Thoughts on the Recent PokerStars Changes

31st October 2014 // Industry, News, Op-ed

(Editor’s note: The opinions offered herein are those of the author, and do not necessarily represent the opinions of FlushDraw or its owners.)

If you’ve been reading anything poker related in the past few days it’s probably been something connected to the new changes happening at PokerStars. The poker media, social media and the forums have been full of outcry and despair about these PokerStars changes, recently made to the site’s TOS and rake structures. I’ve even written my own article on the new rake changes, which you can read here.

With all the coverage of these changes, I decided to look at the expected impact of the new policies and offer my thoughts on how the whole process has been handled.

Spin & Gos are pretty much unbeatable in the long term

The first announcement of this chain of changes was the introduction of the new “recreational player” friendly game, the Spin & Go. It wasn’t long until the comments started to fly around the internet, most of them along the lines of “This isn’t poker, it’s just a casino game!” This is due to the random factor in the determining of the prize pools for these three-handed events, and the numbers seem to bear that line of thinking out, as it seems that Spin & Gos are, mathematically, nearly unbeatable in the long term.

PokerStars have addressed some of the player’s issues through the forums, but this style of game is inherently concerning for the poker grinder. Spin & Gos are effectively replacing some games, mainly hyper-turbo sit & gos. This new game is definitely a step away from the “poker is a skill game” argument that poker players and companies have been using for many years now. It’s certainly not something that is designed with the grinder in mind, but as an introduction to the game, it has an appeal to those outside the more serious side of the game.

Recreational players are the lifeblood of the industry. While I consider the more serious players to be the backbone holding the industry together, without the recreational players feeding and supporting these winning players, the system collapses. Recreational players are also where most of the rake comes from, so it’s where the sites make their profits, which is why the introduction of Spin & Gos is a decent move.

Yes, it’s going to skew the market in some areas, but while it does that, these games should also introduce new players to the game, and a decent percentage of them should migrate to the more traditional games over time, actually improving player pools as time goes on. I can see why some players are concerned, and if I was grinding mid-stakes hyper sit & gos, I’d be livid. As I don’t, I can see both sides of this issue. While the addition of these games has moved poker closer to traditional “gambling” within PokerStars’ marketing, it should attract new players to the tables in the long term. We’ll have to see if this tactic works, but it seems to be a reasonable route to me.

Next up was the continuing changes to PokerStars Team Pro, with several players not having their contracts renewed. Cries of “This is Amaya slashing costs” were heard across the internet, especially following Joe Cada’s comments on Twitter that the stumbling block for his contract renewal was only to play rake free on PokerStars.

If everyone is wondering what happened with Poker Stars and myself it’s pretty simple. I asked for 100 percent rake back, they said no.
— Joe Cada (@cada99) September 24, 2014

Cada is a former World Series of Poker main event champion, but while he does play online a significant amount, his media profile is pretty small and one-dimensional. Cada, along with the majority of the other players not offered a new Team Pro contract, have very little attraction for those outside the game, and are not really going to attract new players to the world biggest poker site. If PokerStars were firing Nadal, Ronaldo or someone like Victoria Coren-Mitchell I’d be a lot more concerned, but not re-signing these low marketing-yield players is actually a reasonable decision.

PokerStars doesn’t need to (or at least didn’t before this backlash) attract current players to the site, as they are very likely to already play on the site. PokerStars is aiming to bring new players to the game, ones who either don’t play online, or are totally new to poker. Cada and similar players are of no help in this demographic, so why continue to employ them if they have little or no benefit?

Now we start to look at the more controversial issues that have been raised by these changes. PokerStars announced on 2+2 that they were going to be adding currency exchange fees to transactions made while depositing and withdrawing from the site. Originally I was under the impression that these fees (2.5%) would only be charged when players were withdrawing or depositing in a currency that was one of the ones supported in the PokerStars client. These supported currencies are UK Sterling (£), US Dollar ($), Canadian Dollar (CAN$) and Euro (€), and a fee to cover the costs (and maybe making a small profit) of accepting payments outside these currencies made sense to me.

It wasn’t the greatest news for players unable to deposit in one of these currencies, but compared to other alternatives, it seemed fair and compared to the rest of the market it was either better or the equivalent of the market prices. Then I did a little more research, and this included emailing PokerStars’ support team to clarify the position, as everything I had read on the subject had been unclear about which conversions were subject to the new fee.

