Why is SNG rake so high?

[suzzer99]

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The fact that they don't seem to listen to totally rational explanations and are unable to give rebuttals to them infuriates me.

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That's because you say stuff like:

"It's abundantly clear that they're far better off charging $1050+20 for a SNG than charging $1050+50 and getting almost 0 action per day"

"By taking a 7-9% vig in a pool that naturally will contain less fish, they ensure themselves of offering a game that is nearly unbeatable and therefore unplayable, FPP promotions or not."

"If they lower the vig to about 2-4% across the board, they'll get overwhelmingly more players, as well as the multi-tabling players who can put up 8-12 tables at a time and play 100+ SNGs a day."


But you don't really back these statements up with anything except that you're 100% sure they're true. And the only rebuttal you have for Lee Jones' overfishing argument is that it's "absolutely idiotic". What he's saying is that he has to make it fairly tough for you (us) guys, especially as SNG science becomes more and more solved vs. what the casual player is doing. In that there's a balance. He thinks the balance is good where it's at. You don't. The fact that it's a little painful for you probably makes him feel better.

You think the $1050s will increase enough if he lowers the rake $30 to offset the 60% drop in revenue they would see on each one. He doesn't. I'm sure there's a good chance their business model isn't 100% optimal. But I have a feeling Lee and his team pour over a lot more real data than any of us could possibly have access to and spend a lot more time thinking about it. So I tend to give them the benefit of the doubt that they know what they're doing more than I do.

Anyway this is messed up because I'm basically on your side. I would love to see them lower rake. I just can't force myself to think it's necessarily a good business decision for them, or get all righteously indignant about it. I think if we're really going to bat with this thing we need some better arguments than what I'm hearing so far. So I'm done being a defacto PS shill now. Carry on.

[Josem]

1) Lee's argument about overfishing is really crap..

To maintain the balance between good players and bad players, the amount of money in the poker "economy" must be stable or growing.

Obviously, rake is money taken out of the economy never to be returned. Thus, it must be balanced by the money that is deposited for the economy to stay stable (or, ideally, grow)

Obviously, not 100% of a fish's losses are withdrawn by other players - a chunk of it is played with again, and some is lost to other fish, and so on.

If you want to prevent a dwindling poker economy, as Lee seems to suggest (although he uses the phrase overfishing), the single and only thing to do is to reduce the rake.


2) the clearest comparison for SNG rake players is the $/hr paid in rake.

the biggest cash games don't pay much mroe than low stakes NL player - someone can get the figures if they want.

by contrast, the biggest SNGs pay many times as much. this is why SNG players hit SNE first - 'cause they pay so much more rake.

[cougar62]

I really find it amazing that some people think that these poker sites have little to no idea how to maximize their profit. You, me, and just about everyone else who posts in this forum spends countless hours trying to maximize our own profits at the poker tables, wouldn't you think that the poker sites do the exact same thing with their business? Of course they do. Stars and Full Tilt did not become leaders of a gigantic industry by not fully understanding the dynamics of the marketplace they operate in, just as no player can be profitable long term without understanding the dynamics of the games they play.

Of course I'd like to see lower rakes, and I'd like to see lower gas prices, car prices, cable bills, etc. too. But the simple law of supply and demand establishes the market price of all these things, and until the marketplace changes the prices will stay the same.

If the market can't bear the current rakes, the rakes will go down. This is quite possible IMO, especially at the higher buy-ins, as competition gets tougher and high volume players find it tougher and tougher to achieve their desired profitablility, or can be more profitable elsewhere. Then again, it might be more profitable for PokerStars for this to happen, so they might be more than happy to watch their volume move from SNG's to cash games.

The whole point is, these sites know what they're doing, and the rakes are what they are because it is optimal for them to be that way.

[DCJ311]

The whole point is that the market can't bear the current rake!! That's why you see very few SNGs filling up and tons of cash games being played! There are 8 active $25/50 NL tables on Stars right now and 7 $10/20 NL. As far as I can see there are no $525 and $1050 SNGs being played, which is a total joke. Believe me Pokerstars has no idea what they're doing when it comes to SNGs.

The easiest thing to do is just have a 'promo week' where SNGs are advertised with half the rake that's being offered now. If their SNG business doesn't AT LEAST double then they shut down the idea after a week. Obviously they will get way more than 2x their current business but they'll never do such a thing.

WTF.

[DCJ311]

Moreover, the Sunday $215 and $530 and $1050 Tues/Sun tournaments garner anywhere from 350-8000 people. Do you really think Pokerstars is doing everything they can to reach out to this market? Obviously there are tons of players who are able to plunk down $1050 for a tournament buyin, they just know they can't beat $1050+50 STTs because the rake is an absurd joke and Stars does a bad job advertising STTs, which yield them their most profitable hourly rate at the higher buyins.

[TruFloridaGator]

Some of you need to calm down. There is really no way to tell if Stars has the right balance/equilibrium without doing some extensive testing. We don't know at what rake level will maximize their profits so stop saying they are wrong or they are right. That is ignorant. I think they would be very open to lowering the rake to a certain degree and doing some testing with that. Obviously if it didn't increase their profit margin they could go back to the way it was.

Regardless, I think we should all try to convince them to lower the rake rather than argue about what will maximize their profits because they/we aren't going to know unless they try changing them.

[Kevin8423]

If someone could write up some sort of proposal that somewhat goes in to this and sounds intelligent maybe they would pay attention to it. Throw some signatures on there and maybe it would have some chance at affecting the games.

[TruFloridaGator]

There is not even a need to try & tell them why they should change the rake for their own purposes. We just need to tell them in a mass quantity that we think the rake is atrocious. I'm not saying they will bend to our will overnight but it should be a good way to start it.

Last time I heard, they were "considering" my proposal to decrease the rake % of the 32+3s and add more of them registering. That doesn't mean [censored] but I am just one person. I think the whole forum will make a difference & if not, then we can certainly get some more serious ideas in motion.

Taxation without representation, mother [censored]!

[DCJ311]

You have to remember that this is a site that took absolutely forever to start Turbo SNGs even with all the clamoring from people. The owner of Stars is VERY involved in the poker managing aspect of the site and is a purist, so it took him forever to come on board with the idea of faster tournaments. Who knows where upper management stands on SNG rake, but I have sent them proposals in the past that definitely caught their attention, even though nothing ultimately came from it.

Bottom line is they really have nothing to lose at this point so why not try to tinker with the format and see what happens? BTW I sent Stars an email that I may post here later on.

[TruFloridaGator]

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You have to remember that this is a site that took absolutely forever to start Turbo SNGs even with all the clamoring from people. The owner of Stars is VERY involved in the poker managing aspect of the site and is a purist, so it took him forever to come on board with the idea of faster tournaments. Who knows where upper management stands on SNG rake, but I have sent them proposals in the past that definitely caught their attention, even though nothing ultimately came from it.

Bottom line is they really have nothing to lose at this point so why not try to tinker with the format and see what happens? BTW I sent Stars an email that I may post here later on.

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Why don't you work on one we can all sign one of those petition sites? We should of had one done months ago...