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Rake pricing for a sustainable poker ecosystem Rake pricing for a sustainable poker ecosystem

03-23-2013 , 09:35 AM
I can agree with others who say "fish" or recreational players don't care about the rake.

I play live almost every day still for even just an hour or two.

No one complains ever about the rake.

The lowest game here is 1/1 with 10% rake capped at 5.

You can watch the dealer put part of your winnings down the hole every hand.

Only a very few people care about it. I don't, why? The game is so easy to beat.

Then you move to 1/2 and the rake is 5% with the same cap. I've not heard a single person there complain about rake ever.

They don't think of rake when thinking to play online. I hear things like it's rigged (less now though) and it's full of kids using huds along with it's not real poker

These problems are harder to solve than the rake issue. Huds will always be impossible for a big site to ban as developers will always find a way for to get one working.

The rigged thing, I don't know, it seems like its going away, maybe more education and regulation put out in the media?

But it seems that live players just don't have as much fun online. I know I don't with the way the current sites are. That's what I want to try and fix most.

Someone pointed out that live players are not the target markert. I'm sure some will never play online no matter what but I would say a few would prefer to play online if it wasn't in the state it is.

I think the target audience for a big site are the people who are about to deposit on casino sites and play some roulette etc. They won't switch to poker if it's not fun for them though.
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03-23-2013 , 02:11 PM
Quote:
Originally Posted by Pot-sized Belly
The official press releases from Party Poker (it is a publicly traded company, therefore there has to be transparency) tell a very revealing story of vanishing player and deposit base. The site is losing money, and the loss is increasing. Player base is going down fast. It is very unlikely that they will lower the rake at this point. The reason of these losses has also been openly albeit briefly analyzed.

Contrary to what the posters here think, the people running the company are smart and they realize something has to be done. If I was analyzing the poker branch of the company as a CEO (and yes, analyzing business plans and results is something I do for work) I would give it max three years to turn to the green. Unless there was a change I would simply cut it.

Obviously they are trying everything to make the pokers profitable for the company.

IMHO based on the figures the future for the low stakes pro looks really bleak unless something gets changed fast. If the poker market is drying for the sites it is going to sure as hell dry up also for the 2+2 folks.
They made 154.6 million euros last year. You claim the site is losing money/operating in the red. You also claim to analyze businesses for a living. You also say "green" instead of "black." You also suggest cutting 154.6 million euros PROFIT from the bottom line.

Please stop making **** up. Either that or you really suck at your job, lol.
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03-23-2013 , 03:46 PM
Quote:
Originally Posted by 28renton
The sad thing is we have this discussion on 2+2 every week, but the sites don't care. So many good points have been brought up, but I've given up that it'll make a difference.
This.
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03-23-2013 , 06:21 PM
Quote:
Originally Posted by dirtylobster
This.
I disagree. I know that this thread has made a difference and will.


I have been pretty active here and for me at least I understand the rake now.

This is a theoretical discussion about the topic of sustainable rake or even poker ecosystem.

This is not a company program to change any site. It is a discussion as such participants and readers can use it to educate them self.

As such I am pretty sure it has changed some players perception, which is the most it can and should do.

I have never met a poker player at a real table who understands how rake works.

The first step is for the community to understand the topic, then it will make a difference. So far i am pretty sure that less than 10% of 2+2ers understand rake and less than 1% of all players.
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03-23-2013 , 07:29 PM
I have just looked at my PT4 database and filtered for 2nl 6 max.

I have 51062 hands with 11714 won and rake attrib of $160.27 and contributed $164.27.

So filter this just to the hands won:
11714 hands $160.80 rake attrib, $78.61 contributed. Proving Do it Right and Knircky's posts that it's winnings that are raked

Anyway calculating that we get:
0.0031c rake paid per hand or
0.31c/100 hands
=15.5bb/100

Out of curiosity I filtered for average pot = 15bb as a lot of people have posted this as the average pot size at these limits.
I then get 8960 hands with $14.76 rake attrib or around 8bb/100

For 25bb max pot size I have 9828 hands, $25.75 rake, around 13bb/100.

For all hands > 25bb I have 1891 hands, $128.97 rake. 341bb/100!!!!

So that seems to hold up for what all the other posters are saying. Least now it's more clear to me.

I'm interested in that last example. Does that mean that it's the cap is too high? I think most of these hands were at the old 4.5% rake on Stars.

Also it looks like lowering the rake to 3% would make it around 10bb/100 for NLHE.

I have no data on PLO that I can get accurate stats from but I know it turns out as more rake paid. I know people say the average pot is 15bb but from my NLHE example it still looks like the fewer hands that actually reach the cap are the ones were the most rake is paid.

