The Current “Unsustainable” Poker Environment is a Myth.

I believe the idea of us being part of a current unsustainable poker environment is a myth, and one that is propagated by Pokerstars.

My view is based on:

*An ever growing online gambling market.

*INCREASED new sign-ups for Pokerstars during 2015.

*Having games that have got tougher every year for the past 5+ years that make it APPEAR like this trend is inevitable.

*A poker environment that hasn’t deteriorated BECAUSE of winning players.

*How an unquestioned public belief in this myth facilitates support for Pokerstars making drastic changes.

*Pokerstars have started to further increase the focus on this point in recent posts, podcasts, and interviews, and virtually everything they put out in the public now is part of a carefully constructed PR campaign.

*No solid evidence from Pokerstars to support their claim


Many people have questioned the information that Pokerstars has delivered through their press releases, blogs, and forum posts in recent weeks. Since the latest blogs by Eric Hollreiser and Daniel Negreanu even many of the players who don’t fall into the category of experienced professionals have been expressing anger and contempt towards the company, and no longer trust what they say. In a Pokernews interview today with Lee Jones, we see further evidence of a Pokerstars spokesperson deliver nothing other than rote-learned, carefully crafted statements.

I spoke about my belief on the 2+2 pokercast last month, but I haven’t seen much posted about the views of others questioning the current “unsustainable” poker environment. I believe that it is a myth that has been given plenty of momentum by what amounts to propaganda from Pokerstars’ PR team in order to facilitate their latest changes, which are basically nothing other than a strategy to take a larger slice of the net depositor’s profits (and change the face of the game.)

Now, it’s true that we have experienced a changing landscape over the years, but that is because online poker was a fledgling entity until very recently. Among other things we have seen the removal of the USA players from the worldwide pool of players, the resettling of American pro “refugees”, the segregation of players from Spain, Italy and France (other further resettling of pros from those countries), the regulation of online poker by a growing number of countries and the related costs, plus of course the emergence of poker education in various forms.

So basically, in the past few years we have gone from an environment with a pool of players that looked like this pre-Black Friday, and pre-dating many of the educational websites, coaches, software tools:



To the current environment which has a much higher reg:casual player ratio:



(Those outside of the circle represent ex-players who are no longer part of the player pool)

NB: The information shown in these diagrams is for demonstration purposes on how the player makeup has shifted- they are not intended to be precise ratios.


Combined, all of these factors give the impression that poker is on an inevitable path that deteriorates each year, but this isn’t the case. This has been an inevitable evolution, and there may still be further obstacles to overcome (such as the fight vs artificial intelligence software) but we have now arrived at this existing state of affairs, for which there is no reason to believe it’s not sustainable, and was unlikely to get much worse, and quite possibly would start to see an upturn sometime in the future with the re-emergence of the US online poker scene and hopefully an eventual second marriage for the worldwide player pool one day. The following graphs serve to try to highlight the above point, that just because game quality has dropped during recent years, it doesn’t mean that it isn’t tapering off- as I believe it is.



Other online gambling activities that have been around longer than poker, such as casinos, lotteries and sports betting, they are all thriving; they are not suffering from people no longer depositing. Combined, the online gaming market has steadily risen each year and this growth is set to continue.



Poker is a little different from these activities because of how it is dependent on the networking of players, but there is no reason to believe that deposits are drying up. Pokerstars want you to believe that they are though, and they like to shift the focus onto HUDs, scripts, and other third-party software as well as their story that high volume players continue to harm the games. Pokerstars want you to believe that the games are in a state of decay and winning players are to blame- and that the only way that online poker can be saved is for them to implement changes. Pokerstars’ aim is purely and simply to take more money out of the game by effectively increasing rake across the board. They are not interested in the health of the game per se, and their spokespeople are certainly no authorities on the subject:

Daniel Negreanu is inexperienced when it comes to understanding the online environment. He frequently mentions “unsustainable environment” quotes but with nothing to back it up. As for Eric Hollreiser, for someone who is the VP of Communications, he doesn’t know how to communicate very well, much like a Tea Lady who can’t make a pot of tea. Here’s a quote of his from this week’s press release: “During the three-day boycott we recorded the healthiest consecutive three-day ecosystem results of the year…” Does anyone actually know what that means, and by what metrics they formed that conclusion? Of course not, because it is simply concocted to fit in with the impression they want to portray. Lee Jones worded it as “during the boycott the ecosystem health was the best it’s been in a very long time, which means that players’ deposits were lasting longer, they were losing money more slowly, which translates into a better experience for recreational and casual players…” but it’s just the same nonsense. They are obviously making a conscious effort to mention their concern for the ecosystem as frequently as possible now. He went on to comment that they had “a business intelligence team” that recognised the ecosystem was getting worse and worse at an ever increasing rate. I would question that claim, and suggest they are attempting to further present an apocalyptic poker landscape for their own benefit.

