No idea, I don't have an educated opinion on this.

I'm not arguing how much rake Stars should charge, I'm arguing that the reason games are bad is likely in large part that rake is high relative to winrates. I'm also arguing that some of Stars' justifications for current rake levels don't seem compelling. Stars can of course say rake is high because they want to maximize their short, (and potentially medium and longterm) profit. I might not like that as a professional poker player, but that's not necessarily Stars' problem.

Most of the money that a site rakes goes towards promotions (including rakeback) - this is going to be 25-40% for most sites. Then a large chunk goes towards acquiring new players.

By reducing rake you have to reduce promotions or reduce acquisitions. I don't think many sites make actual profit from poker any more except for PS.

If we try to acquire players by spending less, we get outspent by our rivals and we lose market share. If we try to reduce promotional costs our players leave and we lose market share. If we reduce rake we attract only pros, who kill our existing players even faster, and we lose market share.

I don't think that sites can compete by reducing rake because the people that sites want to attract don't know about rake and so don't care about it.

But I do think it's OK to reduce rake in the lowest games for purely ecological reasons. You want those games to be as soft as possible because it keeps new players alive for longer, and those are your future midstakes players. Also it's not a big deal to rake €500 per day instead of €1k per day at NL4.

I don't think competition can do this because the price of poker is obscure. You can only compete on price if everyone knows the price.

Acquisition and promotions. How often do you see €100k promos in WoW?

There've been subscription sites in the past, and they never last because they can't acquire new players. If the original model was subscription then someone just has to invent rake, which is an obscure fee, and they'll acquire all the new players for themselves.

I don't think anyone is making much money from poker except for PS right now. Economies if scale matter a lot in this industry, and they have them to a much greater extent than anyone else.

D,

Though I didn't explicitly say effective rake in my analysis, I did basically the same thing by noting the low winrates versus high rake in PokerStars zoom pools.

I think effective rake is a useful concept, but I don't like it because it adds another layer of jargon to the conversation and effective rake is kind of a slippery concept. For example, the effective rake changes over time due to game conditions, while the rake is fixed by the poker site. The effective rake is also different from player to player, while the rake is the same for each player. So I prefer to just say that rake is high and winrates are low at PokerStats, rather than bundling the two concepts together as high effective rake.

D,

I think most people discussing rake on 2p2 have measured effective rake by datamining a sample of the 100 or so highest volume players at a given game/stake, and then looking at their mean winrate versus rake paid.

So, for example, winrates in PLO zoom games at 50PL on PokerStars lag far behind their 50nl Zoom counterparts due to a high rake in bb/100 as well as roughly equal pre-rake winrates. Check out Skjervoy's posts for this stuff, he links to these analyses constantly and they're very well done.

This is my point. A rake free 2+2 site would cater for HU grudge matches and a small period of play from pros until the pecking order is established.

Then it would revert to everyone sitting out again until the fish arrives and unless 2+2 spends a lot of money advertising the fish may never arrive.

IMO a company would need to already be established or hold a lot of casino / sports-book clients before this would be viable. And even then they wouldn't be making much money from poker so it's probably not in their interests to even start it up.

The problem with this chain of thought is that the games used to be very beatable, so beatable in fact that pros started multi tabling and playing stakes as low as NL10 (maybe lower?) in order to make a living. If you reduce the rake again you're just going to have more pros playing those stakes and the win rates will go back down in time and the effective rake will go back up. Those type of games were not designed for players to make a living from.

I'd agree. Most sites make money from their casino and sports-book. Of course if you also offer poker then there is no need for the player to open an account with a rival and potentially lose his casino or sports betting to them too. Once Pokerstars open a sports-book in the UK they may get me to play a few more tourneys as I will likely be using that service and will hopefully have more money in my account!

Mass tabling is not a new concept brought about due to the decline in game quality. Players mass tabled during the golden years as well when win rates were incredibly high.

If Pokerstars reduced the rake tomorrow are you suggesting a 20 table player will reduce his tables to 18 or whatever? No, the player will continue to play his max amount of tables but just make more money.

Also I would argue lowering the rake at a stake will only encourage more pros to play it. Lowering the rake will not encourage more recreational players to play a stake.

Would you rather the table rake was 5bb/100 lower or the table had an extra recreational player on it? I think you're looking for the wrong sort of change to boost online poker.

What do you think the rake level should be, other than just saying lower?

Why won't it be a problem in the future?

Also today's levels of mass tabling are also going up because of advances in technology which is making it much easier for players to multi-table.

I would also say the amount of mass tabling can and very likely will be effected by sites limiting the number of tables a player can play in the future. Unibet may already do this, I'm not sure?

Why would recreational players be more attracted to sites where their money is split marginally more in favour of the winning players than it was before? If the poker site offers the recs promotions/bonuses/etc from its share of the deposits made then that is more likely to keep the recreational player coming back. Giving a larger share to the pros to withdraw doesn't achieve anything for them or the site.

