If that's the case, cant PS just reduce rake on the lower games and increase at the higher games. That should keep PS profits basically the same, keep the rake more dependent to the buy ins and keep all games beatable.

On other sites there are no high limit games so even if the nose bleeds don't like the increase, they really have no choice? Also I don't think those playing 1000 plus can really say much to an increase imo anyway. Seems very feasible according to Do it Right's graph.

DiR: Excellent post!

I believe that you've had the opportunity to go to the IOM but declined. Everybody who gives a damn about the current state of things with online poker in this community really really really want you to go, myself included.

I would suggest that you fine tune all your arguments into an even more compelling presentation. Stars will hear you out. I honestly believe that if somebody can show them that there is a better way to do things that they will try it. Like you said, the poker ecosystem is nowhere near simple and I'm sure that Stars will admit that they too do not understand it fully.

From now on whenever I see you post in one of these threads I'm going to bug you about going to the IOM. Sorry in advance if that becomes a pain, but I care about what's going on and over the last 5 months I've come to realize that you are the best candidate 2p2 has got. I know you think that its a waste of time and seem to have refused going in the past out of protest, but I'm sure that you could accomplish more there than you can here.

Oh and djle2:
I think I speak for most when I say its probably a bad idea to encourage Stars with this line of thinking since most players don't really have much of a choice atm.

+1

Great post DiR

Lee is busy with archery and playing football
http://pokerstars.api.pstv.videojuic...ons/15594.html

I think the rake is to high, too, but I don't think this example works. If he plays in a homegame and is a 10bb/100 winner and now he starts playing online and is a looser, it doesn't necessarily mean it is because of the rake. The conditions between his homegame and the onlinegame have to be the same to make the example workable.

But let's say that his homegame and the onlinegame play out the same. After a few deposits he realizes that he can't beat the game anymore and decides to quit. Now we have 2 interesting questions:

1.) Why are other people still playing if they should have figuered out that they can't beat the game?

2.) Is stars (or any other company) really interested in keeping the potential winning player in the system [like you said: once he realizes he can't win he will quit!]?

---------

1.) People who keep depositing just don't care. They play, because they enjoy poker. They are paying for a hobby and they all have different reasons for playing. But let's continue: One guy deposits let's say 200$. Most of the time he is just 1-2 tabling so he is playing like 60-120 hands/hr. Even so he pays 20bb/100 in rake and maybe he is loosing 20bb/100, the 40bb/100 are at plo25 just 6,25-12,50$/hr. With a 200$ deposit he can still enjoy playing for at least ~16hrs/month on average.

Of course I have no correct numbers on how many hours the average recreational player plays per month at these stakes/overall, but I feel like 16hrs/month is a lot.

2.) No, they aren't. Poker has their "stars" already, the guys who deposited 50$ and moved up through stakes and are now playing a 25/50$ game all the time. Pokerstars doesn't need to have "new" faces or to create new ones. Some players still will be able to move up in stakes and reach the top, so the need to create them by lowering the rake isn't important.

The other reason should be obv: Stars doesn't want a new player to take out money out of the system.

If he quits anyway once he realizes that he can't beat the game, then there is no real need for stars to kepp him in the system. If he wins he takes money out of the system and if he looses he will never come back. That's the type of customer no one is really interested in.

Of course everything is pretty much simplified, but I guess the general points should be made.

------------

I have a question regarding the impact of a rake change:
I think that a lot of people believe that the impact of the rake change would be the same for every player, but I don't really think that this is the case. With the new method every player should be paying a different amount of rake. Obv the recreational player should pay most rake while the regulars should be paying close to the same amount. If we now lower the rake, does it mean that the reg and the rec will save let's say 5bb/100 in rake? And taking it one step further: The money saved in rake: Does it really add up towards the winrate?

