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

[Mike MacIntosh]

Looks like an excellent idea. I doubt stars will change there rake structure though.

They would only make the change if they could make more money. You need to find a way to "prove" that they will make more money by doing so. I don't see this being an easy task.

[AMT]

personally i think it looks great, i just dont think stars will go for it...i do however think that with enough outcry and enough in the way of proposal that there may be modification in it if you/we can keep heckling stars about it. good work, let me know if there is anything i can do in the fight for lower rake

[Hercules]

I guess you forgott one argument, which supports your "model".

Assume that a winning mid-stakes player XY, can move up quicker (=pay more rake). Ok because of the rake reduction PS will earn less over a short period, but exponentially more from XY, because XY plays higher stakes sooner (assuming XY might get better...). If XY sees, that he has so much succes he will be willing to play more. If you begin to win big money (relative to earlier income...) you wanna win more. You`re motivated and motivated people play more and more and more...
So basically PS gets the rake back because more regs will begin to play higher levels, assuming that they are beatable without a big rake.


Cons: I am afraid that "fish" wont say something like "wow i only have to pay x in rake. I HAVE to move up"...So your model is missing the maths between money that PS looses from fish (because they obv don`t care that much about rake) and the money they win from regs...
I have no numbers how the fish/regs proportion is, but in these days its getting lower and lower like 3:6 depending on buy-in...

[Deuce2High]

Very good idea and nice that someone actually wrote something up about it. Everything makes sense and I think that with enough support it's likely to happen.

[Josem]

i'm not convinced that rake levels have as high an effect on player's activity as you think.

Before Party closing:

WPEX = 0 rake = few players.
PS = 8% -> 4% rake = mid-number of players
PP = 10% -> 7% rake = lots of players

[AllinDan]

thanks for actually coming up with an alternative structure- sng fees are indeed way too high, and I'm surprised that a major site hasn't drastically lowered fees and made a big deal of it to attract new customers. I'll send stars an email with some of your ideas, though I have a feeling they have more pressing matters to deal with than this.

[undercheck]

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


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This proportionate increase is not enough as the new SNG players shall quit (or reduce) paying rake elsewhere (cash games, lower stakes SNGs, whatever)

[Chipchucker5]

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personally i think it looks great, i just dont think stars will go for it...i do however think that with enough outcry and enough in the way of proposal that there may be modification in it if you/we can keep heckling stars about it.

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What if we could somehow organize an "SNG strike" until they met our demands? Lol, I know there's probably not a chance in hell, but that would be bad ass if we could pull it off.

[Minnesota]

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What if we could somehow organize an "SNG strike" until they met our demands? Lol, I know there's probably not a chance in hell, but that would be bad ass if we could pull it off.

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yeah plz everyone on 2+2 go on strike forever.