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PokerStars has become the latest in a growing list of online poker operators to announce sweeping policy changes to its business model.
Effective January 1, PokerStars will be scrapping its existing VIP scheme in favor of one that will supposedly distribute rewards more evenly between recreational players and those who play for profit.
The formal announcement was made via press release on PokerStars’ blog, with the alterations to the VIP program elaborated upon in a post on the Two Plus Two forums.
In the immediate, the players most impacted by the VIP redesign will be those who regularly achieve the site’s two highest loyalty tiers: SuperNova and SuperNova Elite.
StarsCoins will work in tandem with a new rakeback scheme entitled VIP Steps.
The new system is little more than a consolidated version of the old scheme, where players earn StarsCoins in clusters upon reaching predesignated VPP targets.
210 steps will be spread across the first five loyalty tiers, with higher tier members earning coins at an augmented rakeback rake. However, the differential between the lower and higher tiers will be significantly smaller than under the current scheme.
One additional point worth noting, is that at every fifth step, players will receive an augmented number of StarsCoins.
The full VIP Steps earnings chart can be found here.
During the early days of the poker boom, players hardly needed added incentive to visit the virtual green felt. Be it simple curiosity or dreams of striking it rich, players flocked to the growing lot of online poker sites largely by their own volition.
Part of PokerStars’ early success was that it effectively encouraged players to play more, primarily through the implementation of a VIP Club rewards program that promised unparalleled extravagances to its most dedicated grinders.
Whether intended or not, there were consequences. Namely, a large subset of the community began to realize that as long as they could break even at the tables, they could make a fortuitous living off of rakeback alone.
In turn, players adapted a nearly robotic playing style, assisted by third-party software, and turned to games where they could play the most tables and still edge out the rake. Hence the popularity of capped and low-stakes cash games, and other formats where success was little more than a mathematical formula.
Over time, new players found most games to be completely unbeatable. Worse yet, these same players were being actively targeted by the so-called “rakeback pros.”
The growing divide between recreational and professional players, along with Black Friday, resulted in a tipping point, where the rate of attrition began exceeding the rate new players were registering for real-money play on the site.
Today, cash game traffic is less than half of what it was prior to Black Friday. The rate of decline has been so pronounced that operators had little choice but to reexamine their business model.
There’s little denying that PokerStars’ existing rewards paradigm was in need of a dramatic overhaul. The question that remains unanswered is who will benefit the most from the changes, recreational players or PokerStars?
From a purely numerical standpoint, it appears to be the latter.
According to the Two Plus Two post, the only loyalty status members that will receive increased benefits, on average, are ChromeStar members.
I took it upon myself to verify this, and sure enough the math holds.
Under the new scheme, players who begin the month as a BronzeStar and work their way up to the final ChromeStar step will generate just under $17 in rakeback. Assuming $90.91 to generate 500 monthly VPPs, that works out to a 18.7 percent rakeback rate, or 13 percent boost. Other ChromeStar members will receive less than a 10 percent hike.
As for the other three lower tiers (BronzeStar, SilverStar, GoldStar), their average benefits will remain approximately the same.
Surely, the money PokerStars saves from slashing SuperNova and SuperNova Elite benefits by up to 60 percent will offset that gifted to ChomeStar members by at least an order of magnitude.
So where is it going?
The simple answer is that we don’t entirely know. While PokerStars has been very specific about what they cuts they plan to institute, there has been a gross lack of transparency regarding how much and in what form(s) recreational players will be awarded.
As a result, the community backlash has been nothing short of vehement, with professional and more casual players alike interpreting the changes mostly as a cash grab.
While I doubt that’s (entirely) the case, it is difficult to argue with some of their finer points.
Here’s a glance at the areas in which we do know PokerStars will increase spending.
Based on the language of the release, we can assume that PokerStars will continue to market to both new demographics and players that once played on the site, but have since abandoned their online poker hobby.
