The Discussion on Higher Rake that Nobody is Having
Posted by Phil Galfond
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Phil Galfond
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The Discussion on Higher Rake that Nobody is Having
Last year, Daniel Negreanu discussed the effects of higher rake in an interview. The community reacted negatively, and he felt his message was taken way out of context, so he made a blog post clarifying his point.
As a poker player and as someone building a poker site, I obviously have a lot of opinions on rake, policies, game offerings, and countless related areas. At the time, I worried that I’d seem disingenuous if I joined the discussion - that detailed criticism of future competitors would come across as opportunistic marketing for my own business - so I chose not to get involved.
I came to regret that decision. By not saying things I normally would have as a member of the poker community out of concern for how it would come off for me and for Run It Once, I think I was actually being less authentic.
For some reason, the topic has popped up once again. Doug Polk talked about it on a Podcast with Joe Ingram. Daniel discussed it briefly on his own podcast, and tweeted a link to the post during a debate with Doug, Joey, and others.
The points I would have brought up last year are points that I still haven’t seen discussed, so I’m going to take this opportunity to say what I wish I’d said almost a year ago.
I’ll mostly be talking about the blog post where Daniel clarifies and explains his thoughts. His interview comments did sound worse, but Daniel is an honest guy and I very much believe that he meant what he wrote.
His blog post is absolutely logical, and the conclusions Daniel draws are obvious and not really controversial (there is a minor argument to be had on how the economics of his real-life example truly work, but it’s complex and irrelevant to what I’d like to discuss). Many in the poker community berated Daniel for standing up for Stars and their rake increases, but not many engaged him in a real discussion.
Daniel describes two 10-20 Limit Hold'em games running across the street from one another. One rakes $100/hr and the other rakes $300/hr. The low rake game has a pro-heavy lineup, but those pros can still do better in the low rake game than in the rec-heavy high rake game.
He talks about a recreational player, Bhupan, who usually plays in the high rake game but occasionally ventures across the street into the low rake game. Daniel argues that the high rake game was better for Bhupan: he loses less and has a better experience playing with other recreational players despite the high rake.
This argument is perfectly sound, and I’m sure in this case it was true.
Skipping ahead to Daniel’s conclusion:
“In closing, NO I do not think higher rake is good for poker, but YES, I do think it makes sense to give the majority of the bonuses or rewards to recreational players.”
Whether you agree with his opinion, this is a perfectly reasonable stance to take, and Daniel is sure to make clear that he doesn’t think higher rake is good for poker.
The problem with the post is what Daniel skips over, stops short of saying, and implies.
Let’s start with implications. Many people will agree with Daniel’s (valid) arguments, but will then be led to draw inconsistent conclusions:
“For Bhupan and other players at his skill level, HIGHER RAKE WAS BETTER FOR THEM than paying a lower rake in a game against pros.”
Many will read this as implying “higher rake is better for recreational players like Bhupan,” which, if believed, is a very compelling moral argument in favor of high rake. We should all care deeply about what is best for recreational players.
The thing is, his arguments don’t lead to that conclusion (and Daniel makes sure not to say it explicitly). In actuality, all that should be taken from this is that in these two specific games, as they were described, Bhupan was better off in the one which had higher rake.
“I do not think raising the rake is good for poker. No rake is “good for poker.” But you need to understand that a game full of pros is far worse for the game than a high rake.”
Many will read this to mean “pros are worse for the game of poker than high rake.” He is once again actually talking about a specific table of players ('this game' rather than 'the game' of poker), but more importantly, he’s comparing pros to high rake (in a way that could be easily construed) as though they are mutually exclusive - pick one or the other. This shouldn’t lead to a conclusion about the real world poker economy.
Throwing in phrasing like “better for recreational players” and “worse for the game,” which are regularly used in the community to talk about poker as a whole, makes it very easy for readers to conflate the two uses and draw the wrong conclusions.
So when Daniel leads off his second paragraph with,
“Now, let’s take a deeper look at how an increased rake affects players,”
and then goes on to talk about very specific situations, it sets readers up to infer the wrong meaning.
I’ll stop now and be clear: I’m not claiming Daniel did anything unethical.
