Updated.
* Corrected Average VPP Rate (Row 3) from 0.20 down to 0.17 (due to the 15% decrease in Rake Paid) and all calculations dependant on it.
* Added additional info on hands required to make SNE.
* Added additional info on potential net winnings.
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I’ve been attempting to explain how reducing the rake paid in order to compensate for reduced VPPs being awarded- through the WC rake- is not as simple as people think, and that specifically, further VPP value would be lost due to milestones taking longer to reach.
To verify what I’m claiming (or otherwise) I’m putting together a model in the hope of getting this point across. Before coming up with a final version of the model though I’d like to first post this initial version and ask for help from others to “proof read” it for me, and to identify any possible errors, and make any comments. If I'm wrong, great- that's better for me, but I currently think this is a very important implication that virtually everyone seems to be missing.
Model V1.1
The model is based around a “typical” break-even 2011 NL100 SNE player. The first row shows that this player managed 4,000,000 hands in 2011 at an average rate of 0.25 VPP/hand. He made $160k at the tables, but paid $160k in rake to finish the year level. However he received $120k back in SNE value for a total profit of $120k.
The second row shows the same player under the 2012 WC rake, where this particular player earns VPPs at a 20% slower rate. To compensate it is calculated that if his rake paid is reduced by 15%, then this will make up for his reduction in VPP rate, and it looks to work fine. After all, that reduction in rake paid makes him an extra $24k at the tables which seems to balance perfectly with the 20% reduction in total VPP value (from 120k to 96k.)
However, the major problem is that he has now actually only reached 68% of the way towards SNE. So, the third row gives a truer picture of how his year would end up, as his individual VPP value has now been reduced by 20% from $0.1200 to $0.0960, and his average VPP/hand rate has been reduced by 15% (the decrease in rake paid) to 0.17. So his Total Profit for the year has decreased from $120k to under $90k.
So, to reach SNE under these conditions, a player would now have to play over 47% (85% x 80%) more hands than in 2011. In order to put in this volume (if indeed possible) then it's pretty much inevitable that his win-rate (which improved due to the reduction in Rake Back) would deteriote significantly.
NB:
1. $120k has been used as an estimated worth of reaching SNE. It is not meant to be precise, nor does it matter.
2. Rake Paid has been reduced by 15% in this example. This is not the same as a 15% reduction in Rake %age. This is because the rake cap is not reduced by the same percentage, so many pots that were raked at $3 previously would still now be raked at $3. (To see a 15% reduction in Rake Paid, the Rake %age would have to decrease by significantly more than 15%.)
3. The final picture (row 3) would actually be even worse than is portrayed (G7) because reaching 68% of the way towards SNE is worth less than 68% of SNE value.
4. To clarify, this post is not claiming that reducing the rake isn't a bad thing compared to not reducing the rake and making no others changes either.
5. I also think that, by the same token, all store items became effectively more expensive for cash players too.