we’ll discount the nasty implications of house players), and all of those require VOLUME, VOLUME, VOLUME.  If a site depends on strong players chasing bonuses, they’re not gonna be profitable.  They need lousy players.  A lot of lousy players.  Players that will blow their bankrolls before they meet the required hands for bonus release.  Party has it right, advertising to the lowest common denominator with their “bad poker face” ads.  PokerStars and FullTilt rely on poker jock-sniffers, and promote their endorsers and celebrities more than their tables.  Pacific is targeting the problem gamblers, touting its connection with 888.  Other poker/betting Siamese twin sites are popping up, pumping up their blackjack or craps connections.  

Prediction:  By the end of 2006, the only three significant poker sites will be Party, PokerStars, and FullTilt.  The rest will either be gone or be absorbed into full casino sites and operated as just another table game.


At 12:11 PM, Blogger mcSey said...

Bold prediction, but ultimately the correct one I think.

Nice post.

At 3:57 PM, Blogger Sinzx7 said...


At 12:08 PM, Blogger MVilla888 said...

Can't see UB closing...they've been maintaining a steady mass of players since I started out almost 2 years ago and don't shill abunch of bonuses...They're tourneys are pretty strong and the have one of the best CS depts that i've been exposed to. at least I hope they don;t close...I hate most of the other sites.

At 1:22 PM, Blogger shag773 said...

Sorry to derail this thread, but I just ran the 85 Bears at Candlestick vs the 84 Niners 6 times on Whatifsports, and the Bears won all 6, and only 2 of the games had a margin less than 10 points. They went 1-5 vs the 75 Steelers. I don't take the simulation games as the end all of this argument, but I do find it interesting how they see that team struggling against a dominant defense, maybe not unlike the 05 Colts?

At 1:36 PM, Blogger Drizztdj said...

If the sites would employ a bonus clearing scheme like FT and PokerStars they wouldn't have a problem.

Since you need to generate X amount of rake to clear the bonus.

At 9:24 AM, Blogger belgarion said...

What did you base these predictions on?
Your own knowledge or any sold reports, if so what reports are they?


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