Originally Posted by
Erin Micunt
Everything has a chain effect it will be interesting to see how much. Obviously they are going to generate less rake. Even though they are giving back less, their profits in that area will still be lower. With regard to the bolded and continuing the chain effect concept, even though it might not be very noticeable, since there are less regs the recreational players should lose at a slower rate. Since these are the players that are driving the deposits on to the site, we can assume there will be way less deposits and at a slower rate since these players in theory should be going broke over a longer time frame.
So a simplified outlook of what I see is, less profit for pokerstars but potentially longer shelf life for recreational players. Not sure this was the optimal approach for pokerstars to go.
Yes, but in this new model, there will also be fewer cashouts, which will offset the fewer deposits.
Let me give you an example.
Say a fish deposits $5000 and sits with me heads up at 30/60 Limit Holdem. In 300 hands at 50 cents rake each, I beat him for all $5000, and they collect $150 rake in the process. I then cash out the $5000.
In this model, the poker site LOSES money, because they probably pay about 10% fees for both the deposit and cashout ($500+$500 = $1000 total), and only make $150 in rake. So that's a disaster. A large deposit actually ended up COSTING the site $850!
If instead this fish ends up playing a fairly long time on the $5000 before losing it, and if those beating him also do not win at a high rate (and therefore don't cash out), the entire $5000 will end up being raked. In this case, the site will end up making $4500 on the whole thing.
So that's my whole point. Money deposited to the site which doesn't rake enough before being cashed out (by someone else) is a disaster for Pokerstars. Amaya realizes this. While they are not banning winning players, they are at least downgrading their formerly special/high-reward status, and bringing their perks back down to earth.
Basically, Amaya is saying, "We don't really want you, but you can stay here. However, we aren't giving you the world anymore and treating you like royalty, because you actually are a negative to our economy."
I think that eventually we will see an end to the entire tiered VIP program, and everyone will instead simply earn rewards at a flat rate. The tiered reward system benefits grinders and punishes recreational players, and Stars is now big enough to where they don't need to incentivize the grinders to play. Grinders are only of value if you need them to be pseudo-props to get games going. If games go on their own, you don't need them.
Look at Bovada's model:
- Generous deposit bonuses and other perks for losing recs
- Very few (if any) bonuses or incentives for regular winning/breakeven players
- No rakeback for anyone, except for the very few people grandfathered into old affiliate deals
- No rewards program, aside from a laughable, non-tiered "poker point" system where you can slowly earn tourney entries
- No investment in silly "site pros" who don't translate into new players or any kind of real value
They are still rapidly growing despite this.
I realize that they are one of the few large US-serving rooms, so they are in a different situation. But still... they know what they're doing, and I imagine that Stars is lagging behind in this area because they were largely succeeding with what they did right (software, customer service, promotion) and this left them unaware and uncurious as to what they were doing wrong. Not anymore. Amaya is learning, and learning quickly.
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