In a private Skype group with a handful of players last month, which somebody made public, Negreanu let it be known that “We [Pokerstars] did have an 18% increase in sign-ups this year, but they are obviously losing their deposits at a much faster rate, over 40% faster.” The fact that they are experiencing a growth in sign-ups doesn’t seem in keeping with an unsustainable poker environment. As for the increased rate at which deposits are lost, interestingly what we’ve seen during this last year is the emergence of the very popular fast-paced Spin n Goes, so I know where I’d be looking if I were seeking an explanation for why those deposits are getting spent quicker.

Pokerstars are really only interested in how they can make the most money out of their 85 million consumers. (We can’t fault them for this, but we can pull them up on their false claims, lies, broken promises, and misleading information. We can also caution them if we believe they are making a mistake, as I do, that could harm them as well as how it will inevitably hurt the players.) It appears they are looking to change the face of online poker towards a gambling-centric model with games with small- if any-edges, high fees, and very few long-term winners. The danger for them is that their flock of net-depositors may not want to be part of an unbeatable casino environment when they sit down to play poker, as well as the danger of having the players that seed games disappearing. This will lead to a higher concentration of better regulars which will lead to the net depositor going broke faster. If Pokerstars get it right- and I’m wrong- then they win and the players lose. If they get it wrong, then they lose and the players lose.

Conclusion:

I cannot claim to be 100% certain of my belief without access to the numbers that Pokerstars have at their disposal of course, but I am confident that it is correct. It is most certainly worthy of consideration by others. Too often a podcast, post or interview with a question directed towards a Pokerstars spokesperson will lead with something along the lines “we all know the current climate is unsustainable…” but I’m suggesting that they and others in the community at least question that assumption.

Cliff notes:

*There is no evidence of an unsustainable poker environment.

*Pokerstars want people to believe there is to facilitate their changes.

*Pokerstars’ spokespeople deliver nothing of substance.

*Pokerstars are no longer interested in the players’ poker experience- players are viewed simply as consumers.

*The changes are VERY bad news for ALL players.

*It’s a VERY big risk for Pokerstars that could dramatically backfire.

Interesting theory.

I know if I ran a poker site my focus would be on getting the most people to deposit and redeposit consistently and then rake and discourage outflows at the perfect level to maximize profits while not hindering efforts to keep the redeposits coming.

I am sure there is a mathematical formula for that, but all I came up with is 2+2=4

Until then, maybe they should tie grinder rewards to referral bonuses of players that they refer who then deposit and lose (or at least never withdraw).

Great post. Thanks for making the effort.

There is also a real concern what the highstake net depositors will feel about not getting their 10-50k in yearly award as they used to, after they removed highstakes rewards.

For the game quality graphs and slopes. What effects that PokerStars control could make them go upwards? How would you think it would look if they lowered say micro and small stake rake?

So online gaming includes DFS?

From when is the graph a "projection"? 2007?

Honestly it looks like an ultra optimistic budget more than real numbers, most earnings graphs aren't perfect like that unless you cook them to look nice

Yes, lowering rake would obviously lead to better game quality. The purpose of the graphs in this example was to enable people to visualise how games getting tougher each year up- until now- doesn't necessarily mean that that trend is set to continue. Many people believe that this drop in quality since Black Friday is an indication that an unsustainable point has been reached and Pokerstars love repeating that message!

Yes, agreed. I just googled quickly and found the graph. Will re-google.

EDIT: Amaya released this last year during their investor presentation announcing the purchase of PokerStars.

Online gambling may be growing, but I don't see how that necessarily means that poker is growing....

It was the new hotness 12 years ago, and now it isn't.

I can't claim to know if "the poker ecosystem" is sustainable or not

But I am confident that winning players are no longer welcome in poker-stars and are being targeted

Judging by the convoluted arguments stars have put up over the past month and a half, I would say they have indicated that they ARE willing to lie to the players, and I wouldn't blindly trust anything they say

You're quite right, it doesn't necessarily mean it, but I didn't say it did. Without access to raw data, I can't be certain of my claim, as I stated in the OP, but my belief is based on a number of factors which includes the overall growth of online gambling and my best guess that there is a correlation. I am not attempting to prove anything, but I'm trying to present facts that, combined, should give us reason to consider the possibility and not take Pokerstars at their word.

