Friday, 7 November 2014

Recent Rake Changes

Hello!

You have probably heard by now about the recent changes made by PokerStars considering the rake being charged at various formats and stakes. If you don't know what I'm talking about, you can check it out here.

The changes were announced last week. I remember that when I woke up that day I went to the computer room to say good morning to André as usual. I was startled by the look he gave me, one that said he had bad news to tell me but didn't know how. “PokerStars is increasing the rake at the hypers” he finally said.

One coffee and several calculations later, I was in a depression-like state. I was going through various posts on the internet, reading people's complaints about what was happening. The more I read, the more my mood deteriorated. I decided to try to take my mind off of it and played some Magic: The Gathering online. I couldn't focus on the game though, so I decided to leave the computer all together. I had lunch, watched some TV, went out for an ice-cream. To say that I was feeling bad is an understatement. I was in some sort of denial, as if not dealing with the problem would just make it go away. Obviously it didn't.

Now that a couple of days have gone by, reality has sank in. The rake increase affects several formats, one of which is my game of choice: the hyper-turbo satellites. I don't want to go into detail on how this affects the other formats since it's not my area of expertise. So let's talk about the hypers. Here's the table that demonstrates the rake changes:



As you can see, the lower the stakes, the higher the increase of rake. The rake at the lowest buy-in will almost triple up. At higher stakes although the raise is smaller, it's still significant. The fact is that everyone playing these games will be making less money next year. Everyone, regardless of stakes. But the real question (the one that people ask me over and over for the past week) is: Will it still be possible to grind the hyper-turbo satellites?

I don't know.

That's the short answer I have to give to that question. I simply don't know. But since you're probably not satisfied with just that, I'll elaborate further. What everyone is wondering right now is if the games will be beatable after the rake increase. It's obvious that the higher the rake is at a given game, the harder it is to make money. But how do we define a game as beatable? That line is not that clear.

Let me give you an example. If we put Jorj95 or acoimbra playing the $1.50s, even after the rake increase I'm sure that they would beat the games. In fact, I'm sure that they wouldn't just beat them, they'd crush them. Why? Because they're a lot better in terms of skill than their opponents. Their skill gives them so much advantage over the players that are trying the format for the first time or have very little experience that it would be enough to cover the increased rake and the variance over a big sample of games.

Now let's examine another case. Let's say that this time I'm the one playing the $1.50 hypers, only I'm playing against 5 more Katerinas. We all have the exact same skills, so if we play hundreds of thousands of games all we've done is toss money back and forth at the tables while steadily losing the rake. It doesn't matter if the rake is as low as one cent. Those games for me (and all the Katerinas playing against me) are unbeatable. Playing a game with people that are just as good as you will never ever make you money on the long run, period.

And now for the third (and last) example. As things are right now, I'm probably a losing player at the $357s (although I haven't nearly played enough to find out). If somebody took the players of the $1.50s and put them playing $357s against me, I'm pretty sure I'd show a profit pre-rakeback. Do you see where I'm going with this? It's not really what stakes we play, but who we play against that matters. And as people try out different stakes and evolve (or deteriorate), things tend to even themselves out and you'll find the best players playing the highest stakes and beginners playing the lowest stakes and trying to move up from there.

So how can we take into account all the variables and see if the hypers will still be viable after the rake increase? We simply can't. To do that, we'd need to have the ability to look into the future and see how many of the regulars are sticking around, how many of them are migrating to other formats, how many new players will come to this format, take into account the skill difference among players etc etc.

Instead of speculating about the future, I tried to make some calculations based on the results I've had so far this year and see what those results would look like if the new rake was effective from the beginning of 2014. I can tell you that even though now I'm profitable pre-rakeback, with the new rake rates I would be on the negative. Post-rakeback I'm positive in both cases, but when applying the new rake rates I'm taking a significant cut of close to 50% of my profits. But then again, I don't know if I can trust the accuracy of those results cause they are from 10 different stakes. I was using the above table as a reference but I don't know the exact rake that will be charged at each stake. And last but not least, it's faulty to assume that the field of the hypers next year will be the same as this year. That would be a faulty assumption even if the rake stayed the same.

As a hyper-turbo grinder and one of this format's biggest fans I am saddened by these recent rake changes. Even though I can't know for sure how the games will be from January 1rst and on that the changes will become effective, it's obvious that some people who were making money from these games will not be able to do so in the future. Being one of the mid-stakes grinders myself I am among those that the rake changes will have the biggest impact on.

