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Recently announced changes at PokerStars have some of the site’s high-volume players crying foul.
These players are going to experience a dramatic decrease in the amount of rewards they receive from PokerStars, and feel the site is making a huge mistake by punishing its most loyal customers.
From the people we’ve spoken to, and the models we’ve run, McDonald’s claim that 2 percent of players account for 98 percent of PokerStars’ revenues is somewhere between grossly overstated and wishful thinking, for the simple fact that the more volume a player puts in, the less the site profits from this player due to paying out increased rewards.
Couple this with these players being significantly outnumbered and the 2 percent = 98 percent assertion simply doesn’t hold water.
Since looking at the value of the top 2 percent of players is beyond our capabilities (we simply don’t have access to the data needed), we’ve decided to focus on the value of the best of the best, the Supernova Elites, as we have hard numbers we can use to build a working model.
Let’s start with the reality that Supernova Elites are earning well over 50 percent rakeback (they earn between 54 percent – 59 percent based on information on the PokerStars page) and the average recreational player is earning about 5 percent rakeback in rewards (most of these players don’t play enough or last long enough to climb the VIP ladder). So, you can see why PokerStars would want to shift its focus to the recreational players, as all things being equal, they’re at least 10 times more valuable per hand based on their rakeback alone.
But of course, all things are not equal, for either group.
Players who frequent micro stakes games are even more valuable, as they generate proportionally more rake per hand, not to mention that it likely costs PokerStars an additional 5 percent to 10 percent in effective rake to police and investigate the high stakes games and process withdrawals for these players.
When everything is considered, SNE’s are likely eating up 65 percent to 75 percent of the rake they generate, whereas the average recreational player is only costing PokerStars about 5 percent, making recreational players worth 13-15 times more. In our model we use a spread of 10-15 times.
There is also a not-so-subtle difference in numbers. There were only 371 Supernova Elites in 2013, and conservatively speaking, there are tens of thousands of recreational players playing at PokerStars every single day.
One bullish model to determine the number of players at PokerStars we developed is this (we also have a bearish model that uses 50 percent of the bullish model):
Average cash game traffic on PokerStars is approximately 15,000 players. Assuming that the average player plays two tables simultaneously (a fair assumption based on the number of recreational players who only play one table, balanced against the small number of high-volume players who play six or more), that’s 7,500 unique players at any given time.
Assuming an average playing time of one hour (again, averaging out recs who play one table for 20 minutes vs. regulars that play 12 hours across many tables), that’s 180,000 unique players and 360,000 total seats filled a day.
So for every SNE at PokerStars, there are, by our bearish calculations, at least 90,000 (about 250 to 1) and by our bullish calculations, possibly as many as 180,000 (about 500 to 1) recreational players on PokerStars day in and day out, each worth at least 10 and as much as 13-15 times more per hand than a SNE.
On the other hand, SNE’s play a ton more hands. Consider for a moment that it requires a $1/$2 6-Max NLHE player to play in nearly two million hands to reach SNE status.
But because they outnumber SNE’s 250-500 to 1, and are worth 10-15 times more to the site, each recreational player from this pool of 90,000-180,000 need only play somewhere between 267 – 800 hands per year to be worth the same as the Supernova Elites. Because many recreational players play lower stakes where the rake cap is harder to hit, they may have to play as many as 1,000 hands per year to equal a SNE.
Basically, a single Supernova Elite is worth 250-500 players who play between 267 and 1,000 hands.
Our model is far from perfect, and highly skewed towards SNE’s.
Our model assumes the pool of 90,000 – 180,000 players at PokerStars is static. In reality, the vast majority of these players participate in their few hundred to one thousand hands (some more some less) and go broke or simply stop playing. They are then replaced by new players who go through the same life cycle – rinse and repeat. Conversely, the 371 SNE’s are constant.
If the recreational player pool is replenished in this manner every 30 days, and our assumptions are close to correct, SNE’s account for about 8 percent of PokerStars’ total yearly revenue, which is still pretty impressive from such a small group of players.
Supernova Elites generate a lot of rake and are quite valuable to a poker site. However, they’re not as valuable as they believe they are. By our conservative estimates, a few hundred casual players are worth the same to PokerStars as a single SNE.
Robert DellaFave also contributed to this article.