I just posted this to the gameroom thread but I thought I’d repeat it here to give some perspective on the industry:
These sites make an absurd amount of money. Absolutely absurd. They collude and refuse to price compete, so the rake is roughly the same across the internet. It varies by stakes and game type, but it’s not uncommon for online sites to rake $2 or $3 per hand, dealing 60+ hands per hour, with many people playing multiple tables.
I would estimate it costs those sites roughly a penny a day to run a virtual table, in terms of bandwidth and servers and such, yet that virtual table if taking $3/hand for 60 hands per hour for 24 hours can take in over $4000 in real money. Per day. A virtual table, costing almost nothing to run. These businesses are absolutely ass raping in terms of profit, it’s just obscene. Their rake is half or more as much as an actual casino charges, but the casino has to pay for the table space, the dealer, floor staff, security, air conditioning, lights, drinks, etc. Yet because people can multi-table, and computerized dealing can make tables deal more hands per hour, players actually end up paying way more per hour having bits moved around on the other end of the internet than they would sitting in an actual casino getting free drinks, dealers, support staffs, etc. These sites could cut their rake by 99% and still make a huge profit, which makes them just absurd.
And people end up paying crazy amounts. Let’s say an online professional plays 8 6-handed tables with a $2 max rake where the average hands/hr is 60. There is nothing at all atypical about this scenario - if anything it’s a conservative estimate. Assume he wins 1/6th of the pots, and plays 40 hours per week. That person is paying $160 in real money per hour to a virtual site. $6400 per week. $332,800 per year. To a virtual poker site that’s not doing much more than what yahoo games is when it runs scrabble or pictionary for free. Compare to say a World of Warcraft subscription that requires far more support/server power/bandwidth/etc where Blizzard can make a ton of profit off a $180 per year subscription. The online site in this scenario requires a $332,800 per year subscription.
That number seems so absurd that you must think I’m making it up, but plug in the numbers yourself and see what you get. Why do people pay that? Well, the good players can make money despite paying this high cost, and the bad players don’t realize how much of the money they’re losing is because it’s being raked away instead of losing to other players. But even the winners only get their net profits after that fee is subtracted - so if someone is good enough to net $50,000 per year, they’re actually making almost $400,000 a year from the game nad paying $332,800 of it to the online site. The site that moves a few bits around in cyberspace for them.
It’s a big part of the reason I hate playing online, it just bothers me philosophically. I’ve paid tens of thousands or more of online rake and the whole thing just strikes me as absurd. It makes me feel not at all sorry for these businesses because they’re a bunch of price-colluding assholes who’ve taken tens of thousand+ of my dollars (I mean I’m a net winner online, by far, but I’ve paid them absurd amounts to do it).
My concern is primarily that it’s going to be bad for poker in general. I play in casinos almost exclusively but now all of the displaced online grinders are going to need a place to keep earning their money, which may mean they come into my games, and they’re a hell of a lot tougher than the recreational players you aim for. And fewer people will get into poker now - there will be fewer poker shows with no online sponsors, fewer people that test the waters by learning online for small stakes and then decide to come to Vegas, etc. This is bad for the entire poker community, reducing the incoming amount of bad players and concentrating the good players.