I don't have exact numbers, but I would feel the winrate should be more like this:


red = atm
orange = what people would expect after a change
green = what I would expect to happen after a change

Sorry if this has already been discussed and I missed it. Could be possible that I have a mistake in my logic here, not really sure.

mtt rake is not even close to being to high. It is about the only game on pokerstars with a fair rake IMO

You're wrong sir. in DIR's example, if somebody is losing at a rate of -10bb/100 at micro PLO then he does have an edge of 10bb/100 over the player pool since he is paying 20bb/100 in rake. If this were the case then his actual winrate at a typical home game would probably be more in the ball park of like 50bb/100. At least the homegames I have played in

A lot of people will just continue to gamble and continue to lose.

I can't speak for all, but from my personal dealings at home games with people who have tried playing online, a huge percentage of them are under the impression that the games are rigged.

Obviously most of these players just suck at poker, and probably don't realize the skill equivalent to $1/$2 in a casino is probably like .05/.10 online, so they make the huge mistake of playing a game where they feel they can afford the swings at something like .25/.50 only to get destroyed.

If they feel the game is rigged then they end up staying away from it ldo. If the rake at 25NL was say 5bb/100 instead of like 8bb/100 then I think you would find that a -3bb/100 player would now be a break even player. He'll probably still end up going broke eventually because of poor brm and not using his FPP's efficiently to keep him a float but he'll last a lot longer, have a better overall experience and will probably redeposit in the future as opposed to getting raped in 2k hands or less and forgetting about online poker forever.


Stars should be concerned with this and I sure they do want to retain players, they just tend to go about it in ways that only make sense to them and not to the players. More winners are good for the site because those players will brag to their friends. When I first deposited on Stars i read some 2p2 and completely destroyed 2nl and 5nl and bragged to all my friends and told them they should do it too. From that original experience I also became a long time customer of Stars as well. If I were to start out as a complete noob today I would probably only ever deposit one time, get raped and be done with online poker forever.

I think you seriously undervalue the importance of the recreational player having a positive experience with online poker. Sure there are guys who keep depositing. A lot of them are just degens. There are a lot more people that try it once and give up because while they aren't smart poker players, they aren't ******s when it comes to their money. The more players that have negative experiences the more potential new players will be turned off because of this neat idea called word of mouth.

Conversely, the more players that can win at poker even though they are relatively new to the game, the better because those people will have good things to say about the site that they play on.

I think that Stars tends to overlook a lot of these intangibles and undervalues the power of keeping recreational players in the game longer.

In his example, DiR was saying he was beating the online games for 10bb/100 prerake, and thus a 10bb/100 loser after rake.

Even though im planning on chasing it if it's around next year, i think getting rid of SNE and either having higher effective rb for lower volume players, or reducing rake at the micros, is the way to go. Hopefully without such a top heavy rewards system we wont have the games ruined by masstabling BE players.

Hi Lee Jones. What is your thoughts about situation at CAP50(10$BI)/100(20$BI) games and these game future?

http://forumserver.twoplustwo.com/54...-rake-1200688/

You realize the rake is like this because they take 5% up to $3?
If you want to see it 100% fair they could take 5% up to a maximum of 3 big blinds.

At 2nl the max rake would be .06, and at 10/20 they would take $60 max rake.

I wouldn't be opposed at all, it would result in a major rake reduction at 50nl and lower, 100nl would remain the same, and 200nl+ would see an increase.

Is there a reason why 10/20 players only lose $3 on a 4K pot and .5/1 players lose $3 on a $200 pot? If change is needed they need to get rid of this $3 rake cap and change the cap to big blinds.

I agree that caps should be expressed in terms of bb but I don't agree with raising caps at high stakes by like 2000%. Edges are already pretty low there are they not? I believe they did already raise caps at higher stakes a bit if I'm not mistaken.

Here's the current numbers for USD NL games from Stars website:



I think that nose bleeds can obviously afford to get an increase as it should really not make much difference in winrates but at the same time it shouldn't really increase Stars' revenue much. I'm not playing those games though so I would rather leave that to the HS community to fight about.

I think that its weird that the cap at 5NL is 20bb yet the cap at 2NL is 15bb. 5NL should probably get the cap lowered significantly. I don't see any reason for any stake to have a cap over 10bb.

