Daniel Negreanu defends PokerStars’ right to “Increase Revenue” with Higher Rake
Imagine walking into the store to purchase your favorite brand of coffee – as you always do – and finding the price has marginally increased. What do you do? You have only two choices. You can purchase the coffee at the increased price, willing to pay a bit more for your preferred brand, or you can spend less on a brand you aren’t as familiar with, or know that you’ll enjoy less, just because it keeps more money in your wallet.
Members of the world’s most popular online poker room, PokerStars, are facing a similar conundrum. They can pay a bit more in rake to continue playing, or take their game elsewhere. Or they could stop drinking coffee – err, playing online poker – altogether, but that’s not really a choice for most avid fans.
Last week, PokerStars rake rate increase was announced for certain stakes and game types that would go into effect today, Monday, March 28. The increase fluctuates at different poker variations, and won’t affect everyone, but amounts to an approximate 4% increase overall.
The following chart depicts PokerStars’ rake rate, compared to compared to the rates of other leading online poker operators.
As expected, the online poker community reacted negatively to the impending changes, discontent with the impact it will surely have on their bankrolls. But interestingly, being well aware that PokerStars’ lead promotional sponsor Daniel Negreanu would have an opinion on the matter, 2+2 forum member ‘MeleaB’ chose to start up a poll based on the Team PokerStars Pro’s impending reaction.
“How Will Negreanu Respond to the New Stars Changes?” asks the poll.
The five available options, and results of the poll, were as follows:
|It’s good for the Eco-system.||56.33%|
|Don’t share this publicly, but my resignation is obviously in play.||13.29%|
|Have I ever mentioned my friend Moshe?||15.19%|
|It was David Baazov’s decision to delay these changes because he felt it was the right thing to do.||23.42%|
|Guys, I think Eric Hollreiser did an excellent job at communicating these changes.||25.95%|
Obviously (and realistically true, based on Negreanu’s previous support of PokerStars’ rate increases and VIP program alterations), it was strongly believed that the 10x WSOP bracelet winner would advocate PokerStars’ decision by calling it a good move for the poker ecosystem.
However, on Tuesday, Daniel wrote a blog post on his poker training site, FullContactPoker.com, proving more than half of the poll’s participants wrong. He specifically said that the “changes are not design to “improve the ecosystem””, but rather to “increase revenue” for the poker site.
He noted that PokerStars’ rake rate increases would specifically impact players of re-buys/add-ons, heads-up stakes and MTT hyper-turbos (like the popular Spin & Go lottery tournaments).
“If you play any of the formats that saw a rake increase, this will have a negative impact on your win rate,” wrote the esteemed poker pro. “A rake increase, or a price increase in any industry from movie tickets to gas prices are not good for the consumer.”
But in the online poker operator’s defense, Negreanu added, “PokerStars offers a service, and of course, they have the right to set the prices for that service however they choose to. If you set the prices too high, customers may not use your service. If prices are set too low, then the company is likely missing out on revenue.
“These specific changes are not designed to “improve the ecosystem” or anything along those lines,” he said. “These changes are designed to increase revenue.”
From an online poker player’s standpoint, Negreanu said, “I do believe that PokerStars offers the best product from customer service, to software, to game selection and innovation. I also believe that the prices for these services are competitive with other companies in the industry, but ultimately the consumer will decide that.”
Although he said he’s never complained about a rake schedule, he admitted that, for those who play “heads up, hyper-turbo tourneys, or rebuy tourneys, I totally get that these changes suck for you and that you may not continue playing these formats anymore. Hopefully, you will be able to find other formats on the client where the pricing allows you to have a win rate you find worthwhile.”