April 07, 2011

Rake review on PokerStars?

There has been a lot of speculation as to a possible reduction of SNG rake on PokerStars after this statement was made (by 'PokerStars Steve', of 2+2 Pokercast fame) upon Double or Nothing tournaments being replaced:

PokerStars is currently evaluating all Sit & Go offerings, including rake. The stakes offered and rake for Fifty50s are in line with the changes planned for all Sit & Go Tournaments on PokerStars in the coming months.
This has turned into something of a sick slowroll by PokerStars, as two months later nothing has been implemented, and all we are being told is that "these changes are still planned for the coming months".
PokerStars are beginning to sound like the people who owe me money. I've been told "I'll pay you next month" so often that I'm beginning to think there is a 13th month called "next month", and that it only occurs every leap year. Perhaps that's when this will actually happen!

Current rake structure
Currently the rake structure on PokerStars is pretty illogical. There is no real pattern to the rake they charge. It almost seems as if the numbers have been made up at random.

Looking at 9-man and 18-man turbo SNGs:

Buy-in Rake Rake %*
$1.50 $0.25 14.2%
$3 $0.40 11.76%
$6 $0.50 7.69%
$15 $1 6.25%
$25 $2 7.4%
$35 $3 7.89%
$55 $5 8.33%
$105 $9 7.89%
$210 $15 6.66%
$315 $20 5.97%
$525 $30 5.4%

The increase between 6.25% at the $16 level, and 8.33% at the $60 seems completely nonsensical. Based on the astronomical rake for the micro-stakes, and the much lower rake at the highest stakes, a gradual rake reduction would surely make much more sense?

Comparison to cash games:
Level (NLHE)
Rake %
Rake Cap (in BBs*)
*in Big Blinds
**Chart presumes 9 players at table
***Source: pokerstars.com

Similar to SNGs ($25-$55 buyins) the mid-stakes cash game players ($2/4) are getting a raw deal, but a much more gradual reduction of rake is evident as stake increases, to the point where the highest stakes games have barely any rake.

My example 
If I were in charge of SNGs at PokerStars (perhaps I should send in my CV as they are looking for a SNG Tournaments Manager!), I would propose that something similar to table below be introduced. It mirrors much more closely the rake policy for cash games. Obviously my temptation is to put $27+0.01, $38+0, $55-15 etc. as I grind these games myself, but I think that a change to a rake format similar to the one I have devised below would be an excellent change by Stars.

Rake %*

You might ask yourself why PokerStars should make such reductions to it's rake policy, as it is already the most popular poker site in the world, and they are quite literally 'raking it in'. Obviously they are going to earn less money per game under a structure similar to the one I have suggested to one they currently have. However I think the increase in traffic to the games that would result would compensate them for this loss.

A reduction in rake should ultimately make the games more popular. They will become much more beatable, so regs will enjoy a higher winrate. This could well encourage them to play more and is very likely to see them move up in stakes where they will inevitably rake more for PokerStars.

Currently the high stakes SNGs ($200+) are virtually dead and rarely get running. At peak hours there are currently no A particulary favourable rake for the highest stakes games might mean they actually get some action rather than just cluttering up the lobby.

If PokerStars introduces a SNG rake lower than other poker sites, it is very possible it will steal players from other poker sites. Why play a $50+5 game elsewhere when you can play a $50+5 elsewhere when you can play a $55+2.25 on PokerStars?

It is argued that fish don't care about rake, and whilst largely this is probably true, the fact is that with a lower rake they are going to lose their money slower. SNGs with a high rake are hard enough to beat for the best regs, so a fish might get eaten up so quickly that it deters them from playing any more. At least give the fish a fighting chance! It is really important for the longevity of the games that the fish survive. This is shown by iPoker fining and kicking off skins from it's network that had too many winning players.

I remember hearing "server usage" put forward as a calculation towards the rake of SNGs. The length of time they take and such. I'm sorry, but this doesn't fly. If not, why not just make, for example, all 9-man turbo SNGs +$1? $16+1, $38+1, $1050+1, as they will be using the same amount of server space. Also, why do PokerStars run $0.10 360-man tournaments with no rake if this is the case? That's 40 tables, and if you go take a look in the lobby, there are an awful lot of them running. They also just had 113,700 entrants for a $10+1 MTT last week in the Sunday Storm for crying out loud! Now that's server usage! A much more important thing to base them on would be winrate.

Rake & Winrate
The current rake is so high for the $55+5 games that the 9-man turbos are essentially unbeatable. A quick look at the 2011 Sharkscope Leaderboards is a very telling story. In the table which incorporates $15+1 games (the most reasonable rake of the lower stakes games) 13 out of 20 players are from PokerStars, and 12 have earned $4k or more. In the leaderboard which incorporates the $55+5 games, only one out of twenty is from PokerStars, and nobody has earned more than $5k so far this year (see below).

Games that aren't sufficiently beatable are so much less likely to get played. I predict a resurgence in the mid-stakes games if we see a significant rake deduction such as the one I suggested.

VIP Club
There are some people who are making a fuss that a reduction in rake will make Supernova Elite less viable. Whilst this might seem true at face value, I think the increase in traffic in stakes higher to what people are currently able to play will mean it is still just as viable. If you play $55, $35 and $25 SNGs currently, maybe there will be so many $60 games running at the lower rake that you won't need to play the lower stakes games. Maybe you will be able to move up to the $105 games.

Even if this isn't the case surely a higher winrate is a better reward anyway? I mean, what would you prefer to buy? A £50 pair of jeans that you got for £22.50, or the exact same £50 pair of jeans that had 45% off in the sale?

2+2 Thread
A thread has been posted about this topic here, if you want to read what other people have to say on the topic, or get involved yourself...

Cliff notes
*PokerStars suggest they will decrease rake in SNGs
*It hasn't happened yet
*It should happen (and soon, please!)

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10 Comments to "Rake review on PokerStars?"

Unknown said...

Good post, I assume you have number crunched and worked out what your overall earn would be with reduced rake vs the same rake but you make supernova?

Mark said...

Excellent post imo. I would almost certainly move up if they reduced the rake higher up.

Truthans said...

Very good post. Although the player poaching due to significantly decreased rake structures could be an issue.

DM said...

How dare you be so damn selfish!! Trying to reduce the BILLLIONS that Stars make per year so that the fat cats could only afford 9 yachts each instead of 20 is extremely self centered of you!!!

Unknown said...

Barry - I haven't worked out any specifics because who knows what they are actually gonna implement, but any reduction can only be a good thing!

Longy - Thanks man, yeah me too

Truthans - Tyty, why would that be an issue, because of competition rules or something?

DM - lolz, I know ;)

Anonymous said...

Good post; however I disagree with your point in the "rake & winrate" section. The reason that nobody wins at the $60/9mans is because the people putting in volume there are the worst of the SNE grinders for the most part. All the good 9man players play higher stakes, and the non-SNE grinders play lower stakes.

Anonymous said...

Anon- That is surely a wrong concept. In a free market people go to where the most opportunity. There are always people to fill all segments of the market if there is opportunity. Obviously Pokerstars has created an artificial hole in the market that could be plugged by correcting the market structure.

Martcho said...

very good post!
you could have told about the money that pokerstars is going to lose with the regs that are quitting because dont get money enough from grinding the sngs.

Mark said...

Why don't we all post on the 2+2 pokercast and ask them to get Pokerstars Steve to answer the question on the blogcast? I'm sure if like 20 of us went in there and asked they would ask him...

Anonymous said...

insane good post james, best blog post i can recall reading ever! the structure for rake are really bad and make no sense!