http://www.forbes.com/2010/02/10/int...okerstars.html

This article's a little bit older but I never saw it mentioned here and it has some really interesting bits.

Like those figures. Their revenue is much larger than I expected. Either way its absolutely mind boggling how much these sites are taking out of the games in rake. $1.4 billion. To put that into context of poker, that's 14 MILLION full $100NL buyins raked per year. On a day to day basis that is nearly 40,000 full $100NL buyins raked every single day. Is it any wonder the games are in the shape they are today.

I don't think enough people actually realize how much they pay in rake per hundreds hands. See http://forumserver.twoplustwo.com/28...ay-ptr-867882/ for a site by site breakdown; Stars is actually one of the effectively 'cheapest' sites for certain reasons. Right now there's probably not a whole heck of alot we can do about the insane rake since Stars and FTP have an effective monopoly for US players but consumer awareness is always the first step.

games were nice last year until PTR became better known imo

but yeah it would be nice to have cheaper rake

If only you could use the play money tables then settle up on the side. If only.

Am I the only one who is on the sites side? Yes those numbers might seem huge, but pokerstars for example as you can tell by those numbers has huge running costs. Not to mention all the advertising they do trying to get fresh players into the game. Fresh players that will put alot of money into the poker community.

If you don't like the price fulltilt and stars charge in rake, don't play there. I'm pretty sure there have been sites that charge alot less rake, but they went bust.

lol da33le.

those commercials do like 0 to bring new ppl in.

new bonuses, and easier to clear bonuses, would bring more people in.

also not charging $2-$10NL rake helps too.

Disagree, the players you want in your games are the ones brought in by the commercials.

You should tell those guys who have been making commercials for the last 70 years, they seem to be under the impression commercials attract customers. Weirdos.

try again brah

Stars isn't spending anywhere near the figures people are implying on advertising. I think people get desensitized to these numbers once they start becoming sufficiently large.

Take a company like Coke. They are one of if not the single most advertised brands in the world. They run multiple $3million a shot 30 second spots during the superbowl alone. And its not just the US. They have just as much advertising pretty much everywhere in the world. They sponsor/advertise countless organizations and activities around the world. If you see a movie pretty much anywhere in the world, you can be guaranteed you're going to see a Coke spot or three. They are arguably the king of advertising.

So how much do they spend in annual advertising? About $2billion.

Compare Coke to PokerStars.

Stars rake $4mil/day and spend $1mil/day on advertising.

would rather see them spend more money on advertising than reducing the rake

lol qft

so stars could cut the rake by 50% and still profit 250 million a year??????


also lol at 500 million a year in profit and chat moderators working for free lmao

Not quite. It's a bit more complex. It depends on what percentage of their expenses are scaling and which are static. What I mean by this is they show:

revenue = 1.4billion
expense = 0.9billion
===============
profit = 0.5billion

One expense will be employee salaries for instance. If they cut the rake in 50%, they still owe their employees the same as they did before cutting the rake. However, a large chunk of their expenses are scalable expenses. For instance 'rakeback'. If they drop the rake 50% then they cut 50% off their expenditures in rakeback so it is perfectly scalable. What matters is exactly how much of their expenses are scalable and how much are static. Going off the Party Poker charts, its reasonable expect the vast majority of their expenses are scalable. So while if you cut the rake by 50% they may not be making 250million, they very well could still be making 200million per year. Either way a huge amount of profit for offering a relatively simple service.

they'd lose money?

This was interesting to me ...

Much of the Internet's multibillion-dollar gambling industry is squeezed between a gas station and a Persian restaurant in a Toronto suburb.

Head up to the third floor of the building, past the credit union branch, the personal injury lawyer and a real estate agent's office. That's where you'll find PYR Software, which holds itself out as a software development company that helps “customers worldwide to retain industry leadership.”

I'm ok with it, pros have been able to beat the live poker scene, cash game and tournaments for years, with a higher rake, dealer tips and tournament fees.

If you play well enough, you should be able to beat the games on pokerstars at a decent clip while paying 5% in the cash game and 10% in tournaments.