My plan is to keep playing the hypers until the end of the year. I want to hit some milestones and that means I need put in a lot of volume during the next two months. I haven't decided yet what I'm going to do in 2015. Right now I'm considering all the cases from sticking with the hypers and going for Supernova Elite (which should be easier to get with the increased rake) to switching to a new format and all the possibilities in between. Either way, I'll keep you guys informed once I have decided something.

If you are a fellow hyperturbian reading this because you are concerned about the future of the game, I'm sorry I don't have a magical solution to offer you. I wish I did. But apart from knowing things will get tougher in the hyper universe, none of us can predict the future and know how tough. Let's hope that even though we'll make less money, we will still be able to play the games we love. At the moment all we can do is focus on the now and take advantage of the last games that will run with the current rake until the end of the year. I'll see you at the tables.

Good luck!

6 comments:

  1. They are ugly news. This increase is here to stay and it would not surprise me to do so again in the future

    ReplyDelete
  2. Hello Katerina!

    That is a very sad post but I think your doubts are reasonable.
    I wanted to understand the impact that those rake increases are causing, so I did some calculations with some numbers about you I got from shark scope.

    Before you read on, please let me clarify a few things:
    1) I don't want to bother you by any means.
    2) I am no Hyper Turbo Grinder, but currently a Zoom 6-max NL25 regular aiming to move further up. I am taking poker very serious and I am a student of your team mate Felix Schneiders.
    3) I did not read much details about the rake increases.
    4) All the calculations below I did by myself so they could be completely wrong.

    I am assuming the following numbers:
    You have got an average ROI of 1 % (pre rake subtraction)
    You have got an average buy in of $ 40 (= avg Profit of $ 0.40 per game)

    $ 40 (old 2.0 % rake, new 3.4 % rake)
    -> old $ 39.20 for prize pool, $ 0.80 for rake
    -> new $ 38.64 for prize pool, $ 1.36 for rake

    So 1 % ROI means avg $0,40 absolute profit per game
    -> that means with an effective avg buy in of 39.20 (after subtracting rake) you get 40.40 back
    -> and that means that you make $ 1.20 profit with $ 39.20 and that are 3.0612 %

    With the new rake system the gap that opens up is huge:
    If your ROI after subtracting rake stays the same (3.0612 %) you will get only $ 1.183 per game (and that does not cover the rake).
    So if your absolute profit with a buy in of $ 40 should stay the same (1 % or $ 0.40), you have to win $ 1.76 per game with the new rake system.
    -> that means with an effective avg buy in of 38.64 you need a ROI of 4.5549 % (instead of 3.0612 %) to win $ 1.76

    My conclusion about this is that a lot of hyper turbo grinders will lose a huge amount of money, at least pre rake back, and I also think the new increased rake back will never cover this loss. Nobody knows by now, but I think PokerStars will kill a lot of Hyper Turbo action with that step.

    Nevertheless I wish you, and André as well, all the best. I am sure, you'll find a way to deal with new circumstances. I am looking forward to read about your further progress and experiences and all the best for your SNE grind, if you decide to take that on!

    Kind regards,
    Thomas (@thomasberger_ on Twitter)

    ReplyDelete
    Replies
    1. Hi Thomas,

      When I did my own calculations I reached completely different results. The thing is that the rake increase is not the same throughout the different stakes so you cannot make calculations based on the average buy-in for this one. Also, for a hyper-turbo grinder a huge part of the profits come from the VIP system, which you also did not include in your calculations.

      Anyway, thank you for reading my post and taking time to reply. Wish you best of luck at achieving your goals and moving up from NL25!

      Delete
  3. I understand the rake augmentation is bad, but how can it be so bad that you think of choosing another format? I don't get those poker subtilities yet. You still earn the big part of the Buy-in if you are successfull at the Hyper-turbos (in your case). WOuld you be kind to tell me that phenomen in few words/sentences.

    ReplyDelete
  4. Katie, i might save your time by saying following.
    Increasing rake is one thing but we need to think about consequences too.
    The traffic will be significantly lower because even if some top regs will stay the weaker regs will leave because they will stop making any profit and pretty sure realizing the impact of the increased rake.
    Yes, you can say the higher rake faster SNE, but where you want to play it ?
    At empty tables ?...
    Playing 12 hrs a day 6 tabling is not what we want, right ?

    ReplyDelete
    Replies
    1. Hi Gordon Gekko,

      At this point we're only speculating about how the games will be from January 1rst. Obviously you can't make SNE by playing a very low number of tables at midstakes, but it's impossible to make any calculations right now about how many hours per day or days per year a grind to SNE would take through the hypers. We'll just have to wait and see, but I'm not rulling anything out for now.

      Delete

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