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When questioned by a player on where the aptly titled nanostakes games had gone, PokerStars support said:
“We are sorry to inform you that this is intentional.
We are indeed trialing the removal of $/€/£ 2.00 No Limit as well as $/€/£ 0.01/0.02 Pot Limit and No Limit games in Belgium, since June 15th.
We frequently review the selection of ring games and tournaments within our lobby and monitor how that affects the overall playing experience, whether playing on smartphone, tablet or desktop.”
As inflation reduces the value of money, poker operators should see a natural attrition of the lowest stake games over time. The revenues they generate become increasingly unattractive and to recoup the real value of their income it makes sense for operators to reach a point where they drop certain games.
PokerStars’ intent has been evident in the structure of its latest Cardhunt promotion where the benefits only accrued to players at stakes of $0.05/$0.10 and above.
The Belgian market is both small and separately regulated, so it makes a good location for experiments like this. If player reaction is acceptable and the expected impact on revenues is seen, then PokerStars is likely to expand the number of markets where the lowest stakes are unavailable.
Even at $0.01/$0.02 and especially in the Zoom fast-fold version of the game, there are plenty of regular players making profits that are comparatively substantial. A high volume multi-tabling player can comfortably cash out between $500 and $1,000 in a month.
One player’s comment on the twoplustwo poker forum expressed the point:
“IMO the bottom of the Zoom microstakes has too many grinding regs [nitty bad regs] who have no intention of moving up. They can get a lot of hands in 4-tabling & they eat up the new depositors just by waiting for the noobs to make mistakes.”
The average online poker deposit is small, amounting to tens of dollars, and the recreational players that have become the focus for PokerStars play very low volumes.
A research paper by Professor Ingo Fiedler, “The Gambling Habits of Online Poker Players,” found that:
The data was obtained from an analysis of over two million PokerStars players during a defined six month period. The database is now out of date, but the broad conclusions are still applicable.
Recreational players are on average low depositors and low volume players. Their revenue generation capacity is a function of their large numbers, and the longevity of their relationship with the poker room.
Any threats to their numbers or longevity as customers must be taken seriously.
The balancing argument for retaining penny poker games is that they can form an easy bridge to real money poker. With a small cash deposit, new players can test out online poker, and find out if it is for them.
Once acquired, operators have a great opportunity to convert the new players to long-term customers, if they can offer a high quality experience. Losing a first deposit in only a few minutes doesn’t generally make for a positive player experience.
If deposit sizes remain relatively small, then the nanostakes may be providing a product which gives the new player a lot of bang for his buck in terms of entertainment time.
Even a bad beat which wipes out his online bankroll can make a good story to tell to friends. If the final hand comes after several hours of enjoyable play with several highs as well as lows, then there is a good chance that the player will be retained as a customer.
Conversely, if the player begins at higher stakes, then his bankroll may well not last long enough to provide a pleasurable online poker experience.
The staggering success of lottery sit and go tournaments like the PokerStars Spin & Go, may have had an impact on retention strategies. OPR lacks the data to say for sure, but a large proportion of new players may be more likely to play a Spin & Go than a cash game.
The format offers a lottery style chance of winning a large amount of money for a very low entry cost. The lowest buy-in Spin & Go currently available on the PokerStars dot-com site offers a possible prize of $2,500 for a buy-in of $0.25.
A $20 deposit can provide eighty chances at winning that $2,500 prize, and at five minutes per game, up to six and a half hours of entertainment which won’t include, at any stage a major cash loss.
If there is a positive retention impact resulting from Spin & Go’s, it makes the attempt to remove nanostakes cash games which compete with them very understandable.
New Jersey is one of the richest U.S. states, with a median household income of almost $72,000 in 2014. This did not deter PokerStars from including $0.01/$0.02 stakes cash games when it launched in New Jersey this March.
Belgium is also a rich country, but much of PokerStars market ambitions are in countries which have far lower levels of disposable income. GDP per capita in Bulgaria, where PokerStars obtained a license in 2014, is just $6,927.
India is one of Amaya’s hopes for serious revenue growth, but it has a GDP per capita of even less, $1,820.
The nanostakes are inevitably more relevant in such low income countries. Which is why, even if the experiment in Belgium is a success, it is quite possible that PokerStars will only replicate it in richer regulated nations.