I agree with others that it generates rake. However, I think it also is set to reward stupid play. If you have a site where a few sharks eat all the fish. The fish would not come back. I think it sets up players to lose and win at a fairly consistent level. That way it keeps both the sharks and fish paying to play. Nobody ever cashes out.
I think it slows down the rate at which good players bust out the bad ones. Despite this, I think the games are beatable, its just slower and harder than it should be. It's still worth playiing at these sites, which is why I'm here.
Your hole cards are the least important factor in Texas hold'em.
-MovingFlea