Poker affiliates have their costs to pay…
At YourPokerDream we strive to always give our players the best possible deals, from Rakebook to special offers and whatever we can find that will make your online poker experience as enjoyable and profitable as possible.
Our wanting to be transparent in terms of how we run our business means we want our special community to understand both sides, so this article is aimed at giving you an insight into the perspective of the poker affiliate, not least the various costs and fees we find ourselves having to pay in order to avail ourselves of the best deals out there so that we can provide you, our players, with what best suits you and brings in all that extra cash.
It’s understandable that players might think that, because they generate X amount in rake playing at our partner online poker rooms, YPD as an affiliate is automatically awash with cash and we spend all our time partying… That, alas, is absolutely not the case! In fact, the mechanics of the affiliate business means we are subject to deductions and fees in order to operate, and the more value we try to provide our players, the finer the line we have to navigate to maintain a sustainable operation.
Netrake/Netgaming is crucial for the affiliate
The Netrake calculation for a player for the purposes of affiliates is simply the gross rake minus all costs.
What is deducted?
- Tax – depending on the country and provider (15%-20% of gross rake)
- Transaction fees for each deposit and withdrawal of a player (2.5%-10%)
- The rakeback which is paid to the player by the poker room
- Every bonus/tournament ticket earned via a promotion/rake race that a player receives.
Let’s take a closer look…
Tax
Some providers who work with official licenses deduct a tax directly from the gross rake, but we should mention that not all operators do this.
However, some – who we cannot name here – could afford to bear costs and, by doing so, improve the all-round situation for everyone.
Transaction fees
It’s completely understandable that every transaction has a fee for which the poker room is responsible. Whether the company used is Neteller/Skrill, Visa/Mastercard and so on, a fee is incurred. That the affiliate has something deducted here is not a problem in itself, and is absolutely fine. The big question here is how much!
It’s not unusual for a provider that pays only 2.5% fees to Skrill/Neteller/ecoPayz to ultimately deduct 4%-5% – while this may vary from country to country, the fact that some providers decide to make extra money by making such an addition seems unreasonable to us.
And it gets particularly brazen when it comes to Bitcoin. The well-known Winning Poker WPN Network takes as much as 7% fee for every BTC transaction (deposits and withdrawals). A player pays $1,000 and the Netrake is $70 straightaway without a card being dealt. Bear in mind that the real fees are around $1-$2.
As if that wasn’t bad enough, the Chico Network is even worse, taking a massive 10% for every BTC transaction!
Even GGPoker deducts a sizeable 4% for a BTC deposit and 1% per withdrawal.
Rakeback
Every cent of rakeback from a provider’s normal rakeback/VIP programme is of course also deducted from the rake and affects a player’s netrake.
Rake races/promotions /bonuses
Many players do not know that, as a rule, all bonuses or tickets that a player receives through a rake race, promotion, or something else are deducted from the rake. However, there are names on networks such as iPoker and the GGPoker Network where the costs for network promotions are covered by the network and nothing is deducted from the affiliate.
Welcome Bonuses/Reload Bonuses are of course also deducted.
In the end, there is not much left, the Netrake is low and the affiliate has to calculate carefully
Now you have a little insight into what is being deducted from an affiliate and how Netrake is calculated. To illustrate this, a typical calculation could be as follows:
$1k gross rake – $50 transaction fees – $150 welcome bonus – $250 rakeback – $100 promo/race = $450 netrake
N.B. In this example we have assumed it’s a provider and country where no tax is deducted. While this is the best scenario, it’s not often the case, unfortunately!
The affiliate would be paid based on this $450. The amount of commission an affiliate receives varies depending on the site and, of course, factors such as how big is the affiliate, how many players it brings and so on. Roughly speaking, we can say 40%, so in our example the affiliate would earn $180. From this the affiliate has to pay costs, employees, taxes etc. In addition, remember that most affiliates also offer their players exclusive promotions, rake races and special rakeback deals… making this theoretical and quite optimistic $180 look even smaller.
Grinders look for more rakeback
More and more rakeback – that’s what everybody is looking for, but for most their understanding of the mechanics is quite unrealistic. In our example above, we made a very optimistic calculation, but it is interesting that many players think that we earn more from a player who rakes 10k per month than from a player who rakes 1k. Partly in the case of the poker room, yes, but it’s quite different for us.
Why is that? Quite simply, a player who generates more rake receives more rakeback from the poker site, as well as more through special rake races/promotions, which means that the netrake is ultimately much lower. This leads to a lot less commission. Moreover, high rollers also get ‘high’ deals from us.
Netrake calculations can give us negative numbers
Of course, we try to calculate everything as best we can so that we make no minus despite our very high rakeback deals and the exclusive promotions/rake races. However, this is very difficult and, sometimes, we cannot avoid negative scenarios. Often there is a special promotion from a provider which offers so much extra value that the netrake is ultimately in the red.
What many players do not know is that when this happens an affiliate has to pay regardless. Consequently, if an affiliate gets 40% from the Netrake if it is positive, they would also have to pay 40% if it is negative.
Hopefully, players can appreciate that not only is the whole process a complex one that involves numerous fees and payments from the affiliate, but we can also find ourselves paying despite there being negative figures.
