Back in October 2014, online poker juggernaut PokerStars provoked the wrath of the community when it unveiled sweeping changes to its rake schedule. Apparently, Stars took the outcries of its loyal players to heart, as the company has recently announced that it will be reversing course on most of the changes, and will not be instituting scheduled amendments due to go into effect this month.
Instead, according to PokerStars Head of Corp. Communication Eric Hollreiser, Stars will only be increasing rake in the growing number of “jurisdictions where we have already or will experience increased gaming duty or VAT.” The number of countries that have regulated online poker has grown dramatically over the past several years.
Unsurprisingly, the rollback was met with near universal approval from members of various poker forum groups.
Winners and losers
One beneficiary of Stars’ sudden change of heart are low-to-mid stakes heads-up grinders, who in November saw the rake cap of all no limit and pot limit HU games increase from $.50 to $1.00.
Other winners include hyper satellite and heads up hyper-turbo Sit & Go players, the latter of which will notice slight increases to prize pools. For hyper satellite players, it will be business as usual, as the rake increases that were set to take hold on January 1 will never happen.
But I’d argue that the biggest winner of all is none other than PokerStars itself, who by spinning itself as a company that takes the community’s feedback very seriously, has in one fell swoop restored at least a portion of its lost brand credibility.
On the other side of the fence are Spin & Go enthusiasts. In November, the rake for the popular lottery format SnGs was bumped up to 5-6% across the board. Looks like those changes are here to stay. Additionally, it doesn’t appear as though Stars’ lucrative Battle of the Planets promo will be making its way back into the promotional rotation.
Possibly the biggest losers are players housed in markets were online poker is regulated. Unfortunately, legal poker comes with a price tag, and someone has to pay up. And that someone is typically the player.
Although as indicated by Hollreiser, Stars’ does intend on shouldering a portion of the burden:
“We will continue to use a combination of rake increases and VIP Club reward reductions to address the increased taxation, but these changes will be made consistent with our past practice of sharing up to 50% of taxation with players.”
Fair enough, but while decreasing VPP multipliers for players in select countries seems like a relatively intuitive and clean solution, how exactly does Stars intend to rake certain players on its .com site at a higher rate than others?
Apparently, Stars’ has a plan in mind, albeit one that may cause mass confusion and a second round of community outcries.
Different strokes for different folks
In Tuesday’s press release, Hollreiser states the following:
“We are also developing the ability to charge different rake/fees for different players within shared liquidity.”
As I see it, this presents one of two potential complications, depending on which approach PokerStars decides to take.
On one hand, if a larger rake is taken out of some players’ winnings, it creates an imbalance in the poker ecology. To illustrate, imagine a scenario where Player A, who is from a grey market, and Player B, who lives in a country where online poker is taxed, are competing for the same $30 pot. If Player A wins, he’ll receive $28.50. Should Player B be the victor, he’ll only receive $28. See the problem?
In short, players that live in countries where poker is subject to taxation will be at a clear and visible disadvantage compared to those who do not. In turn, these players must play that much better in order to have the same edge as their grey market competitors. With regards to perceived fairness, that’s a big problem.
The more veiled solution of increasing certain players’ contribution to the pot carries problems of its own. In this scenario, grey market players who engage players from regulated markets will feel the burden of the regulated market player’s increased contribution. Effectually, the rake increases for all players.
Admittedly, this is a more elegant and fair solution, but savvy players may recognize that they’re better off not sitting at tables comprised of mostly regulated market players. Again, this is a problem.
Implications for the U.S. regulated market
That’s not to say the concept of different rake/fee schedules within the same player pool is necessarily a bad idea, far from it. It’s just that any proper solution will require a great deal of planning and ingenuity.
If anything, should PokerStars manage to get this right, it opens up a slew of possibilities, particularly in fragmented markets like the United States, which will ultimately rely on interstate compacts between states that tax online poker at different rates.
A malleable rake schedule eliminates one of the biggest hurdles holding these types of compacts back.