I ran across a great article on eGaming Review‘s website that I wanted to highlight. Before I do, I should point out they often post articles of mine and have run some quotes from me in their print mag but that had no bearing in singling this article out.
Dominik Kofert’s article on what the real reason for the decline in poker is, should be required reading for anybody involved in running a poker room. Dominik is someone I have the pleasure of knowing and having worked together with him on some things in the past. He runs one of the largest poker training sites, Poker Strategy, and is one hell of a smart dude. So maybe I’m biased.
Basically he’s saying that poker rooms are way too focused on short-term gains. I’ve said very similar things in the past. Poker rooms often run promotions that produce short term pops in revenue but threaten to burn players out more quickly. Personally, if I’m running a poker room and I’m only going to make $1 off of a player I would rather do it over a year than in one session. That $1 taken in small chunks over a long period produces liquidity on the site and as a result translates into more than one dollar when you factor in how much action from other players that $1 eventually generates.
The problem is often a matter of people who don’t understand poker running a poker room. That’s especially true when you have casino people in charge. For them, you steer your customers to your highest profit offerings so you can make as much as you can off of them. Casino games don’t require liquidity. It’s hard for casino-minded people to grasp how important liquidity is to running a poker room. So they use that casino mentality to run a poker room and try to take the money as quickly as they can not realizing that they could be killing their own poker business 6 or 12 months down the road.
I think a lot of networks and their skins are seeing exactly that today. They’ve been so focused on catering to the VIP players due to the large amount of rake they generate that they failed to recognize that the recreational, losing players are where these guys are making their money. Once you kill all of the fish in the pond and if you don’t invest in restocking the pond you’re going to starve to death.
But that goes back to the casino mentality. You comp your whales. You keep them happy because they blow a lot of dough with you. But in poker, your big whales actually have a detrimental impact on your poker ecosystem. They’re sucking up all of the money from the layers of fish below them.
The guys you should be comping are the loyal and consistent players who deposit $100 or $200 every month and have been on the site for a long period of time but don’t generate huge amounts of rake. Poker rooms traditionally look at that guy and say “Look, we have players who generate more rake in one month than this guy has in two years, screw him.” But where are those guys who generate more rake in one month than this guy has lifetime making their money from? Him!!!
Without that dude and hundreds of others like him your sharks/whales will bolt on you faster than you can offer to comp them.
But most poker rooms don’t look at it that way. They salivate that the thought of landing a guy who generates $10,000 a month in rake. But I would rather have 100 guys generating $100 a month in rake than one guy generating $10,000. Or 1000 guys generating $10 a month in rake. Because that $10K a month guy will come if you have enough of these smaller guys. You don’t need to comp him or kiss his ass. Where’s he going to go if you’re serving up a fish buffet every time he logs in?
So props to Dominik for saying what far too many poker rooms have no clue about.
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Pokerati writes about Phil Gordon and Rafe Furst receiving honors from the Prevent Cancer Foundation. Good for them. I’ve known Rafe and Phil since my Tilt days and both are really committed to using poker to raise money for cancer research. Hats off to both of them.