I believe he was making the best argument he could for a conclusion that he believed in. He’s very smart and persuasive, and in my opinion, he is almost always on the right side of a debate. Presenting the best argument you can for your beliefs is what I’m doing right now, so I can’t fault him for that.
Adding Context
Now, let’s talk about the example and see how it applies to the real world currently - a topic that I think the post skipped over:
In the two-game example presented, Daniel seems to be saying that if Pokerstars moves more and more towards being the high rake game with no pros, they believe that it will be better for them and better for the recreational players. This is a very good argument in favor of the path they are taking since recreational players are integral to the game.
In the real world, like in the example, there are other places that run poker games. We at Run It Once have been working very hard on offering the players a viable alternative. Party Poker has made some great and honorable moves and has aligned itself with smart players who truly care about the community.
However, as things stand currently, Pokerstars has the overwhelming majority of the traffic in online poker.
For most players, there isn’t really a “game across the street.”
So, the Bhupans of online poker are getting something more closely resembling the higher rake of that soft 10-20 LHE game combined with the toughness of the all-pro game!
Nobody is being helped in the short term besides Amaya. The analogy doesn’t mirror reality right now.
But, I concede, it will take time for the decisions and offerings to continue to roll out and to take their effect on the poker ecosystem. The 10-20 limit games didn’t reach their equilibria overnight.
I expect that Pokerstars will continue to shift towards the games and policies they truly want to offer, and the effects of those decisions - their desired result - will take a while to come to fruition. Only then will we find out whether they were “right” or “wrong.”
So let’s take a look at what will happen once the dust settles. There are only two outcomes that result from Pokerstars metaphorically becoming the soft game described in Daniel’s post:
Endgame 1:
This is the scenario where the world of Bhupan becomes a reality.
Other sites (hopefully us!) succeed in offering pros an environment they prefer playing in, and they (we!) become the game across the street.
Party Poker, RIO, and/or others will offer beatable but tough games with fair pricing. Pokerstars will offer really soft games, probably exclusively spreading lower edge variants like Beat The Clock (my opinion), but will keep rake so high that pros will stay away.
In this endgame, Pokerstars eliminates pros from their ecosystem and can offer recreational players what they and Daniel believe is a better losing experience (I’m not arguing in favor of or against that opinion today). Pokerstars grows and succeeds, and the recreational players on their site enjoy the product. This, in my opinion, is what Daniel’s post implies that he wants to happen.
Meanwhile, recreational players who care about the same things that pros do will find a home at one of the other sites.
-Pokerstars wins
-Recs on Pokerstars are happy
-Pros and Recs who don’t like those offerings have options elsewhere and can continue playing
Sounds all good, and I think it very well could be a great outcome. If the other poker sites can offer the experience and liquidity that Pokerstars currently does, things work out for everybody.
It is my position that, once we reach this endgame, Pokerstars is no longer operating a poker site, but a casino.
Now, there is nothing wrong with that. If a company wants to only offer negative EV games, operates with integrity, and provides a product people want - good for them. They can be successful and their customers can be happy.
It’s just not poker, and their customers won’t be the people who want to play true poker.
Endgame 2
In this scenario, Bhupan’s rec-filled game is the only game built for longevity. It continues to run while the low rake pro-friendly game struggles and shuts down.
Like in Endgame 1, Pokerstars becomes a high rake, rec-only “poker” site. All of the pros are driven out, and the recreational players who stick around stay because they enjoy the product Pokerstars is offering.
Unlike Endgame 1, in this world, Run It Once, Party Poker and the others all fail. The true poker enthusiasts have nowhere to go.
This is online poker’s Armageddon. Pokerstars morphs into a poker-themed casino and there is no game across the street.
-Pokerstars wins
-Recs on Pokerstars are Happy
-Pros and Recs who don’t like those offerings are out of luck. Online poker is dead.
This, in my opinion, is what Daniel’s post (along with some additional context clues) implies that Amaya wants to happen. I believe that it’s not what Daniel wants to happen, but he might think it’s the most likely outcome.