I think it is a huge reach to suggest a lower rake is going to change the landscape and create an entertaining environment! I mean it will boost the happiness of the winners but that's something different.

Lower rake will not get more recs in the pool as why would they care, if they even know about rake? It will attract more pros though.

If Pokerstars said there would be no rake on $.25/$.50 tables for tomorrow only do you think the tables would have more pros or recs on them than normal? The game quality would go down as the ratio of pros to recs would get worse. Of course with the abolition of rake there may be more winners or higher win rates, or lower win rates depending on the resultant player pool, but clearly a no cost poker site is not a feasible option.

[QUOTEWe want it to be on the freest market equilibrium possible, to which today we do not have.[/QUOTE]

If a poker site thought they could lower the rake, attract all the players and make a profit it would have happened by now. Clearly these businesses (and no new business) thinks this is feasible. They would need tens (hundreds?) of millions to begin with and even if they succeeded there would be nothing to stop someone else following suit. The vast sums required for potentially no end result means this will never happen.

The free market sets the costs for playing poker. If there was a real anomaly here a competitor would have came in and taken all the business, but that hasn't happened.

Instead we just have players complaining about the rake levels which have been the same for years.

If the rake is reduced do you think this will stop the skill gap being closed by players? The same problem will come up again a few months/years down the line and then what, say the sites need to reduce their rake again because the pros incomes are going down? I never understand why online pros think the sites should put their positions above its own?

Eg Spin & Gos. It's introduction was hated on this website (probably still is) but they are a huge moneymaking game for PS. They have also created several $1M winners (rec winners too) which are great for publicity and recruiting other new players, who may or may not play other games in addition to spin & gos.

your economic knowledge is far superior to mine but this isn't just an economic problem and online poker won't be saved by just lowering the rake. I apologise for being unable to debate some points with you.

But from "their" point of view "we" are ourselves a third party!

How or why would the free market choose to favour "our" freedom, at the cost of restricting "theirs"?

There is already a free market. If sites introduce table limits and players do not agree with them then there is a gap in the market for a new competitor. If the demand and profit is there this will be filled.

Recs losing a little less bb/100 than they currently do is not 'winning'.

If you want to advertise to pro players then yes players making a good living from poker is ideal. If you want to advertise to recs then I think that someone winning $1M in 5mins in a spin n go is better.

losing a little slower than right now is hardly going to increase happiness for recs

I think people are realising that making a living from poker at the small and micro stakes is now becoming impossible unless you live in a very cheap country. That's not to same the games are not beatable as they are, just not for what most people would regard as decent incomes. Players may become recs just playing for some extra income as opposed to for their main wage.

would it just be pros opening up an extra couple of tables or do you think recs would actually care?

the solutions being put forward seem to be reduce the rake and cut the poker sites profits. Do you think this would be appealing to the sites? It's hardly surprising nothing is happening when this is the sole option you are offering. If the poker sites are to take a hit should the pros not also take some sort of financial hit?

No government intervention led to UB, FTP, Lock and a whole load of other catastrophes. It is clear regulation is needed in this area which deals with large financial amounts. There is a free market in the UK and lots of other jurisdictions throughout the world. None of the great business minds in these areas seem to agree that setting up a site and cutting the industry standard rake is the plan to success.

I'm not sure how Pokerstars can control this or even plan for it. Some players (heads up bum hunters) will pay hardly any rake whilst other players will pay a very high effective rake. Maybe these numbers just need to be split up more equally.

sure, I'd love to ask SKY to reduce my monthly bill because they make millions and can afford it but that's not how companies work. If someone can offer a rival service for a lower fee then sky will have to reduce its charges. If there is a gap in the market for a poker site with lower rake charges it will be filled. The reluctance of any new competitor to enter with such a business plan suggests the idea is flawed.

Re rake see below.

If players are moving to them it would suggest they like a more casino type game over regular poker games. Skill and luck both play a part in poker, spin n gos just move the balance slightly more towards luck but skill still plays a part. There will be players who play these professionally and make good money I'm sure. How much they make will depend on how they run with prizes but for sure recs will play far from optimal in these.

Poker still exists and skill games will always exist. If pros are playing for the intellectual challenge then they don't need any recs at all but I suspect financial reward is more important to them than intellectual reward.

Here is your problem, there is an optimal strategy for poker and as players get better and better and poker resources get better players will play closer to optimal and edges will get very slim. You seem to suggest poker sites should have an ever decreasing rake, presumably to almost zero, so that pros can maintain win rates despite edges getting smaller. This is not a sustainable business plan and will not happen.

That's why I am saying changes to rake alone will not save online poker and alternative ideas are required.

