Icon, it sucks that you lost your $1533, and it is understandable that you're pissed -- especially because you did nothing wrong and should rightfully be owed the money.
While Party's tactics in enforcing this are wrong (due to making this rule retroactive, thereby killing most affiliates), they are finally doing what they should have done from the very beginning. They're only rewarding affiliates for players that were actually referred to the site.
Pokerstars had it right the whole time. The whole idea of affiliates is stupid and counter-productive. If I ran a site, I wouldn't offer rakeback. If I did, I would give it directly to the most active players (as a reward), rather than pay out my hard earned money to middleman leeches.
I go way back to the early days of online poker (February 2001), which was before any of this affiliate crap had started. I got to see firsthand the thought process that went into the whole thing.
At the time, there was no dominant online poker room. Paradise was the busiest, followed by Planet, but overall the sites were all small enough operations to where any of them had a reasonable shot at hitting the big time and rising to the top.
I'm not sure which room was the first to offer rakeback, but the original business model went like this:
1) Being a small operation, the site has a small marketing budget. Rather than overspend their precious resources on advertising that may or may not work, they come up with a plan where others advertise for them, yet they risk nothing.
2) The plan works as follows: Affiliates bear the burden of advertising throughout the internet or elsewhere. Nearly anyone can sign up to be an affiliate. When new players show up at the site through the affiliates, the affiliates get something like 25-30% of the rake generated by that player.
3) Everybody wins! The site has a new player, which makes them money and makes their games more active for other players. The affiliate gets 25-30% of that player's rake for life, without having to invest any further time or expense. The process is also transparent to the player, who is just happy to have found an online poker site he likes.
It seemed to be a flawless model. Sites could keep growing without spending much on advertising. Affiliates were making bank. New players poured in from everywhere. What could possibly go wrong?
Everything.
The number of affiliates rapidly multiplied, and soon there were far too many affiliates and not enough new players to advertise to. It wasn't enough just to show up on rec.gambling.poker and post, "Play on Empire Poker! Click here to sign up!" Everyone was doing that, and soon most people were ignoring such messages as spam. Furthermore, players were tending to find out about these rooms through word-of-mouth, and more seemed to be signing up directly than through affiliates. Finally, some clever affiliates came up with an idea: Rakeback to the player.
This was the point where rakeback changed from a cheap marketing tool to a way for players and affiliates to collectively roll poker sites for around 30% of their rake. Players were now being offered the vast majority of the money the affiliate would be getting for referring them. Thus, if Chris is getting 30% of John's rake for referring him, Chris would then pass around 85% of that money right back to John. This would effectively give John himself a 25% rake refund, which looked like free money to him.
Initially, rakeback to the player was against the rules. It went against the whole initial concept of rakeback. The affiliate was supposed to be the one rewarded with most of the returned rake, not the player! While affiliates now were taking huge hits in the percentage of rake they were keeping, it was a necessary change for competiton's sake. The best-promoted and best-managed affiliate programs still made bank, while the rest slipped into oblivion. Soon, rakeback to the player (via the affiliate) was standard. Even the rooms themselves came to accept this as standard practice, with some even cutting out the middleman and depositing the rakeback directly into the player's account, and giving the remaining 3-5% to the affiliate.
However, now there were other problems. Affiliates were cheating, encouraging players to close existing accounts and reopen them under their codes. Suddenly this was costing the sites big money. Rather than paying the 30% commission for new players, they were suddenly paying it for EXISTING players, and soon it became where active players felt they were being cheated if not getting rakeback. Players and affiliates would find any way possible to get rakeback, from bullying the sites into after-the-fact rakeback tagging ("You better give this guy rakeback, or he's leaving!") to signing up on skins from the same network, such as Empire Poker instead of Party.
Rakeback also created situations of fraud, where people would be promised a certain percentage of rakeback, only to have their affiliate disappear and not pay them. On NWP, for example, many people got rolled by "Gator519", who went broke gambling, and used rakeback money earmarked for his customers for his attempt to rebuild his bankroll.
The whole rakeback model had become a failure. Rather than being used as a marketing vehicle to attract new customers, the most valuable new customers tended to already know about the site before ever finding an affiliate. For example, when I wanted to play on Full Tilt, I immediately searched out an affiliate offering the best rakeback and signed up through them. That wasn't the model the sites originally wanted. It wasn't supposed to be, "I want to play at site XXXXX. Let me go find which middleman can get me the best rakeback!" It was intended to be, "I want to play online poker. Let me find what sites are out there!"
Party has finally had enough. They don't feel they should have to pay out rakeback for customers they already had, and they're right. However, it is somewhat unethical of them to have knowingly paid this out anyway for years, and suddenly retroactively decide to enforce their original rules. They should have just ended affiliate future payments for anyone who was "poached". From their point of view, though, they feel as if they have been cheated for years, and indeed they have if you really think about it.
While I am no fan of the strongarm tactics of online sites, and while I have tried to squeeze out as much rakeback as possible for myself, I do see where Party is coming from.