It would be nice to see the cap at 50NL brought down to 4bb, and 25NL brought down to 6bb and 10NL brought down to 8bb and 5NL should get a drastic cut down to a whopping 10bb cut. 2nl is probably completely fine where it is.

I know it's not likely to happen but it would be great if Stars could chime in and tell us that they're considering bringing down the caps a bit. I didn't mention anything above 50NL since I have very little experience there. The caps don't look too bad at first glance, especially for 200NL where its like 1.4bb but its all relative to how tough the games are ofc.

Stars are making as much as they can as quickly as they can whilst they can. They know full well that the money is drying up, probably more than anyone. They simply aren't interested by the fact that they could cush online poker within x amount of years. Asking them to prolong if for a similar profit is just not going to happen.

The only way stars will alter anything is if they see a way that online poker will boom again and then will change things leading up to this so that it has a decent market position. They aren't bothered with poker, they are a business. None of the regs will actually leave stars because that would mean either going to a ****tier website or getting a real job.

Sadly that is just the way it is. They show and tell us what they want to but underneath it all they know exactly what they are doing and where they are going. Just grind and deal with it because it will never change. A supermarket won't lower the cost of its car park unless they will actually lose money because of it. In the same way stars won't lower rake because they know, through millions and millions of hand data and lots of smart business guys, that they won't lose any money keeping it this way.

Do you think that an oil company are gonna cap how much oil they sell in a year because it is running out? Absolutely not.

If stars change anything it will not be because players have asked for it or proven something. It will be because they will make more money doing it a different way. Pure and simple

and iirc this is gross rake paid rather than net.
but it's pretty shame NL50 was left out.

Nice thread hijack guys...Lee any plans for more WSOP qualifiers? A once per week $700 passport qualifier doesn't cut it. If the main event is still important enough for Stars to sign every winner then you should be offering satellites daily to it. Don't forget where you came from.

fyp

Do it Right,
I was going to reply by PM but haven’t had the time. Since this is posted already I will reply here.
You are very mistaken about how price elasticity applies to the online poker industry. You are looking at things as though they are only determined from the consumer end, but this is not true. In your example concerning drugs – prices are not solely determined by demand and need but also by what the product is actually worth. Everyone can’t just start selling dime bags of weed for 20$ a pop because that is too large a profit margin and that allows people to undercut that price and still make huge profits.

The same concept applies here. I am very confident in estimating that Stars profits 10-15c on a dollar raked. They are not just raking whatever they want; they are raking what they are raking to profit given the industry. If it was overly too much, there would be sites that rake less that would get all their customers.

With regards to your point about Party getting an increase in real money deposits – the number of new players making real money deposits doesn’t really matter, what makes the difference is an increase in total $ deposited. These are correlated but the second thing is what you are actually looking for, and there is no data on that. If a bunch of players deposit 25$ it really doesn’t do much.

I agree with your point about PLO rake being extremely high. However, let me point out that the reason it is so high is because possible edges in PLO are much higher. It’s still very possible to post a long term winrate even given that rake, and that is why the game is raked so high. Stars can’t really run games which are raked so high that everyone is a loser in them.

Hood already covered this.

The idea that Stars rapes regular high volume players while rewarding casual players is just wrong. It is the exact opposite – look at how the VIP program is structured. Regular, high volume players get about 2x the rakeback that casual, low volume players get.

I don’t really understand what you mean about the player base becoming polarized. Are you implying by this that there is a peak centred around something like 1bb/100 for cash games (created by the regs) and another peak at something like -10 to -20bb/100 created by the fish? There isn’t really any other way it could work. If you want the mean (the negative winrate created by the rake) to be the peak around which a normal distribution is formed, that is just never going to happen, because it implies a lot of regs grinding out large volume at -4bb/100. Nobody actually does this.

This is pretty pointless rhetoric, because really what you mean by "new" player is "losing" player. Yes, if you have a negative winrate you most likely are not going to be around very long. There is no way around this. You want both a) the games to be profitable and b) new players to the game to be able to win. These two things contradict each other.