In this two minute section of Rikard Åberg’s interview with Negreanu, Daniel says (paraphrasing) that RIO starting a site is a win-win: Either it succeeds and gives players a good place to play, or it fails to attract enough players to keep games running and shows the poker community that, hey, maybe Amaya was right about the direction they’re heading in.
That’s a perfectly reasonable view, though IMHO the second result is not a win :)
From his tone, I can tell that he believes RIO (and probably other sites that attempt to be ‘pro-friendly’) will likely fail. There’s nothing wrong with him having that opinion, and he’s polite and doesn’t say it outright. In fact, as you may know, we’re way behind our initial development schedule here at Run It Once, so I’m certainly not proving anyone wrong yet!
We have also heard from Amaya representatives, time and time again, how their research shows (paraphrasing) that pros don’t matter.
After the community banded together for a 3 day boycott back in 2015, Amaya’s VP of Corporate Communications, Eric Hollreiser, wrote:
“...we can tell you that we did see effects from the recent boycott that give us even greater confidence that our strategy is on the right track to improve the health of the ecosystem. During the three-day boycott we recorded the healthiest consecutive three-day ecosystem results of the year with steady net gaming revenue, even though our net-depositing players lost at a much lower rate than they have all year. As we have seen with Spin & Go's, which have higher retention levels than cash games due to the increased winning experiences provided to all players, we believe this decreased loss rate will result in those players' deposits lasting longer and retention rates improving, resulting in more deposits and more money in the system because players are enjoying their time at the tables more. This is the right foundation for us to build upon.
Our commitment to poker is as strong as ever.
We believe that our actions will demonstrate this in the months and years ahead.”
This is just one example, but they’ve made statements with similar implications a number times.
My Conclusions
My biggest concern is what Daniel’s post implies to me about Amaya’s plans and core values, which Daniel stops short of discussing.
It’s my belief that the endgame they have in mind involves offering exclusively unbeatable games. This is a big assumption to make, and I might be dead wrong. I hope I am.
It’s also my belief that they don’t think there will be a game across the street. This is Endgame 2.
Of course, I could be way off. Maybe they plan for Pokerstars to have their own “game across the street,” offering half unbeatable games and half what I would consider true poker. If that’s the plan, though, why have they been increasing the rake or reducing the rewards in all games? Why do they keep telling us that we don’t matter and that recs prefer Spin N Gos and Beat The Clock?
And why is that soft 10-20 Hold'em game, the game that Daniel chose as an example of a better place for Bhupan and the recreational players that he represents, unbeatable?
I don’t disagree with (almost) anything Daniel said in that blog post almost one year ago. It’s what he didn’t say that I take issue with.
If Amaya believes their important customers want unbeatable games, and if they believe that competitors going in a different direction will fail, it's their right to focus on those games. There’s absolutely nothing wrong with them drawing conclusions from their data and making the best decision they can for their shareholders.
But if that is the case, Amaya believes in a very grim future for us, and if Daniel wants to engage the community sincerely, I’d prefer for him come out and say it.
Personally, I believe that we’re much more likely headed towards a version of Endgame 1 (aka I believe in online poker).
Blackjack, Roulette, Craps, Poker… you can call them all gambling, but you and I know that poker is fundamentally different from the rest. We fell in love with poker because of the beauty that lies in that difference.
I won’t be surprised in the slightest if Pokerstars does better and better as they introduce more fast, exciting, low edge, high rake games. But if the games are unbeatable, it’s going push out the hordes of people who love the game for the same reasons you and I do.
There will always be millions of us looking to play true, authentic, beatable poker. If Pokerstars ceases to meet that demand, somebody will.
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First
View From A Rec:
I play on Stars for 2 very clear reasons -
1: fantastic software
2: number of players, ensuring pretty much there is alway a game i can jump into to burn off a few dollars.
Outside of this i never thought that i would care much for other issues but it pains me in recent years to see the reductions in the classic games (HUNL especially) and the push towards fast pace gamble games. Added to this the weirdness of the rake back system now that seems to get you next to nothing back.
