WSEX, the site that promoted itself almost entirely on the fact that it was rake free (well, technically, 100% rakeback [what is rakeback?]), is now only returning 75% to players. While that might still sound good it does draw attention to the fact that the rake free structure isn’t enough to draw in players. WSEX currently ranks 19th out of 20 sites monitored by PokerSiteScout with 194 cash game players at peak time (down from 440 at the beginning of the year). Oh, and WSEX is still available to US players so the dropoff has nothing to do with being forced out of any markets.
I’m not 100% convinced that a rake free site can’t exist but I am absolutely sure that no site can exist (for long) without player liquidity. Most of the people promoting the rake free business model are under the mistaken impression that fish care about rake. Most fish don’t even know what rake is. If you can’t attract the fish you’ll never attract the sharks regardless of whether you charge rake or not. Any plan for a rake free site needs to address the fact that they need a huge marketing spend to attract the fish.