It's possible for a player to wager huge amounts and break even or even make a profit. In such cases I would expect the house to be unable to pay the referral fees. But in general the site expects payers to lose 0.5% of their wagered amount. They take 10% of that in commission (I guess - I don't know that I've seen that written anywhere), meaning they expect to get 0.05% of the wagered amount. And so they're giving 20% of their expected commission to the referring player.
That's my point. The system looks very risky and destructive (for the operator), unless he holds sufficient reserves. If the site is on loss (or breaks even, or makes a only a very small profit) for a longer period of time, the operator would have to cover ref payments from his own pocket (or his share of investment, which is even worse).
Doog's explanation is correct except that we reduce / don't take every commission. When the players is referred, those 0.05% will goes to the referrer. This ensure that for every bet the commission will not be higher than 10% of the H.E. Our next step is to create a thorough explanation about this on the site (as well as Variable H.E. system).
First we have to separate our role as investor and operator:
- As an investor, the site takes 10% of H.E. as commission / ref payments. It is only 10% of the expected profit, so it should be ok.
- As an operator, we remove ourselves from variance, we focus on the wagering amount (which is good).
Those ref payments are taken from the role as an investor, directly from the bankroll. So, as an operator, we are very safe, we shouldn't worry about variance.
In a way, the system is actually similar with taking fee from winning bets. Remember that when investing in a gambling business, our profit from one bet is used to cover the loss of another bet, we only wish that total profit is higher than total loss.
I notice that the 'Copy' button next to my referrer link doesn't light up when I hover over it like all the other active buttons do.
Works fine for me (firefox).
We will check on that again, this copy feature is quite tricky to be implemented in cross-browser environment.