A Day That Will Live In Infamy (aka The Day Party Booted Their Skins)

I’m somewhat shocked that nobody in the poker blogosphere is talking about the fact that PartyPoker has jettisoned their skins. Sometime this weekend, Party went down for a bit and then came back online with blackjack and side bets. What was less noticeable is that when they came back online they had de-coupled their tables from their skins. In other words, if you’re playing on Empire, you aren’t seeing the tables on Party. It’s no longer one big network of players.

The counts seem to be running about 40,000 players and about 10,000 each on the skins. That’s pretty big news for a site that normally 70,000+ players accessible via all the skins.

And this doesn’t seem to be a technical glitch or some other malfunction. Party states in a recent press release [pdf]:

Historically, PartyPoker players have shared the same poker-only system with players from each of the Group’s four white label poker clients or “skins” (being Empire Poker, Coral Eurobet, Multipoker and Intertops). Following today’s move, PartyPoker players will now play on their own private tables and benefit from a number of new and exciting products that are exclusive to the new platform.

So what exactly does this mean? Well, I’m not privy to Party’s business dealings but I’m going to take an educated guess and say that one of the things Party was remiss in fully disclosing when they reported their earnings recently was that their subscriber growth was down due to the fact that their skins were stealing their best customers. Party’s hard line on rakeback [what is rakeback?] basically drove their best customers to their skins and now Party is striking back.

Basically, from a business standpoint, it’s a mixed bag for Party. It was smart of them to get out from under the skin agreements they got themselves into when they were trying to fuel growth. The skins take a large cut of the rake and were killing Party’s bottom line and most of them were turning a blind eye to affiliates who were offering rakeback which was luring away Party’s best customers. On the other hand, they nearly halved their customer base and now must fight with other sites like PokerStars and FullTilt to win the skin players who will likely be up for grabs. I also wouldn’t be surprised to see shareholders filing class action suits against Party if the markets hammer the stock.

Party still has enough critical mass to survive cutting off of their skins but the skins likely won’t survive in their current form. Most of the skins are just on the cusp of critical mass and if they lose even the slightest bit of ground they’ll quickly disappear. The general consensus is that most of the regular grinders were on the skins due to the rakeback deals. With Party decoupling the sites the games on the skins will likely get brutally tough and many will either go back to Party or find a new site to play at. In other words, this is devastating news for the skins. An informal poll on 2+2 indicates that with 224 votes counted, 81% said they were bolting from their skin account over to Party. Party skin EuroBet has supposedly been so swamped with cashouts that you now just get an error.

Seeing how this all shakes out over the next few months should be interesting to watch.

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