The unavoidable fact is that the opponents will always get better, at a slower pace as time rolls on, but still on an upwards trajectory.Increasing the rake only has the effect of pushing out the pro and serious Recs BUT it still screws all Rec's as we haemorrhage money NOTICEABLY and end up in position where we fell we are being taken for a ride.
So heres my point, I play a skill game and i know i am losing but guess what? I want to pit my skills against everyone! serious Recs and Pros included. Like the coffin doggers in all the crappy casinos across the states, i play because i love the game and want to play in types of games that if i choose to, dedicate more time to studying could have and edge and make some money without having to get lucky on stupid spinning wheel.
On another point, one of the things that got me into poker at the very beginning was one day getting SNE, i wish we could have a site that could come close to reproducing this and selling the dream of earning a decent living from playing a game.
i am always going to play this game, this is my hobby and it makes me happy, so give me stable software, reasonable rake back so i can buy the odd tourney ticket and no bloody seating scrips and i will be a customer for a long time. higher rake just reduces overall player number i can play against and burns through my deposits.
side note: spread 8-game!
Great post Phil!
Although the likes of Party and 888 have shown effort to improve their product, its simply by far not good enough to compete with stars (software!!!!, game integrity,.... )
Unfortunately stars still offers the best poker experience and decided to increase the price of their product.
Until the existing competitors step up their game or new ones emerge to compete with them (fingers crossed; RIO poker) they will continiue to push the price as far as they can! They have shown several times how they value their customers!
Let's all hope there comes a time when they loose what is basicly a monopoly and we customers have the option to just "go across the street" and find the same game and gaming experience on another pokersite.
I really wish you the best RIO poker to succed and heal the ecosystem from the customers point of view
The success comes always with being in fashion (when drinking urine becomes fashion everyone will love to drink urine). When everyone talks about Stars than everyone wants to play on stars even if they don't play there and even if in my opinion their software is really ugly. I hate their colors, I hate their lobby and I hate their tables. The Fulltilt software was for example a sexy bitch.
Being in fashion primarily means that everyone talks about it. The difference between negative and positive is really marginal. So people should stop discussing Amaya and Pokerstars at all when Rio launches and instead starting lots of threads and discussions about Rio and act in a way as if Pokerstars doesn't exist.
Hi Phil! I am a rec player, I have played micros on PS for 7 years; but less and less since Amaya's takeover. I was marginally beating the lowest stakes (over several 100k hands) and just happy to reclaim a t-shirt here and there or to withdraw a 50$ after depositing 20$. I live in Quebec, Canada, and I work full time as a french teacher. Anyway, I just wanted to say that I am looking forward to a RIO poker site and that I would be more than happy to help shall you need people to beta test the software or to participate in the french translation of it.
Bonne chance!
I stopped playing ~5 years ago, curious how much has been attempted to make it +EV for individual regs to play in ways which are positive for recs. f.x. it sounds like seating scripts are still allowed? Don't understand why Amaya would allow those if they think regs getting seats in their games is bad for them. And it's not like regs who love poker want their edge to be coming from a seating script anyone can buy, surely?
As a reg I always wanted part of my job to be to act in a way that promoted enjoyment of the game for everyone involved, because that's an obvious requirement for bringing the most new players into the game (which is good for me as a reg!). But it was always difficult to work out how I could do that without my competitors reaping essentially all of the benefits I was sowing without actually changing their behavior themselves. Would love to see some creative approaches to solving that problem from someone someday.
I think there is one big problem in Daniel post-he makes examples out of thin air without providing numbers. That way he just made up examples to suport his core beliefs rather than base them on the facts.
Just to give you real life example> Say you play nl100 on some average Poker Site.
There is 6max game with 5 regs and 1 fish. The regs will on average paid between 8bb and 10bb/100 in rake. The fish due to his/her lose style will end up paying at least 15bb/100 but closer to 20bb/100.
So the site will take at least 55bb/100 in rake from this table and realistically closer to 60-65bb/100
To say that the regs ar ethe problems when there are very few regs beating the games for more than say 3-4bb/100 in small stakes games is just totally misleading.
For most of the sites nowadays the end game scenario will be that the site is going to take 60bb/100 in rake from the fish while the regs will take 20 and thats like best case scenario
And contrary to Daniel I didn't made up the example to make a point. I gave real life rake numbers we pay every day!!!.
