Online Poker For Shares

Published: Friday, August 19, 2005 Online-Casinos.com

POKER FOR SHARES

Gibraltar start-up has a new incentive scheme for players

MarketWatch reported on a novel approach to marketing this week when it took a look at PokerShare.com, an about-to-launch online poker site based in Gibraltar and owned by an outfit called Playit Ownit Limited.

The CEO of the company, Lucan Toh is trying to woo players by offering them stakes not just in their cards but in the company itself. PokerShare.com promises to give its gamblers ownership positions that pay quarterly dividends and conventional shares if a public offering takes place.

"There is a big expense in getting players to your site, but the bigger expense is keeping them there," said Toh. "In the economics of online poker, you either had to be in at the start or be a little bit clever."

Offering oownership stakes is an innovative approach to marketing and customer retention, and it works like this: 40 percent of the company is owned by a Gibraltar-based trust, with the other 60 percent held by partners and principals. Gamblers earn "share points" linked to the length of time they play and the number of pots they contribute to as well as from tournament entry fees. The points are held by the trust, which then distributes dividends each quarter based on the company's overall profit.

The company will also offer an array of perks comparable to the loyalty incentives that are popular with online and off-line competitors, such as points toward cash rebates, trips, and merchandise.

Although PokerShare player-owners will be entitled to dividends, they won't have shareholder rights in managing the company, nor will they be allowed to trade their stakes, at least not until it goes public.

Like other poker game operators and casinos, PokerShare generates revenue by taking a "rake," or cut, of each pot. Players can't lose share points but can become ineligible for dividend distribution if they don't play in that quarter; one hand alone would suffice to keep the share active.

While the number of share points held by players can only increase, as more get with the program the percentage held by each will decrease.

"There will be a dilution," Toh said. "But as more players come in, revenue will increase significantly, which means profits will also increase, so players will end up with smaller pieces of a larger pie."