I have to agree with this 100%. Look at DFS alone... this accounts for the rise in online gambling and there's no doubt that poker has gone down and by a long shot.

The issue is why are players being forced to take the burden of cuts yet Pstars not only doesn't take any... but increases new formats/games that will further syphon players from the player pool, hurting the ecosystem.

What purpose does your post serve? Pokerstars already won. They won't revert the changes. Didn't you listen to the bald guy in the interview telling you that you did them actually a favor by boycotting for 3 days?

Yes, for reasons that I gave. I'm not saying that Poker is growing, I'm saying we shouldn't automatically assume that it's continuing to get worse and drying up. Also, Negreanu said privately “We [Pokerstars] did have an 18% increase in sign-ups this year [2015]" which I'd assume is a positive.

That is indeed a valid issue.

It probably serves very little purpose. As you say, Pokerstars have already made up their mind. However, if by expressing my opinion it prevents me from smashing another monitor in frustration when I read Pokerstars' next press release or listen to Daniel Negreanu tell his anecdote about his live-playing fish-buddy Moeshae for the umpteenth time, and how bad the current ecosystem is, then it will have saved me a few hundred quid.

this myth is proved just by looking at pokerstars action. obviously, all their recent years efforts were focused on promoting spins. as u've mentioned spins is really a fast deposit destroyer (hyper-turbo + prize pool multipliers). no doubts they are. and also i would mention that spins dont deal with cashout problem (since most of jackpots money are being withdrawn by recs and regs). concluding above said, they've introcuded a high-profitable (but destroying deps faster) and promoted it to attract as much 'cannon fodder' to it as they could. so it seems their purpose is to drain max juice from industry short-term at costs of long-term 'health' of poker. all their actions, changes, lies just fit in perfectly in these assumptions. no wonder if they would make in 2016 smth like 'win 10million in one spin'n'go roll' promotion and hit it like 'our strategy is on the right track to improve the health of the ecosystem because traffic and profit (they wouldn't mention 'in spins') increased'.

Seems overly optimistic, especially your worldwide player pool graph, but I support the message and agree for the most part

Yeah, should probably say what it "could" look like [in an ideal world] rather than "would" look like!

Again though, even if the upward trend was only slight, the point I was really trying to make with the graphs was as I mentioned in my first reply above:

"The purpose of the graphs in this example was to enable people to visualise how games getting tougher each year up- until now- doesn't necessarily mean that that trend is set to continue"

The only bright side to GTO bots killing online poker within a few years is that we get to watch Amaya/Baazof crash and burn.

The truth is though that "no-edge lottery poker" wouldn't be harmed by bots!

Great analysis, will have to read thru it properly when have time.

What did Baazov present to investors to sell the deal? He must surely have painted a rosy picture with rising poker revenues and expanding markets? How come such a doom and gloom U-turn within 12 months? Was he expecting to just shift players immediately into casino games? The guy is showing his inexperience.

He more then likely just said this is the amount of dollars on the site plus forecasted deposits, here is our extraction method via rake. Easy game.

Always though that stars has the best player pool possible (for them), they have alot of parity in the whole mid to low stakes where pretty much no players cashout and just the site wins via rake.

Great analysis.

The question is, can we do something we as regular players ?.
Why so few players registered on the web site http://tiltbook.com/en/weareallin/ ????

If we do not disclose now and try to change course, will be the end of online poker.

Why they do not understand that this idea kills one kind of the food chain?

Ideas?

Stars are moving away from presenting poker as a skill game ...

A silly thought has crossed my mind: you think Isai's sitting back anywhere wondering whether he can somehow re-acquire Stars?

There would be repercussions, of course, most notably they'd have to withdraw from the US markets, insofar as NJ required his absolute separation as a condition of licensure. But the thing is that the US market no longer looks anywhere near as promising as it did 2 years ago when the Amaya talks began. CA stakeholders can't get out of their own way, a federal bill is nowhere in sight, and poker on a state-by-state basis looks to have a dubious future.

Maybe kissing the regulated US market goodbye isn't that much of a loss. I assign a very low probability that anything like this comes to pass, just a thought i've been having from time to time.