Referral option

[William]

If a winning player that generates an MGR of 3000/5000 is planning to sign up at a couple of new places with RB and the affiliate site offers a referral reward on the lifetime of that player (minimum 2%), how much would that referral option be worth?

We are talkin about a one time deal where the one that refers buys the right to do so and pays up front (no monthly payments depending on RB and so on).

RB are in the 30/35% range
There is no reason for the player not to keep signing to new poker sites thru the same affiliate, so the one that refers him keeps getteing a % of his action.

Any ideas?

Thx.

[RakeTheRake]

Hi William,

A derivatives question? Nice.

If i understand correctly you are saying:

Given that the player's referral fee is worth 60-100 a month, how much is that worth as a one off price?

Obviously there is no Black-Scholes for this sort of thing....

But if we assume 4000 mgr as an average per month then that's 80 a month in fees or 960 a year.

put an arbritary multiple of 2.5 on it and call it $2400

Of course that assumes that the player continues to play.

Now this is all theoretical and we could have chosen 1.5 instead of 2.5

The problem is there is no guarantee that a player will play past the first week....so you would most likely be unable to find a buyer....

Any help?

Kind regards

RakeTheRake

[William]

Yes, very helpfull thank you.
I was offered such a referal option and didn't really know what to make of it. I know the other player well and know he will keep playing. I think your number is too high, I was thinking more like 6 months (6x80) (2.5 years is a long time in such an unpredictable bussiness as RB).

Thanks again,

W.

[RakeTheRake]

Agreed, it really depends on who the player is and your relationship with them.

The trouble is there are too many disreputable types looking for a fast buck...so wehereas you would be doing this on the straight and narrow, such a scheme would be abused by certain others.

Kind regards

RakeTheRake.com