See I'm not positive about this. There are tons of games that people play to compete. Games that aren't easy to solve and stay interesting. Look at most multiplayer games, people use them as a medium to compete. If you had no rake and some sort of leaderboard, I could see a big group of people being motivated by it.

Thread now looks weird as dipdappular's account is gone, but..

If that was all you did, I agree. But if you do lots of other things at the same time you can avoid the problem - no table selection, no huds, no trackers, promotions aimed at the lower end and not the top, table caps, etc.

In general though, I agree and it's a good reason why sites can't advertise on lower rake.

I think the fundamental problem is that existing players are too good relative to new players now. Our strategy is to at least make it a level playing field by cutting out huds and so forth.

I think it's only a matter of time before many casino/sportsbooks start dropping poker. They'll realise it isn't worth it for them any more and probably hasn't been for a few years.

Obscurantist pricing means the free market doesn't work very well - see banking charges, cable charges, phone deals, poker rake. What these all have in common is that it's very hard to compare fees between different operators. In the case of banking and cable it's because you can't compare like with like - all are somewhat different. In the case of poker it's because you don't really see the fee happening.

If rake wasn't taken immediately and players were given a bill at the end of each month then competition would start having an effect, but there's no way that a site would want to change to that model, it'd have to be externally imposed.

Right now there's only an implicit cap - the software is quite CPU intensive and there're no player tools allowed, so it's hard to play lots of tables.

Coincidentally, from today's release we're capping NL4 and NL10 to 8 tables apiece though (and I guess, relevant to the discussion in this thread, PLO25 rake is down to 3% from 5%, but it's for ecological reasons).

Is poker actually fun enough for that? I think most of the reason that poker works is psychological - you have to have something on the line, which is why playing much lower than normal is so hard. I don't think the mechanics of the game are interesting enough, but maybe that's just because I'm burnt out after a few million hands.

While these charts are very valuable they are not good way to measure effective rake. The problem is we are looking at the top players, far less then 1% in terms of volume. As such these should be also very much in the top from a skill perspective. As such their effective rake, or winrate vs rake will be much better than the average.

However what we can do is extrapolate and say: if the top players pay lets say 60% effective rake ( or win slightly less than what they pay in rake) than an average winner will have far worse ratios.

My guess is that the effective rake is 80% percent on average in cash games, mostly because 95+% of players play with less than $100.

In other words every $1 that is lost yields $.8 rake and $.2 in winnings.

There is a harvard study that shows that only 10% of poker players win on a very tiny party sample. I have run the data myself and the effective rake there was 500K wins vs 2.5M losses (ca. 80% rake).

http://www.wsj.com/articles/SB100014...23383535635644

The only way to know the effective rake (or true win rates) is by looking at data comprehensively. That data is only available to sites. The above is the only set of data i know that tries to be comprehensive. However it is very small rdm subset of the overall data and does not check out entirely.

However i have studied the effective rake from various angles and i am pretty certain that 80% makes a lot of sense.

Like sauce explains, this disrupts the flow of the poker pyramid and even affects his stake.

As a result the economy is unsustainable and in my opinion online poker is fundamantally something different than poker in its natural form. It is not a skill game anymore in the sense that if you are smarter than 50% of the field you should win.

Sauce thank you. You have a keen ability to explain things. There are very few people that can understand what you just described.

I fully agree with what you are saying here. Poker is primarily about winning. If we create an product where 90% of players lose, we have a ****ty product. If we then sell the notion of poker being a strategic game, sport and a way to make money the marking vs reality works about as well as for a scam. As such it is no wonder that new players leave quickly (given that the 10% winners are likely mostly regulars)

It is my believe that the business model stars is running is flawed. It just does not work. That is ok for stars however, since they have managed to dominate the market and simply get all the money that is coming in the end. There will always be money coming into the game. Stars has a system to sweep it. We just must understand that stars is first and foremost running a casino.

So for stars is this great, for us players not so, as we cannot play the game.


Strangely I don"t fully agree with you here. It is right that less rake means more winning and that would be healthier for the economy.

However the many posters here that say "reducing rake does not work" are not wrong in many of their arguments event though I feel that most of them do not understand the poker economy, or how poker really works (in simpler terms) .

Today poker is fueled by marketing and market share dominance. Hence its very hard to compete with stars just by reducing rake, as it takes away your weapons.

In my opinion we cannot just reduce the rake, we need to completely overhaul the business model that a site uses to operate. We need a model that dominates what stars is doing.

So far the sites are doing all the same thing, when it comes to the core of the product design and stars has a network effect advantage as well as economic dominance.

So sauce and all in this thread, I think someone has to go to the drawing board and come up with a new business model that:

- protects the game: keeps it a skill game, where many players win
- finds a way for the site to profit
- has a compelling marketing aspect and rewards system that attracts new money

Just reducing rake is not enough, else we would all be playing on SWC or a rake free site.