Overhwelming majority of players play micro/small stakes and pay a ton of rake every day.
To be fair. I am not all against rake. In fact I think in the past the model with competing sites with big rake but great rewards and milions spend on promoting and retention of the players worked just fine.
The biggest tragedy now is that basically all the poker sites are either owned by Casinos or Hedge Funds that are interested only in short term profits.
Stars are even worse because it was basically managment buyout where Amaya didn't have the money to buy stars so they just took a lot of leaverage credit to buy it and after that they just suck as much as possible form ecosystem to pay the credit costs first and make money on top of that.
So thats the biggest problem with Amaya getting rid of rewards or increasing rake. The money they get from it none of it goes to players it all is sucked to decrease the debt,pay dividents,hookers and blow for managers etc.
And to add to this I think people don't realize how big part of the poker boom was that the sites at the beggining were owned by poker players (Mike Sexton,FTP guys,Shainberg for Stars) that all understood poker and were interested in growing the game and their player base.
Granted their financial decisions were terrible (FTP guys) but they grew the popularity of the game imensly.
Now all the sites are owned by Casino guys or Hedge funds that are trying every trick possible to either make poker another casino game where only house wins or make the poker game so unfriendly and shitty that their player base will switch to Casino/sports betting anyway.
The huge part of the issue now is that for the most part most of the "poker sites" don't even want you play poker. In fact they would be extatic if they lost like 2/3 of their player base but the rest would switch to play casino games/bet on sport etc.
Hi Phil! Don't make the mistake to believe that regs are worthless for a site, as the VP of Amaya suggested. If that was truly the case, they would have no problem sending an email to all of their regs recommending them to play on other sites such as RIO ( ask them if you don't believe me ). Best of luck with your poker site!
Just wanted to say you are a deadset legend Phil. Love what you are doing and can't wait to play on RIO poker.
Great way of showing your views and disagreements without the unnecessary profanities and insults.
Phil stays politically correct! Thats the right way to go.
I feel that even the example provided is incorrect. A losing or "rec" player has a fixed amount of money they can spend on poker, no matter the take a losing players balance will always approach 0. I don't see how either situation is better for the player, when in both situations he ends at 0 bankroll
If rec has a stable job he can go on losing a certain amount monthly for the rest of his life.
Nice post Phil!
My biggest issue with Negreanus thoughts is that him and Pokerstars actually say things which they really do not mean. For example if pros are so bad for the game and they are so recreational player friendly why are they punishing recreational players with all those SNE changes. They pretty much removed all their rewards as well. That means that for a average player who just plays unregularly games are pretty much unbeatable. Somebody please tell me how many pros are there at micro-stakes? A: Zero. Why are they punishing micro-stakes players? Shouldnt they be increasing their rewards instead of taking them away. This makes no sense to me! Seems to me that they are just thinking about themselves and not anybody else. They even introduced those nice shiny chests to make it look like everything is so good. To me its just one big legal scam and unfortunately people are buying it!
Imo DN have a big % of Amaya and they understand that the marketing effort to spread the concept of online poker is done. Being said that, they reached to the conclusion that the marginal revenue of the company comes from the average 35-50 years old guy who has been playing occasionaly during those ten years seeing poker has a more fun way of gambling than rulette or slot machines. (poker is just a minor portion of the "gambling" comunity)
So they basically leverage their huge customers database in order of taking the best of it. It's a perfectly reasonable bussines move and DN who is the visible face of the company is loved by the guys listed above and hated by regs who are leaving the site allowing the revenues of the company get higher (when DN said "fuck the pros" through is gf he really means it) regs aren't good for a company like PS (for a small poker site regs are important for liquidity, worth of mouth, variety of games, etc.)
Imo if you want to succed with RIO poker you should
Have the greatest software of the venue
figth bots
DN has definitely made millions off of PS in the last couple of years. I would not even be surprised if the number was 8 figures long.