1. Live poker does not have enormous rake. You can find rooms in Vegas with rake caps as low as $3. Tipping is optional. You also get free drinks and even food in some instance, a comfortable chair, a live dealer, etc for this $3 rake. What do you get for your $3 rake online? A server that spits out random numbers.

2. Why should we expect online poker to have the same rake as live poker? As mentioned before in live you get all the free drinks you want, take up space in their casino, a dealer, etc. Online you get nothing. Yet they charge comparable rake rates?

3. Live and online games are not really comparable. $200NL online is a much tougher game than $1000NL online. Online a 6bb/100 earn rate is considered exceptional. Live earn rates of 30bb/100 (about 10bb/hour) are not out of the ordinary. Paying 4-9bb/100 in rake is much tougher in games where the top players are earning 6bb/100 than when they're earning 30bb/100.



Also, I mean no disrespect but I noticed you play the nanostakes online. I think this puts you in a situation where you are probably not too familiar with these problems. It's like a guy who works at McDonald's saying he's perfectly cool with a 95% tax on capital gains. "Those guys have enough anyhow." While he's perfectly entitled to his opinion, his situation leaves him in a position where his opinion is not particularly founded on substance. Once you experience the problems of this system first hand your opinion may change.

I much prefer my rakeback in $ and not in 3 day old sausage rolls.

I'm not personally surprised at all by these gaudy numbers. This is why Stars ridiculous security issues are unacceptable. They rape the player pool and we should expect 5-star caliber service from them across the board based on the size of the business.

Vegas is the exception. Most live games across the globe charge way more than Vegas. Some places even charge 10% unlimited.


This is a valid point. I'm no economics expert but it would seem the market would bare a lower price for online rake but it hasn't. It seems like a scam tbh for the hands to be dealt so fast yet be raked pretty high. Also, shouldn't 6max rake be lower than fullring? (tangent)

Stars just does not see spending even a fraction of that 1.4 billion on security as cost effective. If they spend a few million more on security it might not improve their image that much and bots only increase the rake that stars generates. I think its way more EV+ for Stars to do nothing about security and then just pay out a few hundos to the cheated players.

It doesn't work like that, silly.

how is 1knl easier than 200nl? solid logic

Thanks for pointing that out. I think it was a fairly obvious typo given the context, but perhaps not. I was comparing $200NL online to $1000NL live. I am certain most people with any experience in both would agree that $200NL online is a substantially tougher game on average.

Interesting take you've got on these figures. I look at them and think how it puts the lie to everyone who says the sites could rake a small fraction of what they do and still make money.

Did you even give this a moment's thought before posting it? Hopefully you were joking.

I'm trying to think of a single significant expense, other than rewards, that would be scalable to the amount raked. Lots of things are scalable to the number of players or number of hands dealt, but I don't think there's much else that would cost them less if they dealt the same number of hands, but raked less. Income tax, I guess, since they'd probably be losing money. But things like employee salaries, advertising, banking fees, computer hardware, and bandwidth expenses aren't going to change one iota if they were to rake half. As a matter of fact, I could even see some of them increasing - less rake means more winning players, which results in more banking fees and even more employees, hardware, etc, as more players continue playing. If you flip it around and say that means they save money by charging more rake and making more players lose, it becomes rather disturbing, but there's some truth to it. I don't think that's exactly the intent, but it's the result.

I think I'd be generous in saying the average reward across the board is 20%, considering how many casual players will be getting 0-10%, but I'll go with that for these calculations:

Now (In Billions)

$1.4 Revenue
$0.9 Expenses
$0.5 Profit

With Half the Rake (In Billions)

$0.7 Revenue
$0.76 Expenses
$0.06 Loss

I'm taking $1.4 in rake * 0.2 = $0.28 in rewards, which leaves $0.62 in non-scalable expenses. $0.62 + $0.14 (half of $0.28) = $0.76.

Now I have no idea if the Forbes figures are accurate, but if they are, I don't see Stars being very profitable at half the rake. Certainly nowhere near $200 million.