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Editorial: PokerStars Needs Better Transparency Around Rake Increases

PokerStars

This week, PokerStars made wholesale changes to the cost of playing poker for the vast majority of their users in the micro- and low-stakes tournaments.

As PokerNews reported, "The changes will affect lower-stakes and recreational players and not impact higher-stakes players. Starting on Monday [March 26, 2018], rake on all MTTs with a buy-in of less than $20 will increase while rake will decrease for all Time Tourneys regardless of the buy-in."

The size of the changes, which are now in effect, depend on how you do the math. In raw terms, the amount of rake paid on a $1.10 tournament increased by 20%, from $.10 to $.12, while the change relative to the total buy in is closer to 2%. Either way, it represents a significant change to the cost of poker, which has been stable at this level for quite awhile. The change affects multi-table tournaments that cost less than $20 to enter, or those that fall into the "micro" and "low" stakes level in your PokerStars client.

Doug Polk, no stranger to strong words on the poker industry, came out firing at PokerStars this week on his Twitter feed.

As responses to the Polk thread show, the issue for many players is less the change in rake, and more the way that change was rolled out and disclosed to the affected players. In the initial announcement through PokerNews, PokerStars was unable to even provide details of the changes five business days before the change was to go into place. "The exact pricing changes were not yet disclosed at the time. However, the short blog post mentioned that players can always find the exact rake of an event within the lobby of the tournament."

It's the last line which causes the most concern for players. While there's a general, if grudging, acceptance of the idea that a business is allowed (and, in fact, from time to time needs) to adjust its product pricing for consumers as they see fit. Conversely, consumers have a choice to pay the new price, or look for a similar product elsewhere. That's how capitalism works, and in a perfect world, it works relatively well for both sides of the equation — businesses can make a profit while consumer's ability to "vote with their dollars" keeps prices from going too high.

In this case, however, there's a couple of valid concerns from the perspective of PokerStars customers. One concern from some players is that PokerStars essentially has a monopoly on many kinds of poker. Players who exclusively play hold'em or Omaha games have some level of choice in the online poker market, but for players of the mixed games and less common forms of poker like badugi or deuce-to-seven, PokerStars is essentially the only option to play the games we like to play. That gives PokerStars a "captive market" for those games which skews the capitalist equation. In a monopoly situation, customers are unable to vote with their dollars while still consuming the product, and that gives the monopolist an unfair pricing advantage. Customers who want that product HAVE to pay whatever you charge, because they have no other options.

That's absolutely a concern for players, and something PokerStars should have considered when rolling out these changes, but in fairness to PokerStars, they have limited control over what products are offered by others. That means they also have limited control over how pricing changes affect their customers, and as a business it's important to always reserve the right to adjust your revenue model. A responsible company takes the time to recognize where they are in a monopoly position and make extra efforts to reduce the impact and ensure transparency in cases where their monopoly position gives customers no other choices.

That leads to perhaps the biggest concern, and the one that is most readily addressable by PokerStars: transparency. For the many players who hadn't read the PokerNews article announcing the changes, the change was completely opaque on Monday. The front lobby page of micro and low tournaments only showed the total cost, such as $1.10. The front lobby page showed no indication of the portion going to prizes versus what goes to rake, and no indication that the percentage had changed from the previous day. To find the new costs, players had to click into the structure tab to read that, instead of $1 + $.10, the tournament would now be $.98 + $.12. Polk put it best:

The transparency issue means that many players won't even realize PokerStars started taking more money from them, and giving them less in prizes. And Polk's point that the way the change was rolled out is "essentially an attempt to use confusion to increase price without customers knowing" is a valid one, and one that PokerStars could have mitigated by making the new costs obvious on the front page of the lobby screen. In the past, the PokerStars lobby has been very clear about rake versus prize pool. As a good example of the difference, compare these two micro-stakes lobbies, one from last July, and one from this week.

Old style PokerStars lobby
New PokerStars lobby

Prior to this change, the PokerStars lobby was very clear about how much of the buy-in went to rake, and how much went to prizes. Since the new pricing this week, that is now effectively hidden from view for anyone who doesn't go hunting for it under the structure tab. As someone who works with software design, it's worth noting that the change to the way the buy-in is listed on the lobby front page would involve an intentional change to the code that displays that value in the lobby, which means that the move to hide the amount of the buy-in applied to prizes versus rake was the result of an intentional change to the lobby code, and not an inadvertent "bug." Someone at PokerStars made the conscious decision to hide the rake/prize proportion on the main lobby change behind a single buy-in amount. This transparency change wasn't a bug or an accident; it is absolutely an intended feature of the new lobby.

No one wants to pay more for any product, so whenever pricing changes, there will be a significant level of discomfort among consumers. Businesses can mitigate that discomfort by being as transparent as possible about both the reasons the changes are required, as well as the reasons themselves. Further, when you recognize you are in a monopoly position, you have a greater responsibility to transparency, at the very least, if not to affordable pricing itself.

In this particular case, PokerStars has failed pretty badly on all counts on this rollout. Given their monopoly position in mixed games, players for those games have no options except to pay the new price, or stop playing all together. While that shouldn't prevent them from raising prices, it should have ensured they were much more transparent about it. And PokerStars seems to have made a specific choice, in this case, to be as opaque as possible in these changes. Not only did they not make any comment about the new pricing on the main lobby page, they specifically changed the way the lobby looks in order to further hide the changes.

Even without a clear announcement, if the lobby was the same as it used to be, the new pricing would be obvious in the "Buy-In" section. Rather than showing "$1 + $.10" it would show "$.98 + $.12" and the costs would be obvious. Instead, PokerStars seems to have made a conscious choice to hide the change by removing any mention of rake amount from the main lobby page. While it's perfectly reasonable to expect businesses to make adjustments in pricing from time to time, in this case, Amaya has seriously dropped the ball in how they rolled it out, how they announced it to their customers, and how transparent they are about their pricing going forward.

No one criticizes a business that has to make tough financial decisions. However, when a company takes steps to charge me more, and at the same time takes active steps to hide that from me, everyone should have a problem. PokerStars owes the poker world an explanation about why they've chosen to hide this latest rake change. A little bit of transparency here would have gone a long way. But instead, it appears as though they're intentionally trying to hide the fact that they started to take more of my money this week, and that's something every poker player should be concerned about.

What do you think?

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