I also want to say that influencial people with the voice like Ingram, Polk, Negreanu and co seem to forget where they are coming from and from where their competition is suppose to come. All the talk I hear is about the pros. Pros this and pros that. Poker is actually sports like any other. People are very competitive. You cant just pick good players from the thin air people actually need the environment that ables them to climb up. I say that one cant exist without the other for the games to be actually healthy and thriving. Phil please bring back the SNE system so people can move up and compete with the best.
I will absolutely play on your site once you get it launched!
Why do you believe in online poker still? imo solvers and people studying from solvers are pretty close to make it necessary a 0% rake for the games to be beatable. There's also real time advisors being sold. :(
For me personally it would be convenient if RIO launched a site, but I don't think you will be able to offer beatable games. (unless u make it 0% rake and win with publicity or something like that).
Stars strategy is taking into account online poker is done soon and they are just taking as much as they can before the end. All arguments by Negreanu are just from someone who works for the company.
It's pretty admirable Doug became Team Pokerstars and still talks honestly.
There should be NO RAKE in new poker sites. It should be subscription based, $250 a month, unlimited poker all limits and games. 50 million in revenue a year not enough, too fin bad. You are not the pioneer of internet poker, you dont deserve "pioneer's pay."
If 5000 people deposit $500 each on a poker site, the site is in possession of just 2.5 million in player deposits. The players are all going to play microstakes, so the site wont be converting the majority of that $$$ into rake/revenue. Subcription based site is the way to go. You can charge customers based on the stakes and # of hands/tournaments they play.
Awesome post! Really puts things into perspective regarding game selection.
Nobody is being helped in the short term besides Amaya.
Why is this a shock to everyone?
A for profit business is pushing in the direction it is currently headed to make the most money and still not alienating their most profitable customers. They will continue to do this until a financial case is demonstrated to them that they pushed too far and then they will change direction again in a way to make the most money.
What surprises me is that ''Regs/Pros complain that a for profit site do not bend over to facilitate pro players who feed off the less experienced and rec players whilst giving them max rake back and other incentives to do so.
Every site is out to make money and for Amaya they have found this model along with ''casino games'' and gambling help them to meet their objective. Stats so far have proved them to be right.
Are we hoping Phil is going to start a low profit business to facilitate experienced players eat all the fish whilst taking a small income. Grow up guys, this is called business and pro players are upset that a company has taken a soft part of their income away.
This isn't the case of them doing what is the most EV it is simply position abuse where in many ways they have near monopoly in offical/regulated poker. Add to this increadibly high entry bariers for new businesses here (probably milions of dollars). Also the regualted markets with their licensing costs which makes Stars even bigger because small sites can't afford going thru licensing process and pay the fees. So the problem is that poker rooms have a lot of fixed costs but the bigger the room the less it pays per player. So it makes no sense for a 200 people online poker room to try to get Italian/French/Spanish license only the few biggest players can do.
So this is the same situation as in our games where highstakes regs pay the least amount of rake in terms of their rake/winnings ratio. Or as in our economy as it is called economy of scale where rich are getting richer and poor are getting poorer.
Besides no one proved that Amaya model is correct or the most +EV. This is what they desperately try to convince everyone . But this is just not true.
To give you counter argument . One of the biggest critics on 2+2 of Amaya is Talal/Radialot. He is an incredibly succesfull hedge fund CEO that has been doing deals for like 30+ years and in terms of his business decisions and how succesfull he has been in his life he dwarfs anyone that has been in charge of Pokerstars after Sheinbergs had left.
So who do you want to belief?
Lee Jones that his biggest business deal was taking charge of Cake Network that he burned to the ground and left when it was shinking ship to be back with Pokerstars?
The Stars CEO Ashkenazi who went from Playtech where when they lost probably 2/3 of their poker traffic when he was CEO there? They guy that was fighting poker with all his heart and turned PLaytech to what it is today basically casino group with laughable poker income?"
Like you seriously belief they have an idea what they are doing? I mean unless you assume like Askenazi that all poker players are dumb and we just do it like we did with Playtech so make the client terrible and rake insane high so no one enjoy playing poker so they play more casino games/bet on sport. Success!!!
