Hypothetic Rake Restructuring Proposal for SNGs

[DCJ311]

I know that this is not the most opportune time to post this with all the problems going on in online poker, but I have been clamoring for rake reduction in MTTs and SNGs, especially SNGs, for a long time. Presently it's very tough to beat SNGs, and it should only get harder as the weeks and months go on, seeing as how it will be harder for newer players to deposit online. Eventually the SNG market will dry out if the games are too tough.

With this in mind, I made a spreadsheet that proposed a restructuring of Pokerstars' SNG rake to them via e-mail, which I suppose they looked over (they did not get back to me on it specifically).


Currently the SNG rake format on Stars is as follows, using Buyin/Fee/Rake % of Buyin

$3 $0.40 13.33%
$6 $0.50 8.30%
$15 $1.00 6.67%
$25 $2 8.00%
$32 $3 9.38%
$55 $5 9.10%
$105 $9 8.60%
$210 $15 7.14%
$315 $20 6.35%
$525 $30 5.70%
$1,050 $50 4.76%

It's painfully obvious how disorganized the distribution of fees are. The fee % of a $15+1 is better than a $210+15, which makes no sense. I know this has been addressed MANY times, but it is a flawed business model, plain and simple.

Here's my proposal using the same format but different fees for the $32+ buyins:

$3 $0.40 13.33%
$6 $0.50 8.33%
$15 $1.00 6.67%
$32 $2.00 6.25%
$55 $3.00 5.45%
$105 $5.00 4.76%
$210 $9.00 4.29%
$315 $12.00 3.81%
$525 $15.00 2.86%
$1,050 $25.00 2.38%

Basically I proposed a reduction in rake from roughly 40% for the lower buyins, and a reduction of 50% for the $555s and $1100s.

Now, in order for Pokerstars to profit from this restructuring, they'd have to receive an proportionate increase in SNG activity as follows:

Buyin/ % More SNG Fee Volume Needed

$55 66.67%
$105 80.00%
$210 66.67%
$315 66.67%
$525 100.00%
$1,050 100.00%

So basically if there are an average of 10 $1050+50 SNGs per day going now, there need to be at least 20 $1050+25s going to break even on this model.

This is where I had trouble proving my point that these numbers could be reached. My main theory was that if you increase the pool of players ever so slightly, there will be a huge exponential boom thereafter.

Meaning that if you can get 3 players to automatically join every SNG, you will create far more SNGs per day than if 1 person joins instantly. This is in regard mainly to the multi-tablers, who 'instajoin' new SNGs as soon as a new one is created. By reducing rake, I believe the following will happen:


1. SNG players who can multi-table but choose to play fewer tables to maximize EV can now play more tables, and will join SNGs faster and in more quantity.

2. Former SNG players who now multi-table cash games (far less profitable per hour for the site) will now jump back into SNGs.

3. Breakeven/losing SNG players will now have more incentive to play.

4. Those folks grinding for Supernova/Supernova Elite with no care as to how they do it now have their Mecca for doing so.

5. People who are lazy (like me) and hate variance will now be more motivated to play more hours. I believe that many others fall into this category as well.

There are other factors too that others can expound upon, but I think my proposed business model would increase volume FAR more than what Pokerstars believes it will, based on their current structure.

This is very simple and easy to execute. The fundamental theory with SNGs is that they are far more practical to create than MTTs and you should find a way to create as many as possible as often as possible.

Anyways I wrote this in kind of a hurry but it is based on a lot of research. Please chime in if you think my proposal is realistic and would actually make Pokerstars more money. Feel free to flame away if it sounds ridiculous!

-DCJ311