So instead of focusing just on the % of the rake I really think it's the cap that needs addressed. Opinions?

Last edited by dean_nolan1; 03-23-2013 at 07:38 PM.
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03-23-2013 , 09:13 PM
Here's a first draft proposal of rake for my site



Anyone see any problem with this, especially PLO.

The idea being to have lower caps, about 3bb below 50nl, and for it to take longer to reach those caps at PLO hence the 3%.

The main thing here is if I put things too low to be profitable as a business I will have a very hard time increasing them without pissing everyone off


I've also sorted the rake back rewards program.
I have designed a system I'm calling action points for now, feel free to suggest something better.

But basically a player who gives more action, raises, re raises or starts tables will get more than someone who folds a lot.
You will lose some action points for joining a waiting list and you will lose large amount if you refuse a seat at a table that you were moved to from the global waiting list.

So that grinders (even at just 6 tables) don't automatically get more points than recreational players the points will be divided by number of hands and so you well get your base rake back ratio up to 30%.

Then for losing players I have (100/60) * (losing rate in bb/100) up to 100% rake back. So massive losers (-60bb/100) will get 100% rake back.
For slight losers this will get added to the action point reward percentage so you might lose 10bb/100 but were giving so much action and now you have 40% rake back.

Thoughts welcome and appreciated.

Last edited by dean_nolan1; 03-23-2013 at 09:37 PM.
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03-23-2013 , 10:26 PM
Someone explain to me how lowering rake will make the sites more money? That is the most important thing to poker sites, making money. Until that is true rake will remain as it is.
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03-23-2013 , 10:29 PM
Very fun playing on lowered raked sites in never never land...
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03-23-2013 , 10:49 PM
Quote:
Originally Posted by T-ReV
Someone explain to me how lowering rake will make the sites more money? That is the most important thing to poker sites, making money. Until that is true rake will remain as it is.
By this reasoning the sites ought to raise the rake.

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

If anybody cares to chime in w/ how much it costs the sites to run the penny games and analyze whether or not it pays to keep them up w/ a lower rake I'd find that interesting. Put a different way, at what stakes could the sites afford to lower the rake and maintain their profit margin?
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03-24-2013 , 12:35 AM
Quote:
Originally Posted by Howard Beale
By this reasoning the sites ought to raise the rake.

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

If anybody cares to chime in w/ how much it costs the sites to run the penny games and analyze whether or not it pays to keep them up w/ a lower rake I'd find that interesting. Put a different way, at what stakes could the sites afford to lower the rake and maintain their profit margin?
I think the sites have taken this line of reasoning and raised the rake as high as they think is possible without losing them too much business.

If you lower the rake and keep everything else the same, their profit margin goes down. DUCY? The only way I see of lowering the rake is for people to switch to playing on bitcoin sites like sealswithclubs. They have lower costs due to nearly free financial transactions due to bitcoins.
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03-24-2013 , 01:04 AM
Quote:
Originally Posted by Howard Beale
By this reasoning the sites ought to raise the rake.

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

If anybody cares to chime in w/ how much it costs the sites to run the penny games and analyze whether or not it pays to keep them up w/ a lower rake I'd find that interesting. Put a different way, at what stakes could the sites afford to lower the rake and maintain their profit margin?
Stars had the nano stakes for free when they first started. So we know a site could offer them for free and still grow and not hurt their bottom line. I think they only started the raking the games because of Eastern Euro 24 tablers could make a decent profit for cheaper countries. Most sites never had limit games below .5/1 and started at 25NL online. It's only when Stars' nano stakes games took off that other sites like Party offered them.
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03-24-2013 , 01:44 AM
Quote:
Originally Posted by T-ReV
I think the sites have taken this line of reasoning and raised the rake as high as they think is possible without losing them too much business.

If you lower the rake and keep everything else the same, their profit margin goes down. DUCY? The only way I see of lowering the rake is for people to switch to playing on bitcoin sites like sealswithclubs. They have lower costs due to nearly free financial transactions due to bitcoins.
The idea is to lower the rake bec if they don't then everything might very well not be the same. Do YOU see why? Some sites have gone to the very drastic solution of segregating the player pools and that shows how bad they think the trend line is.

I only have the vaguest idea of what bitcoins are so gl w/ getting Joe Average to try them out.


Quote:
Originally Posted by lefty rosen
Stars had the nano stakes for free when they first started. So we know a site could offer them for free and still grow and not hurt their bottom line. I think they only started the raking the games because of Eastern Euro 24 tablers could make a decent profit for cheaper countries. Most sites never had limit games below .5/1 and started at 25NL online. It's only when Stars' nano stakes games took off that other sites like Party offered them.
Tx, and that's not surprising. Offer the very small games for nothing or almost nothing, ppl can build rolls and have a chance to move up, maybe take a shot every now and then. If they don't move up then it doesn't really hurt the site. But to bleed that guy that posted the chart above, if I read it right, seems counter productive to me. Obv he likes to play but somebody else, maybe the majority, will quit that nonsense and spend their time doing something else.

