06 April 2006

World Poker/Betting Exchange (WSEX) Poker offers 100% rake refund

Sometimes you come across something that is so blatantly silly, you just have to highlight it.

WSEX (World Sports Exchange) has announced that their internet poker room has gone rake free.
Now as far as I know, most businesses and especially most gambling businesses are not generally run as non-profits. In fact, not charging customers a rake for a poker room means that a significant loss will be incurred by the business for poker room operating expenses. Whenever a business (especially a gambling business) makes such an altruistic statement, you can pretty much assume you're being mislead.

There are maybe five possibilities here:
  • They really are a lovable bunch of guys running a business they love for a bunch of customers they love, or
  • WSEX's sports betting overrounds are so big that they have (their customer's) money to throw at a zero rake model in "we do it because we love our customers" activities, or
  • Although WorldPx appears to use proprietary software, perhaps they have found a loophole in their poker software supplier's contract that means if they don't earn any poker revenue, no revenue share goes to the supplier, and they're using zero revenue to pressurize a better deal from the software supplier, or
  • WSEX poker room is doing poorly and they plan to use zero rake as an marketing loss lead to attract customers to save face, OR
  • WSEX poker room is doing poorly and they are using a zero rake model long enough to get to a critical mass customer base and will then re-activate commission
If WSEX was serious about a forever zero rake for their loyal customers, they would:
  • They would only offer zero rake to their long time loyal customers
  • Not heavily advertise the fact they offer zero rake in order to attract new customers
  • They would put a "you get zero rake forever" clause in the T&Cs of the game
  • Not collect the rake in the first place and then redistribute it back to their customers on a weekly basis
Promotional activities are an important part of business. Is this promotion just another thinly veiled and misleading attempt to gain customers? Is it an ego play to address a failing product in any way possible? Or perhaps its a clever publicity play a la Golden Palace. One option I'd guess its not is truth in advertising.


  1. Right...but its still rake free right now which means I'm gonna get a check upwards of $200 at the end of each week until they stop doing this. Where is the downside here?

  2. This blog entry is about advertising approach and possible business drivers - not usually big concerns of most poker players.

    As a poker player, your main concerns are quality of poker product (competitive feature set, aggressive real-time anti-collusion, minimal downtime, no software errors), sufficient player liquidity (you can play when you want at the level you want), playing with similarly or lesser skilled players (you have some chance of winning), convenient low/no cost funds transfers, and maybe bonus/loyalty schemes. If these criteria are met, by all means, take advantage of the promotion. Go forth and play!

    Speaking of promotion exploitation, is anyone having dotcom flashbacks? Let's say WSEX was looking to sell or float their business or sign network skins on to their software. Why not run a zero rake promotion to bulk up your poker KPIs such as "real money" player numbers and "collected" rake (quotes due to the fact that you give all the money back each week). After you use this promotion for awhile to increase liquidity, you could then go to buyers/investors and make claims around "look at our potential revenue once we turn off the promotion - now buy us at an extortionate multiplier!"

    The same liquidity need would apply to setting up a poker skins/network business. No one would join your network unless it was at critical mass. Come to think of it though, no one would join your network if it meant competing with a zero rake model either.

    Readers might also think that they can make back operational costs to at least break even on poker by the interest earned off of holding the rake for a week. I would guess that the interest income wouldn't even remotely come close to covering operational costs.

    Lastly - all press is good press, so hats off to WSEX/worldpx's poker marketing manager for creating the buzz they did on this one.


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