The Curious Case of Jao Poker

Today we turn to the curious case of Jao Poker, a US-facing startup site that’s attempting to take a multi-level marketing (MLM) approach to the necessary business of attracting new customers. Jao Poker’s been around for a handful of months, and it claims to have a thousand or so playrs signed up to date, though such things are a bit hard to check.

The whole Jao operation seems a bit questionable and curious, though it does open up a door to ask whether online poker’s traditional affiliate model is indeed the best way to conduct such an enterprise. The affiliate model ain’t perfect, though it has worked, more or less, for as long as online poker itself has been around.

The MLM approach isn’t necessarily any worse in principal, though for every honest MLM effort – no matter what type of business we’re describing – there’s another that’s a thinly disguised Ponzi scheme or another form of ripoff. The MLM model tends to lend itself to such abuse in general, even though we’re not accusing Jao Poker of that here.

But still, Jao’s made a couple of basic blunders that makes an independent observer scratch one’s head.

If you’ve heard of Jao Poker before this, it’s likely due to an unfolding feud between one of Jao’s primary owners and organizers, Tam Nguyen, and Jonathan Brown, the owner of prominent affiliate rakeback site ProfessionalRakeback.com. This appears to be one of those oil-and-water situations; one wouldn’t expect affilliate owners to look kindly on an approach, meaning MLM, that essentially cuts out the affiliate middleman.

In that light, it’s not too surprising to see Brown take Nguyen and Jao Poker to task for a couple of significant blunders. Besides a couple of very basic problems with Jao Poker’s business model, Nguyen himself seems about as skilled at marketing and PR as Michelle Clayborne was back in the old Full Tilt Poker days. Which means unskilled… totally unsuited, in fact.

Back in May, Nguyen took it upon himself to castigate a player, Eric Nichols, who complained about… something… maybe (or maybe not) being disconnected just prior to the bubble breaking in a $27 tourney. Players make complaints like this all the time. Sometimes the complaints have a legitimate basis; other times not so much, and disconnects are unfortunately a long-suffered part of the online-poker experience.

Jao Poker and Nguyen refunded the $27, whether they had to or not. Good move for a new room, at least until Nguyen posted this:

“Eric Nichols is a broke joke for the poker community. I gave him the opportunity to make money with me but all he did is bitch and complain. I even paid him $27 for a complaint of bubbling a tournament and blamed it on our system to keep him happy and he lost it and now filing a complaint that charges were not made from his account. Your a lowlife bitch. I don’t give af. I will blast you.

“You said your reputation is important. Well you fucked it up off $27 that you got paid on.”

Yeah. Of all the ways to handle things, this ranks at or near the bottom of the list. I briefly considered writing about it in May, but went on to other things. Now, it’s back.

Then there’s the battle between Nguyen and Brown. Brown apparently inquired about entering into a more traditional affiliate relationship with Jao Poker, only to discover that Jao was charging affiliates some sort of licensing fee – either $100 or $50, depending on the type of program. Weird deal, if you ask me; I for one am never paying someone for the chance to work with them. Brown rightly states that under this type of arrangement, Jao Poker would be treating its affiliates as a direct revenue source, rather than as a referral source for third-party players. Jao Poker would have to be pretty damn special for this to be worth it, and there’s no evidence of such special-ness.

Nguyen went to social media about his aborted relationship with Brown as well, with similar bombast. It really doesn’t matter whether one takes Brown’s or Nguyen’s side; it’s just a bad look for Jao Poker.

But let’s get away from that Brown-Nguyen feud, because there’s a larger story amid all this shit-flinging. One thing Brown wrote about in a rewrite of his initial ProfessionalRakeback story was that Jao was at first accepting payments via PayPal and then – at least according to reports offered to this writer, who is not a Jao customer – was using third-party processors and dummy online businesses to processm credit-card payments.

Any or all of this is a big no-no to any US-facing room, and there are indications that Jao is moving to Bitcoin and similar online currencies as a payment medium. That’s still not nearly enough. There are so many other problems here that anyone should think twice about participating at Jao.

First, did you know that every player at Jao can legally be considered an “owner” of the company? That’s part of how multi-level marketing works. So, if someone at the DOJ did decide to take interest in Jao, they could go after every single Jao player.

Second, Jao and Nguyen are openly promoting sports-betting opportunities, posting lines and so on. Yeah, that’ll bring even more official attention at both the federal and state levels.

Third, Nguyen and whoever else is behind Jao appear to have learned nothing from Bryan Micon and the SealsWithClubs experience. Nguyen isn’t even pretending to be outside the US. Given all this other stuff, it’s only a matter of time. SWC’s legal problems began with a Belgian player making a complaint to Nevada authorities. Sound familiar? Self-described “bad boy” Nguyen’s favored method of dealing with controversy by lighting up his enemies of social media equals big trouble, sooner rather than later.

All the successful “grey market” US-facing online poker rooms are owned and operated from outside the US, for very obvious legal reasons. Running one from inside the US is not going to work.

Nguyen appears to have plenty of personal drive and motivation, and that’s a big plus. How it’s being used, though, spells future troubles for Jao, and rather sooner than later, though “later” appears inevitable in this instance.

So I’ll be steering clear of this one, US-facing or not. Frankly, it’s just not worth the potential trouble.

(Author’s note: The opinions offered here do not necessarily reflect the opinions of Flushdraw or its owners.)