And if it's the Eastern Euros causing the problem just cut them off. Why allow a group that doesn't bring anything to your business to profit from it at your expense?
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03-24-2013 , 02:00 AM
Quote:
Originally Posted by Howard Beale
The idea is to lower the rake bec if they don't then everything might very well not be the same. Do YOU see why? Some sites have gone to the very drastic solution of segregating the player pools and that shows how bad they think the trend line is.

I only have the vaguest idea of what bitcoins are so gl w/ getting Joe Average to try them out.




Tx, and that's not surprising. Offer the very small games for nothing or almost nothing, ppl can build rolls and have a chance to move up, maybe take a shot every now and then. If they don't move up then it doesn't really hurt the site. But to bleed that guy that posted the chart above, if I read it right, seems counter productive to me. Obv he likes to play but somebody else, maybe the majority, will quit that nonsense and spend their time doing something else.

And if it's the Eastern Euros causing the problem just cut them off. Why allow a group that doesn't bring anything to your business to profit from it at your expense?
Stars has boxed in Chinese players(or did). They made a rule where only one Chinese national could play on table at once. So this has been done to a point. It seems like the sites just want to bleed the game dry until the game is dead or near dead. For sites like Party it makes sense now that poker is the smallest part of their business, but for Stars this could be the death knell for them.
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03-24-2013 , 02:15 AM
Quote:
Originally Posted by lefty rosen
Stars has boxed in Chinese players(or did). They made a rule where only one Chinese national could play on table at once. So this has been done to a point. It seems like the sites just want to bleed the game dry until the game is dead or near dead. For sites like Party it makes sense now that poker is the smallest part of their business, but for Stars this could be the death knell for them.
Tx again. I didn't know what was up w/ Party having not been able to play on it for years (U.S.). I take it that Party is now more casino than poker.

But I wouldn't be too worried about Stars aorn. That company is run by some very smart ppl it seems to me. Look what they did: Pay out U.S. players at once? No prob. Pay, what, $750MM total in settlement w/ DOJ? OK. Buy an Atlantic City casino? Yes. These folks are skilled. If anybody can figure out how to keep online poker viable it will be them.
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03-24-2013 , 09:17 AM
Quote:
Originally Posted by T-ReV
Someone explain to me how lowering rake will make the sites more money? That is the most important thing to poker sites, making money. Until that is true rake will remain as it is.
re-read OP

Cuts in rake would increases variance, heaters and no. of winners over a decent sample EXPONENTIALLY, in what is a dying game where nearly every grinder knows if they are a long term dog because the colossal rake makes it abundantly clear.

The graphs in the OP show the how each cut would bring back poker's natural state of smoke and mirrors leaving most of the player pool deluded to their abilities, retaining and growing their customer base instead of desperately advertising and mowing through players.

Players are running out and wising up = big long term flaw in poker sites business plan, this is why sites would make more money

Once online pokers reputation is f***** there's no bringing it back.
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03-24-2013 , 09:52 AM
I thought I would have had some feedback on my rake structure but seems just more people arguing and getting nowhere.

So some more figures to show that it's a better idea to lower the cap.

Since my rake cap hits the max at pot size of 75bb I filtered my database for pots won over 75bb.

853 hands
$103.54 rake (64% of total rake paid for all hands)
0.12c per hand
12bb/100

With a 3bb cap that would result in rake paid as $51.18, almost a 50% decrease in rake paid.

In total then that is a decrease in rake paid over all hands by about 35%.

The rake will end up lower also because all limits have 4% rake and PLO even lower since it is 3%.
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03-24-2013 , 11:51 AM
I actually think the .75 rake cap for 25NL is about as fair as a rake site should rake. Many sites rake 3 at these stakes which is insane.
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03-24-2013 , 11:54 AM
Quote:
Originally Posted by lefty rosen
I actually think the .75 rake cap for 25NL is about as fair as a rake site should rake. Many sites rake 3 at these stakes which is insane.
Yeah I agree, I didn't realise how high the rake was on some Euro sites.

I have checked the numbers and even with my low rake and rewards and it is still a profitable model.

Last edited by dean_nolan1; 03-24-2013 at 12:02 PM.
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03-24-2013 , 05:22 PM
Quote:
Originally Posted by T-ReV
Someone explain to me how lowering rake will make the sites more money? That is the most important thing to poker sites, making money. Until that is true rake will remain as it is.
Rake is the price to play poker.

Right now the rake is so high that the best players can win. I guess somewhere around 10-20%.

