This is what NOT to do when it comes to launching your own
poker site. Let's say for a minute that you understand and
realize the following statements.
The online poker market is a $6 billion dollar a year
industry. The top online poker rooms are profiting over $1
million dollars each and every day. The top poker
affiliates (people who simply refer players to these sites)
are making over $100,000 a month.
You decide to start researching on how to start your own
online poker room. You hop onto the search engines and
before you know it, you find two dozen or so companies
claiming to be capable, able, and willing to help you.
Naturally, you don't get something for nothing and you
realize their fees range from $5,000 up to a couple of
million. You know that you generally get what you pay for,
so you start weighing the pros and cons with pricing for
these companies.
On the low end, you can get a website that is 95% canned,
and you simply advertise it. When players sign up on your
website you receive a percentage of the revenue that their
gaming generates. In other words, you are a glorified
affiliate with little or no control of anything else
besides limited marketing with the business. (Due to
duplicated website content).
On the high end, you can drop $1-$2 million dollars on
fully created and customized gaming software. This will be
created from scratch to match ALL of your likes/dislikes,
and desires. So, you're out $1-$2 million and 1-2 years
have passed while you waited for the software to be
completed. Now it's complete and you have to start
marketing. Once your marketing is ready to go, you need to
hire 1,000 or so player props to play poker at your site so
that when your first 5 poker player signups show up, they
have someone to play poker against. This is the trickiest
process when trying to reach and maintain the much needed
player liquidity.
Option C is to join a poker network. Contact several of the
larger successful poker networks and you will find that
they are very selective. You must know what you are doing,
have a good business background, and have a sound business
plan for them to scrutinize. You will naturally pay them a
small royalty percentage of all revenue that your players
generate. They can have you set-up within 6-9 months with
moderately customized gaming software and they can provide
you with player liquidity. This means when your first 5
poker player signups show up at your site, they are pooled
into the other players from all of the other poker rooms on
the network. It typically costs about $500k to get started
and the network will usually want to see a budget of
$2million or more.
I took option D. I received a phone call out of the blue.
It was from a representative of a poker network. I was
given a professional and remarkable presentation. I further
verified some of the claims shortly thereafter and was
quite impressed. They claimed to be the one and only
connection to the Poker Network. In other words, if you
wanted to be a poker site on the Network, you had to go
through them. They claimed to have been affiliated with the
first poker website ever. They claimed to have a "unique
relationship" with the network that offered a lowered
startup cost. They proposed building me a custom website
integrated into the network for $55,000. This would include
access to their gaming license ($50,000 value) because I
would be placed under their "umbrella". There would also be
a sliding royalty scale of roughly 8%-21%.
This was music to my ears. I was going to receive a custom
poker website, have a poker room in their network player
pool (instant player liquidity and 3rd largest network in
the world), pay a small royalty commission, utilize their
customer service for my player support, utilize their
processing for my player deposits/withdrawals, resulting in
a Turn-Key solution!
I raised $250,000 to get started. I then met with the
president from Vancouver, Canada. I handed him a check for
$55,000 and then waited a few months in anticipation for
the poker website mock-up to be completed.
I also made several customized website requests. They were
quite reasonable. I received a call just 3 months later
that my site mock-up was almost done. When I viewed the
site mock-up, I wasn't impressed, but it seemed like a good
starting point. I noticed that ALL of my customized
requests were not complete. I was told that those would
take extra time. I was assured they would be done. I was
then "bullied" to check off on the site, and if I didn't my
site would be put to the bottom of the pile, and I would
have to wait months before the changes would be made which
would also delay the launch. They said this was due to
newer licensees sites still needing to be completed.
I reluctantly agreed and within two days, I referred many
people to the new poker site. It wasn't perfect, but I
figured it was good enough to get the ball rolling (oops).
On the 12th day of launch I got an email from a player I
referred. He had won $22k. He had requested a withdrawal,
and after 8 days he got an email explaining that the max
payout was $2k per week and he would have to resubmit a
withdrawal request and wait 10 weeks total to get all of
the money out.
This was just the beginning. I got another phone call
explaining I had a large number of deposits (good news),
but I had to cover those deposits. The network demanded an
additional $15k reserve to be wired within one week or I
would risk having my site shut off. I originally paid $5k
for the reserve. I sent the money only after drilling them
for two days as to why. Their story was convincing. They
said they weren't a bank and I would be responsible for
"floating" all deposits and withdrawals from all of the
different processors which had up to a 2 week delay.
This was yet another "red flag". In the back of my head, I
kept asking myself why couldn't or wouldn't this billion
dollar empire float a lousy $20k for a two week period. A
few weeks later I received several emails from
client/friends of mine who hadn't received their cash out
from our poker site. These cash outs ranged from just a few
hundred to a few thousand dollars. This made no sense to me
as I had now paid $20k in reserves to cover and float these
deposits/withdrawals.
The president of the company gave every reason why these
things were happening. I was assured and reassured. Within
a few weeks players started giving me feedback that they
had finally started receiving some of their withdrawals.
The knots in my stomach loosened a bit. Things seemed to go
smoothly for a month or so. I then received a phone call
from the president again explaining that he had his once a
year incredible marketing campaign launching to get new
players. It was the most effective marketing they found and
could only be done once a year he claimed. If I wanted a
piece, I could partake for $12,000. I was guaranteed of its
effectiveness. I accepted his offer. I wired the money and
NEVER saw a single player sign up from the campaign.
The problems never stopped, they only got worse. I started
receiving emails from other licensees asking if I had
received any revenue payouts from this company. I further
questioned this, and come to find out, some of the
licensees hadn't been paid their operating commissions in
months. I had never requested a payout from them because I
never put much into marketing due to the other major
problems. (Thank God) Needless to say I managed to lose
over $100,000 with this company. Come to find out, they had
lied about many representations that they made. Turns out,
you can have a direct relationship with the network without
going through this company. Why would the real network even
allow this company to represent them? I do have a theory.
The network allows this company to exist in order to
sabotage and prevent the little guy from growing. By
letting this scam continue, they can prevent a lot of
companies from ever succeeding thereby securing the
networks overall market share of online poker players. The
network has let this go on for over 7 years. Prospective
Poker site operators beware. Over 200 people have been
sucked into this.
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For specific details about this experience, please read the
reply section at the bottom of the article page at
http://www.pokerroomstartup.com