I challenge that view. I think the problem with this is that we believe we cannot win against all these good players.

However if we were to fix the problem of losing, you would play online again?

The reason we stop playing is because we lose. The reason why we keep playing is because we win (ok, a few because we are addicted). We start playing because we think we have a shot to win.

Ergo if we manage to create more winners we also create more players.

In other words if you would still win, you would play. You stop playing because you can't win anymore (and your not an idiot).

Now if multitablign is the reason why you lose then yes its the problem. However I believe that is not so.

Multitabling actually just increase the effective rake (winrate vs rake) because:

- it reduces your winrate per table
- it creates more players that play a more similar style (more regs multi table than fish)
- it allows to play a lower limit, lower variance style where rake is higher
- it increases the amount of hands played not the $$. Since we pay per hand that means more rake

I believe this thought does not check out logically:

1. Games were not that beatable back in the day. Again I refer to the study i mentioned before from 2006 where only 11% of players won. Rake and effective rake has always been a problem, especially at low stakes.

2. If you reduce the rake, games per definition are beatable. Beatable means that people make money. The poker economy is very simple: deposits = winnings(withdrawals) + rake. If rake = 0 winnings are high and the game is beatable, the higher the rake relative to avg win rates the less beatable the games are.

If people win in games they also move up and as such winning players leave, making the game easier. Rake makes it so that people can't move up and good players that should move up either stay or leave. This makes the games though, increases the rake even further and interrupts a healthy upflow of money.

In some cases reducing the winrate to less than zero, making the player a loser at the given stake.

Zoom is the popular faster poker version for cash game players.

Maybe it's fair to say "to a lesser extent in cash games than sngs," but the newest popular thing in cash games is still a faster variant.

Cap games have increased in popularity too and those are short stacked. You might argue that players used to just shortstack more, and that might be a fair argument that takes cap out of this discussion.

[x] 100 million customers.
[x] More than 50% of the online poker market.
[x] Valued at 5 billion dollars.

[x] Working business model confirmed.

FWIW, I'm not keen on some of the ways Amaya/Stars operates, and the direction it's gone since the departure of the Scheinbergs has been somewhat worrying, but the company isn't run by muppets, y'know. The Rational people know how to run a poker site better than all of us.

To save Limit and NL cash games, tweak the rules a little from time to time. Tweaking could stymy multi-tablers, system players, HUD use, and bots, if done properly. Rec players would have more chance and top notch pros would have more edge.
I'm not going to go into what particular tweaks could work right now.

I certainly don't think the site is run by incompetent people. But take a look at the first 3 checkboxes. None of them are because of business decisions made in the last 4 years. (well maybe partly the 5 billion part).

This is not a working business model for a poker site as the current system is not based on growth but on extracting more money from less players. This can't be deemed a healthy ecosystem. I'm mainly referring to cash game players.

Chinks in Stars' armor have started to appear all across the board which is an inherent problem when relying on revenue from a smaller player segment. When one mass multi tabling player quits it's the equivalent of 10 single table players quitting. Years ago when the revenue was based on growth a player leaving wasn't as catastrophic.

Look at the Live Events where multi tabling doesn't play a factor and look at the demise of so many of them.

The APPT can't even run a satellite without extreme measures taken just to get the minimum players to start it or ridiculous 2 rebuy 1 addons to make the guarantee. 7 years ago I played in a 215 freezeout with 5 or 10 packages guaranteed.

The EPT's barely make 1 seat guarantees and are filled with the same players winning T money which adds nothing to the Live Event.

The PCA started suffering a few years back where a 5 package guarantee is now deemed a big offering. I remember 50 or even 100 package guarantees back in the day.

Even the LAPT tour, (which historically has the most attractive satellite program) is starting to suffer this year.

These are just examples of what happens when a website relies too much on so few.

This was a good post, but I'd like to extend it a bit. The people at the top of PS were there throughout the time the company grew very quickly. It's a different skill to run a company when it can't grow so fast any more.

They're also now expanding into two other products. This is going to mean major reorganisations of company resources and priorities. Not many gambling companies have done this successfully (for the record, I've worked at PS, Ladbrokes and Unibet).

When poker stops growing but PS' casino and sportsbook offerings do well, how will PS handle their poker business? Party went through the same change, and we can see how that ended up (though I admire their attempt at change, even if it ended up poorly).

It's going to be a very challenging couple of years for PS and they'll have to face lots of new kinds of problems. They have good people in senior positions so maybe they'll be fine, but maybe those problems don't have good solutions.

I started a new NVG thread regarding taking action about the PLO rake, asking DNegs to bring his influence to the table.

View: Negreanu should look into the PLO rake situation as promised on J.Ingram Podcast

So...Re: post one this thread...has Sklansky quit twitching???

He is relocating back to Vegas. Should be back up soon.