About Illegal Rakeback
Rakeback capped at poker networks (like iPoker) and stand-alones (like PartyPoker) alike. The reason is to prevent an unhealthy rakeback competition between skins (the different poker rooms on a network) and the affiliates.
To explain why that is so unhealthy, I try to explain the ecology of online poker with a simple example:
* Let us say you are poker room X, who does huge and successful marketing in the media to bring in new players.
* Your latest ad campaign brought in a player who deposits $500 at a cost of $200.
* As this player is a fish, he loses the $500 to other players, generating only $100 gross rake for you.
If you are a stand-alone, this is not a big problem: you will eventually get more rake to cover up your $200. Maybe in the end you get $350 of total rake and the winning players get $150 - so both have equal profits.
But if there is an affiliate or (even worse) skin on your network that specialises in having great rakeback offers, chances are that especially the winning players (who know the market way better than beginners) play there.
Now, you, the poker room that brought in the depositing player worth $500 for a price of $200 only gets $100 back. Even though his ad campaign was great if you put all of the poker world into one big pot, it did not pay him off.
The profits that should be rightfully yours is shared by the offerer of illegal rakeback and the players getting that.
The Spiral of Death
In the short run, that might sound great to the winning players (you're probably not the poker room, but more the winning player in that example ;)) - just because you are getting more money.
But the problem is that the eco system of poker is now already damaged: the poker room who does successful marketing does not earn money with it. They will discontinue to bring in new players and maybe even join that rakeback race to gain some profits back.
History Shows
There were already networks brought down by that. The problem is that many networks just looked for the "quick dollar" so they did not tackle such parasitic business models.
Nowadays, they luckily take action because they understood. Take NoIQ as an example: they were expelled from iPoker, because they gave hidden/illegal rakeback.
NoIQ did never ever do any marketing, not even affiliating on sites bringing in new players like us or PokerNews or PokerListings. All their rake went into rakeback and their own pockets.
They just lived on the backs of the honest poker rooms and honest poker players. Their parasitic business model did not consist of anything else but the thought "how can we squeeze money out of the poker market without having to do own software, own marketing etc.".