Beginning on January 1, 2015 the iPoker Network (owned by PlayTech) will implement a new rake allocation system for their skins in an effort to fix what the company feels is a flaw in player valuation.
The new rake allocation model, which iPoker is calling “Source Based Rake” or SBR, was first reported by PokerTube.com. I was also able to procure a copy of the network’s 26-page SBR manual to assist with writing this column.
The new method will not affect the amount of or how rake is collected at the network’s online poker tables, nor will it affect a player’s allotted contribution to the rake. SBR is only used on the backend to determine the allotment of revenue sharing between iPoker and their many skins.
iPoker hopes SBR will balance the ecosystem
iPoker is hoping SBR will improve their current player valuation model by rewarding skins that are bringing in new players and frequent depositors, and at the same time disincentivizing sites from focusing their marketing efforts on grinders.
The current model used by iPoker is to allocate rake to their skins based on each player’s contribution to the rake at the tables. This has led to a focus on attracting high-volume (usually winning) players who play a lot of hands and generate a lot of rake, but do not deposit and are not good for the health of the poker ecosystem.
How SBR works
This isn’t iPoker’s first attempt at solving this issue.
Beginning in 2012, iPoker began separating their skins into two tiers. A top tier (with exclusive games) for skins that help the poker ecology of the network by meeting certain performance thresholds, such as bringing in new recreational players, and a second tier for skins that are not attracting new players and have a preponderance of winning, high-volume players.
Unfortunately, this tiered system doesn’t seem to be working, and its relative ineffectiveness has led to the development of SBR.
SBR is designed to tag all of the money in the system (across all skins) to the player who originally made the deposit (and by extension the skin they registered with), until that money leaves the economy through rake or withdrawals.
In order to do this SBR essentially creates two separate categories of player funds:
- Money being wagered for the first time*
- Money that has changed hands
*Bonus and promotional money is tracked as new money.
SBR tags all “new” money (money deposited) to the depositing player. This money will now be tracked within the system in what is effectively a “shadow balance” only visible to iPoker. The shadow balance is tracked and rake is allocated to the player and skin where the money originated regardless of who currently possesses it.
Example: “CHRIS” on Poker Site X deposits $100 and loses it in a single hand to a “STEVE” on Poker Site Y. The total pot is $198 (suppose $2 of rake was taken) and both players generated $1 in rake, CHRIS for Site X, and STEVE for Site Y.
Under the old system STEVE and Site Y would be credited with any rake CHRIS’s money generated from here on out.
Under the new SBR system, Site X would continue to receive credit from CHRIS’s $99 that is now in the possession of STEVE. If STEVE also started with $100, his balance would now read $198, but his shadow balance (seen only by iPoker) would have $99 tagged to him and Site Y, and $99 tagged to CHRIS and Site X.
If this player then uses these funds to continue playing, then Site X will be credited with the rake even though CHRIS is no longer an active player – it should be noted that iPoker’s SBR model uses oldest money first, so if CHRIS deposited before STEVE, Site X would be tagged for STEVE’s future rake until that money changes hands or is lost to the rake.
Basically, under SBR, Site X will continue to be rewarded for bringing this money into the system even if it their player is no longer in possession of it.
Potential impact of SBR on players
SBR does not impact the rake paid on the players’ end (unless they read this column players will not even know SBR exists), but it will likely impact the rewards programs and promotions offered by iPoker skins moving forward.
With high-volume, non-depositing players losing value, and new and frequent depositors gaining value, sites will be forced to shift their focus from attracting high-volume winning players to depositing players, and this likely means a retooling of their VIP programs.
A suggestion made by the iPoker Network in their SBR manual was for skins to lower the % of rewards offered through a site’s VIP program and target new and frequent depositors with personalized promotions and offers.
Potential impact of SBR on skins
SBR is a major change from the top down. Skins that have focused on grinders will be hard hit with the implementation of SBR on January 1.
iPoker outlined in their SBR manual that they have gone back some two years to determine the source of all funds in the current economy, which means current skins that rely on a small percentage of winning high-volume players for the bulk of their rake allocation will soon see their worth drop dramatically – perhaps to near 0.
Other skins that have been doing things the “right” way all along, will likely see their share of revenue jump significantly, even if most of the players they brought into the network are long gone.
Potential impact of SBR on affiliates
Affiliates are also likely to be hard hit by these changes as they have spent the bulk of their marketing efforts in recent years attracting these high-volume players.
The adoption of SBR will likely require affiliates to move away from a rakeback based model into a free bankroll or gift based model.