Or maybe you can at least imagine that if CEO of sucessfull hedge fund with 30+ years experience of deal making calls them basically greeedy idiots that will burn the business to the ground right???
This is like my biggest dream come true if Phil made a deal with Talal and they did this business together with fairness and transparency and within 3-4 years all the casino scumbags would be gone.
Man can dream
As of 2018 Mark Scheinberg`s net worth is 4,8 billion. You call this a low profit? What is low profit anyway? Is it 10 million? Is it 100 million? Is it a billion? At some point you start to wonder how much money does one man even need? I really don't know. Maybe you can tell me.
What Pokerstars is doing is fine in a short run but those things are not gonna last. They are pushing the limits and they can do that because they have no competition at the moment. They want to milk the cow as long and as quickly as they can. They have 0% respect for online poker, only thing they care is bigger bank account. They can continue forever as a casino but not as poker site. At some point their luck is going to run out and when this time comes the companies with smarter personnel are going to take over. The opportunity is there now, question is who is making the first move. I believe that Endgame 1 is going to be way more successful in a long run and obviously way healthier for the games as well. Even if Phil goes with this so called 'low profit' business plan with very low rake structure i'm sure he is gonna be fine financially.
I don't really want to defend stars here, because I don't really know how things used to be or the extent of the changes. But it strikes me a bit strange that in these conversations stars is always the devil while party or 888 are "doing some good things", even though those two have way higher rake.
888 only dumb people say they are good because they are a lot worse than Stars.
Party what you are saying is just not true and Stars spreading false information. Their rake is higher but their effective rake is a lot lower because of how much they give in promotions/cashback etc.
Granted their vip program is maybe too friendly for regs and should give more recreational players but for most of their player base the rake they pay is 30-40% lower than Stars. If not less.
I believe even with Stars own analysis Party overall rake is 108% of Stars but they still have rewards system that gives players big chunk of it back
After a bit more thought, I can see at least two other scenarios happening:
Endgame 3 - RIO succeeds and alongside Party et co.generate most of the traffic in online poker due to the fact that Beat the clock and Spin and Go's are not sustainable on the long run. A significant part of recreationals will move to conventional poker sites because they prefer complex games. They are shortly followed by regs, and Pokerstars becomes the poor game across the street with high rake and 0 Customers.
Endgame 4 - RIO succeeds but this time Pokerstars adjusts to the situation, and the whole landscape of online poker is reverted to the exact moment when Amaya bought Pokerstars.
You have a way with words that makes me wet, Phil.
make the good future happen Phil!
Granted I haven't played online poker seriously in 3-4 years, but I still like to log onto stars and play a few hours each week. I know I'm late to the discussion, but I feel there is a major flaw in the Bhupan analogy. Essentially, the situation where Bhupan is losing less at the rec-filled high rake table than at the pro-heavy low rake table won't happen because pros will realize they can win more in the rec-heavy high rake games. At equilibrium, both pros and recs can expect to earn the same winrate playing either game, obviously with pros making more than recs. The caveat here is that charging a higher rake merely yields a higher effective rake for both pros and recs. If this winrate for pros drops below zero, pros gradually leave the game (and in reality will be the weakest pros) until the rec:pro ratio becomes large enough for profit to be sustained once again. However, the benefits recs recieve from greater rec:pro ratios are cancelled out by the increases in rake.
Feel free to skip this as the rest is just technical game theory stuff to reinforce my summary in the paragraph above.
Consider the population of poker players, a proportion p of whom are deemed professional. We assume pros win at a rate w off the recs, and zero against each other. Subsequently, recs win zero off other recs. There are two sites running, one of which offers a rake h (the high rake site) and the other a rake of l (the low rake site). For simplicity, I'll assume each site is capable of running the same number of games though the core results do not depend on this. Let p1 and p2 be the proportion of pros on site l and site h respectively. Note that (p1+p2)/2 = p.
