Microgaming to Adopt Opaque Rake Allocation System for Operators

Microgaming Network is planning to adopt a new rake allocation system that will pay rake to operators based on a formula that considers “volume, activity…

Microgaming Network is planning to adopt a new rake allocation system that will pay rake to operators based on a formula that considers “volume, activity and win/loss ratio” of the player, according to a network announcement.

The system is similar to Ongame’s infamous Essence rakeback system, that uses a prioprietary algorithm when attributing which players in the pot should be “awarded” the rake. A similar system has been adopted by Bodog, a cornerstone of its “Recreational Poker Model.”

However, unlike Ongame and Bodog’s system, this will only affect operators—the skins on the network—and not the players. According to the PR, a “dual layer” system means that players will be allocated rake paid based on the existing weighted-contributed system. Confused yet?

When rake is taken out of a pot, the rake must be attributed to individual players. This affects players’ rewards—be it rakeback, bonuses, rake races or other promotions—which are awarded in proportion to the rake a player generates. But it also affects operators on the network that share liquidity across multiple skins: Operators will only earn the rake generated by their own players.

Under the “dealt” method, all players dealt into the hand are attributed the same share of the rake. Once the standard system, it has fallen out of fashion in recently years. PartyPoker switched to weighted contributed in late 2011 and PokerStars followed suit at the beginning of 2012. Revolution Gaming—now with its rakeback paid hourly—is one of the few remaining under the dealt method.

Under “weighted contributed”—by far the most common system, and the one used by Microgaming since 2010—players are attributed rake based on how much they themselves put into the pot.

Opaque rake allocation methods have also risen in popularity. It appeals to networks, because it encourages operators to acquire and retain recreational players—the life-blood of a network.

However, it is unpopular with high volume players. Firstly, players cannot calculate their effective rakeback, because rake is allocated to them at an unknown and changing proportion. And ultimately, the stated goals behind the algorithms of both Bodog and Ongame is to reward low volume, recreational, and losing players more than winning, high volume, professional players.

Microgaming’s True Rake system aims to be the best of both worlds. In the words of Lydia Melton, Head of Network Games at Microgaming: “What sets True Value apart from other networks’ solutions to the valuation problem is that it uses a dual layer system, which does not impact the players themselves. Any players earning rake-based promotions, like bonuses, will clear those promotions at the same rate on True Value as on the current method.”

“This is our biggest release thus far this year, and we believe it is one of the most important releases in online poker,” she adds.

Although in theory players will not notice the chance, in practice operators may choose to reduce player rewards following the introduction of the new method.

Currently rakeback across the network is fixed to 30%, but if operators are paid based on “true rake” and pay out player rewards (or to affiliates) based on weighted contributed, then operators with more high-volume players may face proportionally higher costs in paying rewards. Time will tell whether some skins respond by lowering the rewards offered to their higher volume customers.