Economical Poker Room

So I just read Dusty's blogs about how now a days, up in the higher stake games, money is just passed along among the professional players which maintain a neutral ROI. Of course the only significant money being made consistently is in the process is from the poker rooms' rake.

This is just a idea to think about and I also love to talk business, but what if there was a poker room with a micro rake %. I think right now the market standard is 5% give or take. I'm talking about less than 1% and around the margin of .5%

Wouldn't the economical poker room gain market share steadily and attract the average and professional players looking to pay less rake from the volumes of money that flow in and out their accounts?

They would need a mass of capital in the beginning to build up. You'd be spending tons of money on programming and all that stuff, then you need a mass marketing campaign. Then your gaining that money back really really slow because you make so much less in rake. It would take you forever to turn profit if you ever did. Oh, and most players don't recognize rake, that's kind of why they have rakeback, they see it as free money but in reality it's yours.

You might have something there.

Lets see a business plan that accounts for overhead and can make it work.

Could call it TwoPercenters.

Might run into some kinda cybermob tho....

Actually is a very good idea Why has nobody done this?

There is no doubt that the theory of lower price = higher demand has been tried. In this case my thoughts of why this would be very hard to achieve is this:

Running game online is very cheep compared to an actually casino. A network of hardware would be needed to process the information. Sort of like servers for a game, but probably more complex.

The start up cost for a project like this would be a lot. The legitimacy of this program would have to be top notch. This would need a professional development team not so basement programmer. So like the first replier, a large start up capital would be needed.

Also let's say that a program is pushed through and it's totally legit and working. Without mass advertisement at start up, gaining even 1% of market share would be close to impossible. Of course word would get out and a slow and steady customer base would follow, but by the time that happens, the company would most likely be in the far net gross negatives.

From as far I can see right now, online poker rooms are like oligopolies which means the market is dominant by a few number of producers. Putting a new poker room with micro rake out there on the market would force competition for other producers. With such a small market share from the start up micro rake company, the other companies with dominant market share would most likely find some way to drive it out. So the new guy wouldn't want to try a new micro company. It could be best to just charge the same rake and work from there.


Hahaha I guess I sort of argued against my idea. Well I would love to see more ideas guys!

Rakeback!

Rakeback would be offer but that could cut gross profit too much. My idea of rake back would be a flat 10% back or get 50% of it back if you play 5k+ hands a week. This could increase rake dramatically and the extra rake made from the incentively promotion would be enough to cover the 50% rake back and have more profit left.

I think you guys are underestimating the costs associated with running an online poker room. Severely underestimating it.

How much does pokerstars an ftp spend a year then?

Tens of millions. You need to think about law suits and all that stuff too.

Are you going to allow US players to play? You'll need a ton of capital for any government issue that could arise as well.

You would need a fraud team, A round the clock programing team, customer service, a security team, ect. Running a professional, legit online site is expensive... Way expensive!!!

A standard casino has most of the stuff listed, but they cannot offer even a fraction of the venues that online casinos can. I'm not sure how much the operation cost would stack up against a casino, but just the potential is far greater than a live casino. I wasn't talking about starting one with chump change. Just a fun idea about an entrepreneur that has a couple million to invest.

Well i tink the insurance for a live casino employees is the major cost at start up. take commerce casino in LA, they have over 500 employees, to get insurance for. Online casino has none of this, maybe 10 to 15 at the most.

If you had about 10-15 million (probably more) in initial capital you could do it, you wouldn't see a profit for years, if that. The problem is that most recreational players wouldn't see the value in having less rake, thus they wouldn't see what you could offer over the competition.

That's true, but I feel the majority of online players are aware of rake and rakeback. Also keep in mind all the small sites popping up and failing. They have a good software, but aren't doing anything different from the market.

Programmers
Bankers
Customer service personnel
Payment processors (including the special US ones that are constantly changing)
Promotions (commericals, web sites, etc.)
Servers and bandwidth

These things add up quickly.

It is a very interesting concept that I think is common to consider whenever you look at something and say "I think it is too expensive". I think many of the points brought up are very valid. I also think the "rakeback" comment was a comment trying to say the big players get rakeback now and not saying you should do it for the economical poker site. I think a big problem you would face would be all the other sites lining up against you as well as the players they already have on their bill never playing on your site. As usual I like the idea, but see a very difficult journey in it ever coming to fruition.

Stix

With enough cash anythings possible. If you have enough to not make a profit and still survive for maybe 5 years, and a ridiculous marketing campaign, it could work.

guess you guys never heard of wsex poker. google it

Its been around for years. They dont advertise much to keep overhead low.