Earlier this year, PokerStars launched a massive Facebook campaign featuring recently-signed soccer stars Cristiano Ronaldo and Neymar Jr. The campaign coincided with the site’s Dream Team Collection promotion, which was for the most part a recreational player-friendly event.
The release suggests that PokerStars will dedicate even more funds to marketing and promotions of this variety in 2016.
Given the current declining state of the online poker industry, PokerStars’ decision to aggressively target new demographics is a wise, and arguably necessary, move.
Not only will the new players boost PokerStars’ liquidity simply by taking a seat, but a compounding effect may occur where site regulars are compelled to stick around due to the higher prevalence of softer games.
Of course, the real challenge lies in keeping the new players liquid long enough so that they continue depositing money onto the site, and I’m yet to be convinced that PokerStars will be successful in accomplishing that.
Additionally, it at least appears that PokerStars will be capitalizing on the success of its Spin & Go’s by experimenting with a variety of new poker formats. As per PokerStars’ Head of Corporate Communications Eric Hollreiser:
“Our investment includes the most significant research and development initiatives in years, some of which will come to market in early 2016, including a standalone PokerStars branded app that we believe will bring a brand new twist to poker. Later in the year we’re planning an even more bold take on poker that we believe will be very exciting.”
I’m interpreting this statement to mean that PokerStars will introduce more poker variants that both incorporate some sort of randomized element and by design, limit a professional player’s perceived skill edge.
The problem with this approach is that it’s seemingly at odds with PokerStars’ stated intention:
“We are introducing these changes to move towards a more balanced long-term poker economy and to return the game back to one that rewards skill via winning at the tables rather than playing primarily for volume.”
Spin & Go’s are among the least skillful online poker games – so much so, that I’d be shocked if any player was able to maintain an ROI of over 1 percent.
By introducing more games of this variety, PokerStars will be doing anything but encouraging customers to play skillfully.
Instead, the online poker lobby will bear more resemblance to a casino, where players are encouraged to try their luck, only to eventually realize that the only entity regularly profiting off of these games is PokerStars.
Already, PokerStars is dedicating a huge chunk of its promotional dollars to Spin & Go’s.
The recently concluded Spin & Go One Year Anniversary promotion, which awarded lottery SNG tickets to players who completed trivial daily missions, resulted in so many Spins played that six millionaires were crowned in a week.
Part of me suspects that the reason PokerStars was so willing to dole out millions of $.50 – $100 tickets is because it knows a fair chunk of that money is only out on loan.
Just based on the positive PR PokerStars generates from these events alone, there’s little reason to believe that the operator’s tendency to promote its non-skillful games won’t continue, especially if more “fun” games are introduced in 2016.
Unfortunately, games of this nature will have the long-term effect of bleeding players, recreational and professional alike, dry.
Maybe I’m completely off-base, and PokerStars is spending money on researching games that require even more skill than Texas Hold’em.
But again, the company’s lack of transparency prevents the community from fully knowing.
PokerStars will most likely launch in New Jersey within weeks, if not months, after the VIP Club overhaul goes live.
It’s difficult to envision a scenario in which professional grinders are so put off by the changes that they boycott the site. Not to mention, the majority of New Jersey ‘s recreational crowd didn’t play on PokerStars prior to Black Friday, and will have no point of comparison.
It’s even conceivable that the changes will work out for the betterment of not only PokerStars NJ, but the industry as a whole.
Consider that PokerStars’ adjusted rakeback rates will be significantly more in line with those found on Party/Borgata and 888 Poker. In one possible scenario, existing operators may find themselves believing (rightfully) that they stand a fighting change against the online poker behemoth, prompting renewed marketing and promotional efforts.
Furthermore, PokerStars may find it easier to balance the online poker ecology in the US, as the skill gap between recreational and professional players isn’t as wide in the States as it is abroad.
Just as recreational friendly-changes would have probably been more effective in 2011 when online poker was just coming out of its Golden Age, so will they be in a country where the level of play is several years behind the times.