Online poker rooms have become the preferred domain of poker players. The physical constraints of land-based poker rooms are easy to ascertain; tremendous time and effort are required to facilitate in-person poker play. The ubiquity of online poker rooms naturally raises the question: How do online poker websites generate revenue? The answer is multi-fold (excuse the pun).
For starters, online poker rooms have what is known as a rake. This is predominantly used in cash games and describes a percentage of the poker pot kept by the house. Percentages differ from one poker room to another, but 5% is a typical figure. Many online poker tournaments, including SNGs (Sit & Go’s), charge fees for buy-ins. This figure is typically 10%. Poker players may see the following fee structure for a specific tournament – $100 + $9. In this case, the $100 contributes to the prize pool, while the $9 is the online poker room fee for hosting the tournament. While 10% is a benchmark figure, this typically decreases as the buy-in increases.
Zynga Poker is a market leader in online social poker gaming. This ranking poker site offers free poker online to players, with the option to purchase packages of virtual chips for poker play. Unlike other pay-to-play poker rooms, Zynga’s model is unique. Free daily chip gifts are available to players every 24 hours. The gaming action is readily accessible to players via Android smartphones and tablets, iPhone or iPad devices. Players can purchase chip packages to boost their poker bankroll with 20% more chips on purchases compared to the standard in-game Chips Store.
Other Ways That Online Poker Rooms Generate Revenues
There are many ways that online poker rooms generate revenue, notably through advertising, merchandising, and paid guest posts from websites. Like banks, online poker rooms deal with huge deposits daily. And like banks, not all that money is regularly paid out to players.
In other words, there is a massive cash stockpile under the control of online poker rooms. That money does not pay interest to players whether they withdraw it now or in one year. Therefore, carefully investing player deposits is another way to generate revenue for online poker rooms.
The laws of the land govern the profit model for online poker rooms. The authorities watch online poker rooms to ensure they don’t up and duck with player deposits at the witching hour. Regulatory constraints safeguard client funds to mitigate player risks and maximize the penalties for platforms holding player deposits.
In our current inflationary environment, where interest rates are 3.35% in China, 4.25% in the Euro Area, 4.35% in Australia, 5% in the United Kingdom, 5.5% in the United States, 6.5% in India, 8.25% in South Africa, 10.5% in Brazil, and 10.75% in Mexico, it makes sense for online poker rooms to maximize deposits at fixed interest rates to generate windfall returns, while returning zero interest to paying players. Of course, players are only interested in leveraging their deposits for poker winnings.
*Source: https://tradingeconomics.com/country-list/interest-rate
Regulatory Environment for Online Poker Rooms
Poker enjoys a worldwide appeal, but online poker is unavailable in every country, territory, or jurisdiction. The fluid legal landscape is both a bane and a boon to online poker players. When the regulatory climate allows, poker games are available online. There are many challenges to homogeneous online poker regulation, notably the shifting sands of the regulatory environment (often politically motivated), player pool liquidity issues, fragmented regulation, illegal poker markets, enforcement, auditing, and control of the online poker arena.
For example, online poker regulation is complex in the United States. It is determined on a state-by-state basis. Online poker is fully regulated in several states, including Delaware, New Jersey, and Nevada. Within the past two decades, we have seen unprecedented changes in the US online poker market, with the UIGEA of 2006 all but eliminating online poker from the US before the Feds adopted more pro-poker and pro-online gaming legislation several years later.
Canada tends to view online poker more favorably, with liberal legislation permitting non-Canada based operators to offer online poker games to players. Certain Canadian provinces have their own online poker rooms, and this nascent industry certainly has plenty of upward potential.
In Europe, several countries lead the way as beacons for the online poker community. These include the United Kingdom with its highly developed online poker market. Thanks to the UKGC (United Kingdom Gambling Commission), poker enthusiasts have loads of leeway to enjoy their preferred games, tournaments, leaderboard challenges, satellites to land-based poker tourneys, and the like. In much the same way, Italy, France, Spain, Portugal, in other countries feature an avid population of poker enthusiasts.
Across Australasia, online poker is enjoying a boom. This is particularly true in the Philippines, Australia, and New Zealand. Players are certainly encouraged to check local regulations for country-specific laws. In Latin America, Brazil and Argentina dominate the online poker market. These are huge hubs of poker-loving communities.
And in Africa, regulations are limited except for South Africa where online poker rooms operate in a grey area. Form the most part, international (offshore) this is online poker rooms determine their own policies vis-a-vis South African players.
The global poker market is diverse. There are certainly challenges and opportunities. Revenue models include a wide variety of options for pay-to-play poker tournaments and free to play poker rooms. This dynamic industry has tremendous promise, and player numbers are rising.
