NoPayPOKER’s model of free poker started as a fortuitous accident, but now it’s a steamroller gaining momentum as time goes on… It’s easy to forget how it all started, so let’s have a peak at the past.
My partner and I created NoPayPOKER 3 years ago from the ashes of CardCrusade. A few years before that, we were convinced that online poker was one big rip-off and needed an alternative site. (The fact that I’m still convinced of it needs to be explained in a later posting).
The statistics were ridiculous, in 2005 PartyPoker generated nearly £5 billion in revenues on the back of only 1 million players. That meant that every player was paying $16.50/activeplayerday on average. We looked at the costs and were convinced we could offer the same service for $25 per month without “raking” any players.
What’s the “rake” you say? On a traditional site the house takes on average 1-5% of the winning pot which is know as the “rake”. That’s fine if you pay the rake once per day, but players pay it 60 times per hour! It’s been calculated that if you play 50hrs of $2/$4 and end up flat, you will still have generated $300-$500 of rake…your potential profit has been paid out to the house.
Looked at another way if 8 players started with a bankroll of $100/player on a $5/$10 table, after 8 hours there would be $0.00 left on the table!
99% of poker players don’t make a profit, so who does? It’s becoming obvious, isn’t it? That’s right, the vast majority of the money goes to the house. That’ s crazy when you consider that in an efficient game with a normal distribution of skill levels, 20% of players should come out ahead!
Armed with those facts, a small group of us raised some seed financing, built a site and started a never ending software development process….
We had thought of everything, for instance we knew we were a low cost operator so we expected to charge the players for transferring money in and out of the site, similar to discount airlines. Initial marketing would be through Search Engine Optimisation (SEO) and word of mouth. After the model was proven we would go on to a second round of financing to power a more traditional marketing campaign.
If you are from the poker industry you might have spotted the big flaw at this point
Any guesses? OK, I’ll put you out of your misery.
It turns out, surprise of all surprises, that the traditional poker industry survives off of bonuses and a huge marketing spend to attract the newbies, otherwise known as “fish”. In contrast CardCrusade was the chum bucket of the poker world. Every shark (experienced player) in the sea was attracted to the rake-free utopia.
And that’s where it all fell apart. The fish were too inexperienced to realise how badly the rake hurt them and too easily distracted by the smoke-and-mirrors bonuses offered by traditional sites. The sharks swam around looking for an easy lunch but only found other sharks who were always ready to take a bite. In short it was an imbalanced nightmare.
Once we came to that realisation it was a unanimous decision to close down CardCrusade. I’m not suggesting that a rake free site isn’t possible, but it wasn’t possible on the financing we had available – again that is a topic for another conversation.
My partner was left in the enviable position of having the rights to the software that was developed during CardCrusade’s operating life. The fact that it didn’t run for more than 5 hours at a time and never had more than 50 players using it didn’t seem to be any deterrent. Oh, what a mistake that was
…for the next time – Why Start a “Free” Poker Site?
All The Best,