In a natural environment there should be 50% of winners, heck I think it would be more like 60% even.

If we assume that players will stop if they cannot win there is a great potential of more players.

Thus because of the rake sites lose somewhere of 60-80% of their potential customers due to the rake.
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03-24-2013 , 05:47 PM
Just curious do they monitor the micro stakes for cheating and colluding alot? Do they value those customers as much as say the mid-hi stakes crowd (most of their profits)...
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03-24-2013 , 05:56 PM
Quote:
Originally Posted by Genetikfreak
Just curious do they monitor the micro stakes for cheating and colluding alot? Do they value those customers as much as say the mid-hi stakes crowd (most of their profits)...
Most profit comes from micros stakes as that's where the largest player pool is. I checked Stars today and there was over 300 2nl games running.
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03-24-2013 , 10:00 PM
Quote:
Originally Posted by T-ReV
Someone explain to me how lowering rake will make the sites more money? That is the most important thing to poker sites, making money. Until that is true rake will remain as it is.
If rake decreases, volume of hands played increases. Simple economics. Whether or not that makes the company more money depends on the decrease in rake and subsequent increase in volume.
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03-24-2013 , 11:44 PM
Going beyond simple economics increasing the number of winners by either decreasing the amount of money taken out of the games or changing the method in which it is taken (which could easily be set to profit equivalent on their current profits!!) would also have a huge secondary impact. I think a big problem is that word of mouth has deteriorated to the point of being nearly 100% negative: "The sites will steal your money, the games are rigged, players cheat, the games are full of bots (house run or otherwise), etc, etc."

While a huge part of that ruining of online poker's reputation is due to the actions of the sites themselves, it's also in no part due to the fact that the rake and decreasing edges are resulting in an abysmally small number of players coming out winners. Poker is a zero sum game yet the rake has created a system where we're looking at the ballpark of 90% of players being losers.

If you're average - you lose at an incredibly high clip.
If you're slightly better than average - you lose huge.
If you're much better than average - you lose modestly.
If you're vastly better than average - you break even.
If you're on a professional or near professional skill level - you show a modest profit.

Swapping to a system that doesn't distort the result of the game as it's being played would actually let the site continue making their enormous profits while also enabling the results of the game to much more closely resemble those of a zero-sum game. We'd go from 10% winners to something more like 50% and perhaps even more given the player composition (more big outlier losers pushing the median up than big outlier winners pushing it down). Imagine how that would change the word of mouth, and in the long term - the reputation, of this game! A player at a homegame starts talking about the rigging and cheating online and instead of being met with 90% knowing nods and approvals, half the table is: "Ummm.. actually I've been playing for 'y' months now and have won $x. It's not like live but you can definitely win."

For less hand waving and more concreteness - one common example of such a profit model would be a rake on withdrawals in excess of deposits. Another option would be that you buy 'chips' and can then sell these chips back to the house at a margin. This would even discourage people from constantly withdrawing which, though inconvenient for players, is something the sites would presumably like. There are undoubtedly even more clever schemes possible that could be mutually beneficial for the players the and the site. Ultimately the problem is that poker is game where it's relatively easy to become 'competent' and edges between competent players are very small, but rake makes it such that if you have anything short of an enormous edge - you're going to be a loser, and likely a big one.

I also think even Stars is starting to try to test the waters here - not in the secondary department which is much more long term but in the more straight forward short term way. Recently Stars introduced a couple of 5 card omaha variants that are likely to have incredibly low edges paired with incredibly high rake. They 'accidentally' screwed up the rake when introducing the games and so they've been run rakeless for some time. Comparing the before and after will certainly give them some interesting data to chew on.
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03-25-2013 , 08:09 AM
Quote:
Originally Posted by LT22
If rake decreases, volume of hands played increases. Simple economics. Whether or not that makes the company more money depends on the decrease in rake and subsequent increase in volume.
While this might be true (Although I'm not convinced it's true. might be total BS) the difference is not enough to make the sites more money, of this I'm fairly certani. The most profitable games are micro-stakes games, and most people playing those dont care what the rake is. They will play the same amount with the current rake or decreased rake. Recreational players probably wouldnt even notice the change.
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03-25-2013 , 09:33 AM
Quote:
Originally Posted by archii
While this might be true (Although I'm not convinced it's true. might be total BS) the difference is not enough to make the sites more money, of this I'm fairly certani. The most profitable games are micro-stakes games, and most people playing those dont care what the rake is. They will play the same amount with the current rake or decreased rake. Recreational players probably wouldnt even notice the change.
I agree it's not 100% true. There would certainly be some uptick in volume though as regs play more hands against regs. Whether or not that's enough to make the sites the same money is something none of us knows.
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