Thursday, December 13, 2007

SNG Fees, The Poker Cartel + Player Stickiness!

Have been thinking about fees for SNGs (tournaments in general too).

Every week, somewhere on the internet, someone posts on a forum something like 'why are SNG fees so high .... we are being ripped off.... etc etc'.

You know they have a point - well, ok, half a point. The 8 to 10% fees are high considering the value that the poker sites are offering. From the perspective of a multi-tabler playing 10 / hour this could easily be $20 or $30 gone forever from your poker bankroll!

Now, let us look at this from the perspective of the poker sites for a second. Asking the question: If SNGs are so popular (and they are) what incentive do the sites have to lower that rake? None. An equilibrium has been reached - the demand for the games with the current rake is too high, reducing the rake by 30% for example would not result in enough of an increase in players to make this profitable for the poker sites... what is more a poker site doing this is in danger of starting a 'price war' - that would be deterimental to their business.

I am not condoning the high fees, far from it - my personal view is that the rake for all forms of poker is too high. For me it is a reality check from the perspective of the sites and the people looking after their bottom line... there really is little incentive there.

A couple of examples will illustrate:

- World Poker Exchange used to offer 100% rakeback for cash games (think they reduced it to 75% eventually). Let me ask a quick question, why was this site not in the top 10 - or even top 20 - online poker sites??

- Rakeback deals are available at many sites, but NOT at Poker Stars.... why then is this the most popular site by a long long way?? (twice as much traffic than nearest rivals - 130K peak vs 65k Peak for Full Tilt and around 58k Peak for Party). Sure, the VIP club is decent, but really, does this compare with a good rakeback deal??

So whether we like it or not the status quo remains, every now and then a hopeful poster appears on the internet with the mild delusion that 'player power' could change things for the better for everyone... unfortunately it will not, there are too many people happy to pay the fees to get the sites to change.

Sure, it is a cartel - yet, for the near future at least, player stickiness (or just apathy!) means it will remain in place!

GL at those (expensive) tables, Mark

2 comments:

Short-Stacked Shamus said...

It's (effectively) a cartel, all right. And while "player stickiness" is already inherently part of online poker, the UIGEA & subsequent difficulties w/moving money makes it all the more likely folks will stay put, no matter how bad the deal (e.g., Absolute continues to thrive . . . .)

Mark said...

Excellent point Shamus - not all stickiness is by choice these days.

Cheers, Mark