Even experienced players often don’t know what Netrake means and how it is calculated
The topic of Netrake comes up often and causes confusion among some online poker players. Since we are asked about it regularly at YPD, here is an article aimed at explaining everything you need to know about Netrake.
First, players themselves have nothing directly to do with Netrake, rather it’s a crucial element for us as an affiliate because it helps determine how we are paid. This applies to every affiliate, and different deals/races/promotions are rated based on a player’s Netrake.
How is Netrake calculated?
The calculation of Netrake is very simple: we take generated rake and subtract all costs. However, there are minor differences in the mechanics depending on the online poker room, due to there being certain costs that some poker rooms do not deduct and instead pay for themselves, while others deduct everything.
To help explain, let’s use GGPoker as an example. Factoring in the relevant elements gives us the following equation:
Rake (after deducting PVI) – Fish Buffet/Black Status (Rakeback) – Welcome Bonus – Transaction fees = Netrake
(N.B. GGNetwork promotions such as the Daily Rake Races or Jackpots have no connection with a player’s netrake)
Now let’s take a look to Natural8. They are in the same network but the calculation is different after changes were made on 01.07.2020. You’ll see in this calculation that we arrive at Real Netrake with a considerably less favourable outcome than at GGPoker, especially while Welcome Bonus is running. This is because the Affiliate has to cover 100% of the costs, as well as transaction fees.
Rake (after deducting PVI) – Fish Buffet/Black Status (Rakeback) = Amount (Commission Affiliate) – Welcome Bonus – Transaction fees = Real Netrake
Finally, here’s an example using PartyPoker for further comparison:
Rake – Weekly Rakeback – Welcome Bonus – Transaction fees – Tax (depending on the country) = Netrake
We can see the calculation is a little different regarding Netrake at PartyPoker – more elements are deducted than at GGPoker, for example, but there is no PVI at PartyPoker.
Online poker rooms are also different when it comes to fees. The more fair operators take 2.5% for every transaction via Skrill/Neteller, while others might take between 4% and 7%. Regarding this topic, we recently featured an article about the hidden costs that an affiliate has to pay.
Netrake determines how much an affiliate earns and the extent to which exclusive promotions/deals can be offered
Some might think that an affiliate earns enormous fees because players generate a lot of rake. However, this isn’t at all the reality given what is deducted and that the affiliate receives only a share of the Netrake.
Everything has to be calculated and it is therefore an advantage for many affiliates if certain promotions, such as our GGPoker/Natural8 Rake Chase, are calculated and paid based on the Netrake.
Often, there are also normal rake races such as our 25k Main Rake Race, where the usual rake rather is counted rather than Netrake. The calculation for the affiliate is the same, so a race must not offer too much to the player in order to avoid slipping into negative numbers. This happens more often than you might think, especially when players also have a welcome bonus and there are special promotions from the poker room which offer additional value.
If Netrake is negative, this impacts negatively on the affiliate
Importantly, if the cost and Rakeback are higher than the rake generated, then Netrake is negative. In this case, an affiliate has to pay the same amount as if Netrake were positive.
A simple example: Let’s say the affiliate gets 30% of a player’s Netrake. If a player’s Netrake is $100, the affiliate will receive $30 commission. However, if the Netrake is -$100, the affiliate pays $30.
The more Rakeback a player gets from the poker room through the usual VIP system and promotions, the smaller the profit margin for the affiliate. Even if a promotion is based on a player’s Netrake, the affiliate would not have to pay out anything to the player, but would still make a loss.
In the long-term, Netrake is always a plus for players, especially those having just joined a poker room, or those players who jump from site to site to join numerous promotions, constantly depositing and withdrawing funds.