I just got an email from PS Steve with regards to some changes some sooner and some possibly later as a result of the March 2012 player meetings which I attended. I think that my Nda would still apply some I'm not going to paste the email here, but I will say that it looks like there might be some good things coming in June. Wish I could elaborate more but Nda's gonna Nda.

Obviously Steve or Lee will post something soon though.

DoubleD, unfortunately your post has quite a large number of inaccuracies, much like when you claimed earlier that I support raising higher stakes rake. I'm not going to pick apart your post line by line (though we can by PM if you like since then at least I know it's because you actually believe what you write and are not just trying to hijack the thread for some reason) but I will point out one thing, since it's critical. You are vastly underestimating Star's profit margins when you claim: "I am very confident in estimating that Stars profits 10-15c on a dollar raked."

You can read Party's financials here: http://www.bwinparty.com/Investors/F...F405DA41F.ashx

A much larger percent of Party's business, compared to Stars, is located in heavily taxed regional locations such as Italy and France. They are also a much smaller company meaning baseline generally non-scalar costs such as technology maintenance, servers, etc cost relatively vastly more for them than they do for a larger site, like Stars. They also give much more back to players than Stars. In 2010 they gave an average effective rakeback of 25.5%. They have a similar VIP club to Stars (in fact it is more valuable at the top end) but the majority of those rewards came from Party's constant bonus offers and high value promotions as is evidenced from the fact that in 2011 when they also became somewhat more anti-reg through swapping to weighted contributed, killing off rake races, etc they still gave away 21.14%. Stars on the other hand runs few to no promotions of value for all players, and offers bonuses and similar promotions about once a millenia.

In spite of all of this Party managed a profit of 13.6% last year, down from 15.4% the year before. Stars profit is absolutely going to vastly surpass that by a very healthy amount. Forbes estimasted Stars' pre-Black Friday profits as ~$500million on ~$1.4billion revenue or 35.7%. While their revenue has undoubtedly decreased substantially since then - they've also become a much greedier company since then. They offer fewer promotions than ever and regulars, on average, earn much less back per penny raked due to weighted contributed. They've even gone so far as to cancel the guarantees on tournaments if they felt there was a real chance of an overlay. These are all things that would stand to increase their profit margin.

Also, Hood's 'point' was incorrect and just plain strange. I assumed he was just tired when he wrote it which is why I did not respond. He generally tends to bring up some good points points, but that wasn't one of them. He claimed: "With 10% profit margin, if you reduce your revenue (rake) more than 10% you will make a loss." In the context of his post he clearly was implying that the company would go into the red when he says "make a loss". Do you actually agree with that? Spoiler below if you do, since this is again getting way off topic:

I can't see how we are debating this. My whole post i talked about how some costs are fixed and some are variable, and then you just say i "Hood stated it was a 1:1 relationship", so you clearly didn't read anything i wrote.

The idea that you reduce rake 10% but maintain the same profit margins is just bizarre. Yes some costs would go down (specifically the two i can think of are operator tax and player rewards) but most would not, at least short-term - marketing, operational costs, staffing, operator licenses, rental, utilities... these are all the same tomorrow whether you cut rake 10% or not.

Sure we can speculate on how many costs are directly variable to the rake but your default assumption that a 10% reduction in rake correlates to a 10% reduction in costs is just way left-field. The same number of hands are being dealt, the same transactions are being performed, the same support and infrastructure is required.

I maintain that if you "cut rake by 50%" you wouldn't "cut profit by 50%" but any poker business would in fact by loss-making. I don't think this is too controversial.

edit: I also just saw you took a quote I wrote ("With 10% profit margin, if you reduce your revenue (rake) more than 10% you will make a loss.") and purposefully removed the end of the sentence that finished "... assuming costs are independent of these rake cuts" at which point i went on to state how some costs are not. Come on that's just purposefully rephrasing what I wrote one page back so you can attack a strawman.

