No Rake? Leave it to Dutch

Dutch Boyd is young, but he has a lot of experience in the world of poker.

The twenty-something professional poker player is hoping that experience, along with a unique business model, will help make his newly launched Internet poker site a success.

Online poker rooms represent one of the largest growth areas for interactive gaming. Players can go online with relative ease, learn various games of poker, play against other players and even take part in high-stakes tournaments.

The business plan is simple: Similar to the traditional sports book model, the operator takes a percentage of each pot. A professional player like Boyd could see as much as $1,500 a week go towards rake fees through Internet sites.

Boyd tries to play 5,000 hands of Hold'em a week online. "It his hard to play that many hands a week at a land-based facility," he explained. "If someone is able to play that many hands a week at a $5-$10 table, the rake fees add up."

That means big money for poker room operators. Simple number crunching, Boyd said, shows that the bigger sites can rake in as much as $50 per year.

Boyd wants to change all this.

He's planning to launch a site, within the next six months to a year, that would offer rake-free play. The aptly named "RakeFree.com" would initially charge users a monthly membership fee. As membership grows, the business plan would shift toward other sources of revenue.

"We would charge juice for tournaments," Boyd explained. "We would be able to make interest off of customer deposits, and of course advertising would open up another revenue channel."

Boyd's numbers show that only 10 percent to 15 percent of poker players at land-based casinos or poker rooms break even. Online, those numbers jump to about 30 percent, but he said the majority of the players who "make" money from online poker make only a little bit.

RakeFree.com is a ways from being launched, but Boyd has already begun promoting the site. He entered his first World Series of Poker this summer and finished in 12th place. ESPN broadcast much of the tournament, including several hands involving Boyd and interviews with the up-and-coming player, and whenever the camera was on him he was wearing a visor emblazoned with the RakeFree.com URL.

Boyd said he came up with the idea for RakeFree.com a while ago and has been tossing it around the poker community for sometime. The concept came to him while he was working in Sacramento as a prop player at a popular poker room.

Boyd would chat with his fellow prop players and quickly realized that it was nearly impossible for them to make any money on the $2-$4 games. He realized that during a low-limit poker game, the player's real opponent is the house. In California, a standard card room spreading a $2-$4 Hold'em game rakes $3 from every pot. This adds up quickly to about $100 an hour.

In games where the average buy-in is often only $40, it's not uncommon to see the same 10 players throwing chips around for a few hours and all of them coming out of the game a loser, Boyd said.

The rake is slightly more favorable for online car rooms. The standard rake structure is 5 percent of the pot in $1 increments up to $3. But online poker is much faster than bricks-and-mortar card rooms, which means that an online site is actually raking more per-hour from each table than it's land-based counterparts.

An average $2-$4 player online will pay about $12 an hour to the house, while a high-limit player pays about $18 an hour.

"This really adds up," Boyd explained. "A high-limit poker professional playing one table for 40 hours a week, 50 weeks a year, can expect to pay about $40,000 to the house. No wonder so many people are losing at poker."

The WSOP coverage helped generate investor interest; he hopes to add a handful of new investors to the dozen or so he's assembled.

With so much at stake, one would think Boyd would try to keep his idea a secret, but he's not worried about competition.

"I would almost welcome it," he said. "I could probably make more money as a player on such a site than I would operating one."

By his projections, a professional player could save $70,000-$80,000 a year playing online at site with no rake.

While poker represents a burgeoning sector of the interactive gaming industry, Boyd feels there is little room for sites to gain a competitive advantage.

"Undercutting the market is really the only thing left," he said. "The danger in doing it step by step is that the market could become fragmented. I think this is a great time to do it."

Emboldened by his surprise run through the WSOP, Boyd is confident that the RakeFree.com concept will be big.

"Online poker is getting big," he said. "I have no idea where it is going but I think we could really make some waves with this."