PokerStars has made the decision to lower its rake for certain games, a statement on the PokerStars Blog announced today. The rake reductions have already taken effect for “Hyper-Turbo” Head’s Up SNG’s, as well as Head’s-Up cash formats.
Plans for future rake increases this year have also been permanently suspended, the statement said. Also noteworthy is that the rake increase on the new “Spin & Go” games has remained intact.
No prior indication had been given that such changes were in the works. Although the announcement caught players by surprise, it is a move that is unsurprisingly being met with enthusiastic approval.
Rake Returned to Pre-Increase Levels
The reduction returns rake levels to where they were prior to increases announced in November of last year:
After additional analysis and consideration, we have now returned the rake to pre-November 3 levels in most instances and have cancelled the planned additional increases,” the statement said. “Spin and Go tournament fees and payout changes implemented on November 3 will remain in place.”
The company additionally pledged to keep the freeze on rake for the duration of 2015, except in jurisdictions where its costs have increased due to regulation.
Amaya Gaming Forced to React to Market Pressures
The Amaya Gaming company heavily leveraged its purchase of the PokerStars brand in the summer of 2014. This led to speculation that a string of decisions by new management raising both rake and fees at the site were being made with the aim of short-term profit, without any regard for the long-term consequences to its poker ecosystem.
Now, it appears as if those accusations were largely correct.
The uptick in fees had been considered severe by regulars on the site. For example, the “cap” on rake — meaning the most that could be taken out from any single pot — had doubled for the popular “Head’s Up” format, from $.50 to $1.00. When it was announced, angry players flooded poker forums, claiming that the increase made the game unprofitable and vowing that they would either be taking their business elsewhere or quitting the site altogether.
That shift in patterns seems to have materialized, with the corresponding drop in play tipping the fees past the supply/demand equilibrium point and actually costing PokerStars profit on the affected game types.
This would explain why the “Sit & Go” format — and its more recreational, less rake-conscious player base — will not have its rake reduced.
Personalized Rake Levels Coming Soon to a PokerStars Table Near You?
Buried within the statement announcing the reduction is this sentence: “We are also developing the ability to charge different rake/fees for different players within shared liquidity.”
The trials and tribulations surrounding US online poker regulation was the industry’s biggest theme in 2014. This story is very often told from its positive side — access.
However, this is a false narrative. What regulated online poker sites really need is not access; what they need is profitable access.
It’s impossible to ignore that the flip-side to regulation is that governments charge a premium for the privilege. In any business, this cost gets passed along in some measure by the service provider to the consumer. What makes online poker unique, however, is that some consumers benefit more from consuming the service (in a pure quantitative sense) than others.
It’s no secret that poker sites have a love-hate relationship with winning players, and would love to charge them more for access to the tables than depositing players.
Right now, that idea — that some may pay more than others to access the tables — is confined to considerations of regulatory cost. However, read a certain way, the statement seems to crack the door open toward going even further and truly “individualizing” rake.
If that is the direction PokerStars decides to go, we may see a time come when winning players will be individually targeted for rake increases.
The decision for the industry leader to lower its prices will be hailed by those grinding the games right now. However, what the choice to reduce rake means in the broader industry context is much more complicated.
I believe that it’s a positive that the world’s largest poker site is acting in-tune to player concerns about poker remaining profitable in order to stay viable in a very competitive gaming market. Nevertheless, it’s obvious from the wording of the statement that this only occurred because the profit motive of PokerStars and grinders aligned when player traffic patterns shifted following the rake increase.
Overall, I read the statement to be more a shot across the bow toward the “regulars” in the poker-playing community.
An “across the board” rake hike may have failed to increase profits; the idea that profit margins must be expanded, however, will not. Dealing with the costs of regulation seems to have kindled the idea that some players should pay more for a seat at the table than others.
Right now, it’s limited to country or origin, but there is no reason to believe that it will only stop there.