Look, I'm see i'm getting dragged in to another do-it-rightathon and i'm already regretting it I said before that I think you raise some good points. But like here and in the past i see you writing stuff that you know isn't true so you can push your agenda. You don't need to do this! You have a strong argument and you don't need to add in additional fallacy because you already have support of this forum. You know that if you cut rake by 10%, costs aren't going to reduce 10%: You know this because you're a smart guy and this is basic business stuff. Like before when you claimed that the "industry was moving towards Essense-style rake" when you know this just isn't the case.

You also know that "they've also become a much greedier company since then" is just not true. You know that WC wasn't a money grab. You know all this. You don't need to spread this FUD because you're not a troll. You have a very legitimate point and you have the ear of 2p2. But you are watering down your argument when you repeat fallacies like this.

heh you make the same mistake you told him he's making above this quote where you talked about the drug example.

A site could come up tomorrow with half the rake that pokerstars has and it won't "get all their customers". Choosing a poker site or other is not only about how high the rake is. You need decent software, and proper advertising. That is not to say that no-one but stars has that because no-one else can afford it. It's just that IPoker sites just really don't like improving their software.


of course it's ****ing controversial. you throw some numbers out there with absolutely nothing backing them up and then you say "I don't think this is too controversial."?

LOL what kind of discussion is this? And why are you talking about 50% FFS? Has everyone ITT suggested a 50% rake reduction ACROSS THE BOARD? As I've already stated, no-one has been complaining about MTT rake, so 1/3 of rake could essentially stay the same, and rake at 3/6+ NL seems fine, and as you go down the limits, you wouldn't be cutting rake at a fixed percentage, it wouldn't be 33% (or whatever %) less rake across the board at 0.01$/0.02$ - 2$/4$ stakes, there would be some sort of linear decrease



GTFO, you really believe this?

Hood why are you assuming their costs are so high? They make income passively... if all their staff took a day off leaving the servers running they'd rake about the same as normal. If their outgoings were 90% of revenue that would leave them hugely vulnerable to any future Black Friday-esque events or even just a change in legislation in one of their larger markets. That's hard to believe.

While you're here Hood, you were fairly positive about the future of LHE after the meeting you went to yet nothing positive has happened. It wasn't even a topic at the latest meeting. Thoughts?

Since you have written some well thought out things earlier in the thread, I can't help but feeling (very) cautiously optimistic. But I'm getting to the point where I am jaded enough by Pokerstars announcements that I think it'll be wiser to maintain my usual stance of 'please please don't screw things up further'

I mean i wouldn't say i was fairly positive about the future of LHE after the meeting, but i was fairly positive that PS understood that it needed specific attention.

Since then we had the HU FL challenge and that's about it, I hope they do more for fixed limit.

I will say I haven't played much poker at all this year (like 20k hands tops). kind of gearing down for Spain next month, so i don't really know if games are still 'dying' on PS or if things have stabilized.

I was very surprised to learn that LHE was not mentioned at the last (2?) meetings. I specifically made sure not to be involved at all in the selection process or discussions other than 1 or 2 posts so I can't really comment on the why's. I've tried a couple of times to 'rally the troops' since January in a couple of LHE threads but they mostly died.

To hopefully put the whole "reduce rake by x% reduce profit by x%" thing to bed I'm going to write a bit of a long post and even include nauseating citations for clarity. I'm planning this to be the last post on this because i can't afford to get dragged into another long back and forth!

I will say upfront that DiR has a lot of good points, I've always maintained that. I think a good case can be made for large (but sensible) rake reductions for long-term benefit to all. But I think these need to be grounded in facts and not fallacy, and there's enough self-evidence fallacy that a lot of it feels like trolling and not progressive at all towards a common consensus or proposal.

Jah Onion: The reason I'm talking about 50% is just DiRs example. The number doesn't actually matter, it's the premise of "cutting rake reduces profit by the same proportion" when in fact it is "cutting revenue" and the difference is huge. I agree with you, a proposal should include targeted rake reductions,. DiR's principal argument is "the rake is too damn high" and argues for net rake reductions (whether targeting in just cash, or just certain games is irrelevant): the underlying argument DIR has is that the rake in poker must go down. This is what is being discussed.

---

One good example of the effects of revenue reduction can be taken from France.