Winrate at each site is given by:
(1-p1)w - l (pro at low rake site)
-p1w - l (rec at low rake site)
(1-p2)w - h (pro at high rake site)
-p2w - h (rec at high rake site)
Equilibrium conditions are:
(1-p1)w - l = (1-p2)w - h
-p1w - l = -p2w - h
Using these along with (p1+p2)/2 = p we get:
p1 = p + (h-l)/2w
p2 = p - (h-l)/2w
Winrates at equilibrium are given by:
Pro winrate: (1-p)w - (h+l)/2
Rec winrate: -pw - (h+l)/2
So essentially the outcome is the same as if everyone played on a single site where rake was the average between the two sites. Clearly, if the high rake site chose to offer the lower rake l, both pros and recs would be better off. Implicit is the assumption that the pro winrate exceeds zero, that is (1-p)w - (h+l)/2 >= 0. If it doesn't, the proportion of pros p will fall until the winrate is no longer negative.
*In real life, due to oppurtunity cost, the threshold for the winrate will be some positive number.
Consider the situation where pros can only breakeven. The winrates are given by:
Pro winrate: (1-p)w - (h+l)/2 = 0
Rec winrate: -pw - (h+l)/2
Now consider the high rake site wants to increase rake to drive out professionals. In this case, it may seem like the rec players could benefit from increased rake lowering the amount of pros in the games, but it turns out the benefit to driving away professionals is offset by increases in rake. We can look at how the rec winrate, now denoted by R, changes:
dR/dh = (dp/dh)(-w) - 1/2
Note that changing h results in a new p, and specifically the new p will satisfy:
(1-p)w - (h+l)/2 = 0 ------> p = 1 - (h+l)/2w
and that dp/dh = -1/(2w)
Thus:
dR/dh = (-1/2w)(-w) - 1/2 = 0
And rec players recieve no benefit from this rake increase. Long story short, higher rake screws everyone but Amaya.
Didn't see this until now. Very interesting model you put up there. Kudos.
How many of you actually believe that this Bhupan character actually exists? What kind of casino takes 3x times from the beginners? Is this really a thing? And what stops Bhupan and his recreational buddys to go to the casino across the street where the rake is 3 times lower? This story makes ZERO sense!
I do not think recreational players doesn't even know what rake is.
You are overthinking this. Also Negreanu is Amaya's PR guy, it is his job to justify their immoral practices.
Look. Don`t get me wrong. I actually like the guy, but... As a poker pro himself he should fight for all poker players (pros and recreational players alike) not make up fake stories. He is basically lying to recreational players about the rake and thats not cool.
Reading this I like the way Phil's brain is gearing ups for what is to come I like the game he is playing. It may be about more than profits here it may be about the future of online poker. It is war business but also war for poker to be a beatable game where skill is mixed with luck and fun not sad faces due to unbeatable rake. Nobody wants to feel raped while playing the game they love. For credibility for RIO poker I believe Ike Haxton for obvious reasons would be a good and hopefully cheap (only for the cause) alignment for Phil and ROI. This is David and Goliath but David has truth quoting Augustine of Hippo — ‘The truth is like a lion; you don’t have to defend it. Let it loose; it will defend itself.’ People should recognise the truth or they are not poker players at heart they are fish and should be put down and ridiculed for playing poker at stars vs a beatable game. This is poker not Roulette god dam it this issue gets to me
If RIO can deliver half of FTP was (moderate/good traffic,software,games variety,okay rake),I think we have a winner !!
I am a recreational player and really enjoy playing poker. I am 29 and have played on and off for 13 years. I wanted to be a professional poker player when I was 18 but never had the strength of mind to not jump into games which were much too big for my bankroll. I am now on The Board of a PLC company and earn cash that is better than I could ever have dreamt of when I was grinding away on Pacific Poker in 2006. The thing that keeps me going back to Pokerstars is their MTTs. I know that cash games are the heartbeat of a poker site, but for me, I can only ever play on a Sunday due to a heavy work schedule. The beauty of Pokerstars is that I can deposit $2k, play in a bunch of $50-530 tournaments and load up some 200 Zoom PLO/NLH games as I drop out of the tournaments. The cash incentive to final table these tournaments is what keeps me so interested, because I can't make it out to Vegas for the WSOP. If you can grow RIO to create MTTs that can offer a similar experience to Pokerstars, I will be 100% signed up , and I will gladly hand over my money to the pros.
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