PokerStars Needs To Take Rewards Away From High-Volume Players, Even If It’s Unpopular

Apr.13, 2017 10:01:AM
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    PokerStars taking away rewards

PokerStars has found itself in unfamiliar territory since the company was sold to Amaya in 2014. A steady stream of criticism has been lobbed at the once-unimpeachable company by a small but very vocal segment of the poker community for changes to its product.

The critics have characterized many of the changes as a cash grab by Amaya. They call it a pivot away from poker, and toward casino and sports betting. Some see the changes as a direct assault on the professional class of poker players.

Among the changes that have caused a rift between PokerStars and high-volume winning players are:

  • The rollout of lottery-style Spin & Go tournaments
  • The removal of virtually all heads-up tables
  • Rake increases in certain games
  • The introduction of new luck-infused formats that blend casino and poker
  • The addition of sports betting and casino options

But the most controversial changes have been to the long-ballyhooed PokerStars Rewards program. These changes have slashed the rewards some players receive.

The opposing point of view

If you listen to PokerStars, you’ll get a completely different perspective. The company believes the changes are not only warranted but necessary. It is now trying to relay some hard truths to the players who feel they’re being treated unfairly.

The reality is they’re just being treated less well.

PokerStars points to the need to fix what has become an imbalanced ecosystem, brought on by changing dynamics in the poker world. Namely, there’s a shortage of depositing players and an abundance of withdrawing players.

So it’s not that PokerStars hates pros or wants to turn everyone into losing players. But there is a strong distaste for the methods some pros use to make their money. Mainly, they play an ultra-tight style across numerous tables and rely on the rewards they receive to turn a profit.

PokerStars would like to see them playing higher stakes and adopting a style of play that gives more action. That would be in place of bottom-feeding and playing an extremely tight, vanilla style across dozens of tables — volume for volume’s sake.

In part, the changes PokerStars is implementing are designed to force players who want to make money playing poker to move up in limits to maintain their win rates. That leaves the low-limit tables to the recreational or beginning players in looser, more volatile games.

‘Deserve’ has nothing to do with PokerStars rewards

Somewhere along the line, rewards (measured in rakeback) became something players felt they’d earned through a high-volume of play. It just became part of their win rate.

Because of this, the loss of rewards is largely mischaracterized — or perhaps oversimplified — as a rake increase. Yes, the rake has increased in certain games. But the rewards cuts are simply the revocation of a perk from which certain players were benefitting.

In most games, the actual rake hasn’t changed at all. Additionally, effective rake (rake minus rewards) for most players hasn’t changed much either. But for some players, mainly high-volume winning players, the effective rake they pay has undergone a seismic change.

Because of this, it’s easy to understand why high-volume players see the changes as nothing more than PokerStars implementing a round of austerity. They see it as PokerStars punishing them and helping pay down the nine-figure debt Amaya took on when it purchased PokerStars.

The relationship between poker site and player needs to change

Unfortunately, there isn’t a sacred pact between poker rooms and players that says they have to provide players with money — or a refund on the price they charge in rake in order to make sure they can earn what they think they deserve to earn — simply because they play a lot.

The rake is the price charged by the card room to spread poker games. Rewards are an enticement to play. The two can fluctuate independently of one another.

This is one of the reasons PokerStars is trying to rebrand the rewards program as a bonus, rather than a core part of a player’s winnings that is somehow anchored to the amount of rake they pay.

The malcontents also argue that PokerStars and other online poker sites were previously rewarding the very behavior they’re now trying to dissuade.

Much like the closing scene from the movie Unforgiven, there are reasons to feel empathy for Gene Hackman, or in this case the former Supernova Elites. They really didn’t deserve this. They were just doing what they believe is right and what they’d been conditioned to do.

At the same time, from the opposite perspective, “deserve” has nothing to do with it. For PokerStars, this is about survival.

Evolve or die for PokerStars

During the poker boom, the poker economy was firing on all cylinders. New players were showing up in droves. Poker sites were more than happy to reward players who put in tons of volume and brought in more rake. The conditions were perfect, and everyone was happy.

But things change.

Imagine being Amaya circa 2014. They’re looking at the beautiful new asset they recently acquired (for a princely sum) and quickly realizing, “Houston, we have a problem.” The influx of new players and new money had slowed to a crawl. Player attrition was occurring at an accelerated rate.

Basically, the number of new players and money coming into the poker economy was no longer offsetting the players and money leaving the economy. Furthermore, the cost to bring in new players was increasing.

Fewer new players meant slimmer pickings for winning players. The games became tougher to beat. Not surprisingly, many previous world beaters suddenly invaded the $2/$4 no-limit hold’em games.

Fortunately for them, improvements in poker software, tracking software, and PC and laptop capabilities provided them with the means to play more and more tables. These players quickly realized the best way to make money wasn’t by beating their opponents. They played extremely high volumes at lower stakes and reaped the rewards of the VIP program.

It had the added benefit of reducing variance and avoiding most of the apex predators who displaced them from the higher stakes tables.

In some respects, these players (rakeback grinders) became scavengers. They started playing tighter — that is a necessary part of playing a multitude of tables — hoping to at least break even. But being a slight loser was OK too. In doing so, they could pocket the six figures of rewards coming their way for hitting Supernova Elite status.

The new equation for PokerStars

A simple fact of life for a poker site is this: New money coming in has to offset the money going out. Not only was this becoming an issue, but in the case of PokerStars, it was heaping the bulk of its rewards on the players most responsible for the attrition rate of new players.

As one PokerStars insider told US Poker: “The environment around us was changing and the company was going to have to adapt to that new environment. It’s evolution at its most basic; you adapt or die … we couldn’t afford to continually reward winning players for being winning players – the numbers simply didn’t add up.”

“I think the fairest way to state that is that the Scheinbergs would have eventually decided to make many of the changes that you’ve seen under Amaya,” he added.

And it’s important to note that it was the Scheinbergs who got the ball rolling on casino and sports betting, not Amaya. However, the sale to Amaya likely sped up the process.

“Without the pressure of quarterly earnings reports or big debt to draw down, they might have taken a bit longer to make those changes,” the insider noted. “As private owners, that was certainly their prerogative.”

Final thoughts on PokerStars

In many respects, PokerStars (and the rest of the online poker industry) is partially to blame. This is the behavior PokerStars and others were rewarding for many years. It was behavior the previous ownership was loath to address for fear of causing the backlash that has landed at Amaya’s feet.

It was left to Amaya to make these difficult decisions. While the changes sting now, there are people outside of Amaya (with no financial interest in the company’s bottom line) who believe the road Amaya is taking will get them to the proper destination — even if they do miss an exit or take a wrong turn here and there.

To get to this point will require a lot of trial and error — from marketing initiatives to new game formats to further adjustments to the rewards offered. Most importantly, it will need to remain fluid and capable of evolving as the situation on the ground continues to change.

   
Steve Ruddock
Steve covers nearly every angle of online poker in his job as a full-time freelance online gaming writer, with a focus on the regulated markets in New Jersey and Nevada for USPoker.
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