I asked if the conversion between currencies supported by the site were specifically part of this change. I was advised (after several emails back and forth) that any conversions made in the client would be fee-free, but if I was to try and withdraw my US $ balance to my sterling £ account I would be charged a fee. Considering internal exchanges were still free, this amazed me. The transaction would cost PokerStars nothing; they would be sending a sterling amount to my sterling account, from their sterling holding account.

The only way to avoid this fee is to manually change my dollar balance to sterling before I withdraw, and even then, making that conversion can cause withdrawals to be suspended by PokerStars. While I can understand fees where PokerStars are having to actually convert currencies, transactions such as these are cost-neutral to PokerStars, and any fees on them are going straight into the coffers. Considering most UK (as an example) players are going to play in US dollars, not that many of them are going to think through the process to convert their funds to sterling before they withdraw, even if they are able to.

It’s nothing short of a way of improving the site’s bottom line, which considering the recently announced results, seems to be penny-pinching when you are sitting on a pile of money. The change in policy still hasn’t been communicated to every affected player, as the only communication on this has been on the forums. More on this later.

Is it all about the money?

Next up is the rake change. This is the most quantifiable change to impact players, as raising the amount of money leaving the player pool means less is available to be won by players themselves. I covered the actual changes in an article yesterday, but the change moves PokerStars back into the pack of other poker sites. Where PokerStars was the leading site in terms of rake in a lot of games, these changes have ended that, with the site now have rake that is a lot closer to that offered by its competitors.

While on the surface it seems a small change, and will only really impact those grinders making a small profit at the affected games, it’s a big ethos change for the site. PokerStars has grown into the world’s biggest site for several reasons: great marketing, a high-quality software package, and a great customer focus. This rake change concerns me as it falls into the third of those.

PokerStars was always the place that understood the ecology of the industry, and while some did consider the old rake in some games to be a little high, the rake was beatable by most of those playing professionally. This may still be the case after the introduction of the new rake structure, but what it has done is highlight that PokerStars is no longer being run to offer a top quality product to players as it was under the Scheinberg dynasty.

PokerStars is now a cash cow. While the new owners are not going to put PokerStars at a disadvantage against the rest of the market, the days of actively supporting and making the industry attractive to players who do it as their main source of income are over. Amaya may want to build upon the success story they purchased in PokerStars, but this change may indicate they don’t understand how to manage and build a player pool that is sustainable at all levels.

While my opinions are above, they are opinions from my own viewpoint. I can still respect opinions from other points of view, as the world of business sees many successful strategies, and this may turn out to be one of them. The one thing I can’t support in anyway is the way these decisions have been communicated to PokerStars consumers. Looking at the email I have linked to my PokerStars account, I have yet to see a single email advising me of the changes to the Terms of Service regarding exchange fees, or the change in rake on the site. With the exchange fees already in place, and the rake changing on Monday, if I wasn’t active in the wider poker community, I wouldn’t have a clue what was going on.

Changes of this size in a customer-focused business usually provide a period to allow consumers to make a decision whether to continue using a service before the changes come into effect; a 30-day warning is usual. How are PokerStars’ customers meant to make an informed decision if they’ve not been told anything is changing? I see this as another change in the ethos of the site, and while I’m not sure if it falls foul of any of the rules used to regulate the company, I think it should do so. It’s a change of conditions by stealth, and players are now in a position that they can’t trust PokerStars not to make major changes and just not advise their customers about them.

This is the big scandal for me. As I’ve said above, these decisions may be right for the company and/or industry. I don’t think they all are, but I could be wrong. However, I could never consider the lack of communication and respect for the players shown during these announcements. The old poker rule raises from the murky depths of my mind, “Show one, show all!”

Currently, PokerStars is showing its hands to the grinder sitting next to them, and if I was the new player sitting opposite, I’d feel cheated and ignored — not what Amaya is really going for. We’ll have to see how these changes shake out, and whether the change in ethos is going to continue down the same road. This could be the start of the decline of PokerStars, but in an industry where one site has around 50% of the market, a new challenger will need to rise to challenge them. I don’t see a likely challenger in the current crop of sites, but this could be the opportunity for a new one to enter the ring. It may be that PokerStars is the poker site we deserve, just not the one we need right now.