France taxes operators 35-40% of gross rake[1] (this is also termed gross gaming revenue. Gross is the amount prior to rakeback. Net rake would be the amount after paying out rewards).

From the perspective of PokerStars, this is effectively a reduction in the rake they collect.[2] For every $1 in money raked from the pot, instead of paying out some in rewards and collecting the rest, they first pay ~35c-40c to ARJEL and with the remaining 65c, pay rewards then collect the rest in revenue.

In effect, in terms of PS generating revenue, it is the same in reducing rake 35% [3]

To partly counter-act this, PS in 2011 had higher rake on dot.FR and lower rewards compared to dot.COM. I don't know by how much, and it's not easy to calculate. I'm pretty sure they collected at least 5% more, quite possibly more: Instead of $1 in rake lets say they would take $1.05 or $1.10. Then they pay ARJEL 35c, pay out (reduced) rewards, and take the rest in net revenue.

So here we have simulated say something like a ~25-30% reduction in rake in terms of revenue PS collect.

In 2011, PokerStars lost an average of €1m a month operating in France[4]. This is not reduce their profits by 1m but revenue went down so much that they operated at a loss. They since raised rake and reduced rewards in 2012 further to attempt to counterbalance this.

How can this be? It's just simply the fixed costs of doing business. Marketing/customer acquisition (huge i would guess), CS, software dev, infrastructure - this doesn't change because rake goes down. This isn't that surprising - the bwin.party data posted above by DiR shows a 13% profit margin; DIR argues that PS "absolutely going to vastly surpass" this. The public numbers, nor the number seen by many people who went to the IOM to see their financials, confirm what DIR believes.

A lot of public information is out there to look in to this issue they you can closely verify this yourself. ARJEL published aggregate gaming data [5] and coupled with PokerScout you can make good inferences on this information to the dot.COM. ARJEL's counterpart in Italy, AMMS, actually is nice enough to published information broken down by each site.[6]

So even those who refuse an invitation to the IOM to discuss their financials have enough information to verify this by themselves. In France, the gross PS revenue (i.e. rake) was effective cut by something in the region of 30%. This resulted in the company making a loss in France in the year of 2011.


[1] France actually takes 2% on all wagers made (http://online.casinocity.com/jurisdictions/france/) i.e. on the pots itself - even if the pot is unraked. This is effectively 35-40% on GGR, although a citation for this is hard because I can't link to myself. PokerStrategy printed http://www.pokerstrategy.com/news/wo...verview_54765/ where they put 34% of "net rake" which is wrong, it should be 34% of gross rake. I know this because I cited this in an article as net rake and was corrected by a primary source. It an average of both cash and tournaments, so in terms of GGR this figure is not fixed.

[2] I do not dispute that the money going back in to the system and not to France's coffers is good for the long-term game; here we are discussing the immediate effect to the bottom line of a poker site.

[3] According to http://online.casinocity.com/jurisdictions/isle-of-man/, the cost in the IOM is 0%. I thought it was more like 2%. In places like Malta, it is 0.5% up to 0.5m. Either way, it's small enough to ignore.

[4] This was discussed during the meetings with French players when PS argued they needed to increase rake. I believe it was made public on clubpoker.net forums http://www.clubpoker.net/forum-poker...-negociations/ in this long therad. I have ensured this figure can be made public.

[5] http://www.arjel.fr/-Communiques-de-presse-.html is where they announce new data.

[6] http://www.aams.gov.it/sites/aams200...30_04_2012.pdf

I, too, got the impression that you were positive about the overall situation and future because Pokerstars seemingly had specific plans for LHE.

I don't know what happened then, but somewhere along the way things went from 'we're aware that there is a problem, but we have exciting upcoming stuff and love and care about LHE' to Lee Jones saying "It's very difficult for us to resuscitate a game that is having difficulty surviving." and "we may do some promotions."

Since then, as you said, the only thing that's happened is DN playing a few hands and afterwards saying something along the lines of 'Well, I'm not ever doing that again'

Yeah I think we agree. It sucks.