Wednesday, October 31, 2012

Online Poker Rooms, Making Money and Bonus Offers

The online poker market is fiercely contested among the now many competing poker sites in the market. With each poker room fighting for business, I wanted to take a look at how they make their money and how genuine offers to prospective players actually are.

Personally the first rule of thumb before venturing any further is that there is very little that is actually free. If a company is offering £500 free, it's £500 that comes with a few conditions (that are usually included in the finer print). The gaming industry is the same as any other. Whether it's shopping at Sainsburys and building your Nectar points, making payments through Neteller and earning points or something as simple as buy 1 get one free. None of these offers are freebies as they still involve you spending money. Getting you to spend money where you wouldn't otherwise have done is really something, and something that happens on a large-scale, especially in the retail sector.

It wouldn't be the first time I have seen someone close to me buying something because they got another one free. Did they need it in the first place? Probably not but it felt like they were getting something for nothing. Strike one to the retailers.

Now, we all know this - this isn't revolutionary. Understanding how it all works simply helps us to look at offers in their true light. Some offers really are great offers while others are smoke and mirrors. This is an area I want to cover in this article. Before I do that, I wanted to cover off how online poker sites make their money.

Internet Poker is a little different from many other 'gaming' business as the rooms don't have a stake in one player over another. Whether one player wins over another is neither here nor there, and rightly so, as this would be unethical. Poker Rooms make their money through two key ways.

Players can either play cash games, otherwise known as ring games, or they can play tournaments. In ring games, the site would take a percentage of each pot, usually between 3 and 5% of the total pot. The amount varies but it is very unusual to see anything above the 5% mark. In the tournament arena each tournament would have a fee, usually at 10% of the buy in. That's to say if a tournament cost £100, the fee taken by the room would likely be £10 - displayed as £100 + £10. This is fairly standard and with one of the key attractions being that large sums of money can be won for relatively small buy ins, the fee is seen as acceptable by players.

How Much Do the Poker Rooms Make?

How long is a piece of string. The larger rooms make a LOT of money. Take PokerStars which regularly sees over 250,000 players logged in and playing. The revenue is staggering. Many of the smaller rooms still make money but find it difficult to compete with the bigger players in the market. You might ask how they survive and that would be a good question. They survive as they don't attract the big players. This makes it a safer ground for many of the smaller time players who don't like to be sharked.

Of course, this makes these rooms a perfect ground for the better player as the quality of play is considerably worse than on larger networks or sites.

I've Seen Many Promotions Offered. Are they Genuine?

It is common for poker rooms to offer an introductory offer, usually a sign up bonus or free entry into a freeroll as well a promotions for their existing players. Let's start with the sign up bonus. These can range from $50 all the way up to $2,000 or so. Going back to my point at the outset of this article, let's not forget - nothing is really free. If you're expecting free cash just for signing up, you're going to be disappointed.

These bonuses are earned as you play. Each room will have the equivalent of VIP points that you earn as you play. These points are what players would use to exchange for cash, tournament entries or other merchandise. As with most things, the more you play, the more points you earn, so the greater the rewards. Another case of you need to spend to earn your bonus. That said, if you are going to be playing anyway, it is still free money when it's earned.

From time to time you will see 'no deposit bonuses' offered. This is more in line with the smoke and mirrors scenario mentioned. Sounds great but how can they give a way free money? I take you back to the point made - nothing is ever really free. In these offers, the fine print states that you need to wager a certain amount before you can withdraw it. So whilst it's your money in your player account, you can't do anything with it until they make their money first. Not as great an offer as they were apparently advertising. Read the fine print and understand the withdrawal requirements.

The one area that is genuine is the offer of entries into new player freerolls or tournaments. If you cash in these tournaments, that money can be withdrawn so this is a great way to kickstart your bankroll, if you have limited starting capital.

A final Word

Whilst I always advise players to shop around to get the best offers, I still firmly believe that there are great offers to be found. The poker rooms make vast amounts of money and the top sites do pour some of that back to their player base, which is essential to keep hold of their player base.