#7: Rake and Rewards

Businesses need a way to cover operating costs and, ideally, to turn a profit.  In poker, it’s done through rake – a small share of the pot which goes to the poker room.

Nobody likes rake. Rake isn’t cool or fun or flashy.  It’s just part of the game – a necessary evil.

Remember Disney Bob, from my 3rd update post?  He loved Disney World because of the rides, the atmosphere, the food, and whatever other elements contributed to his magical experience each and every trip.  

He didn’t spend time analyzing the costs of his hotel room, his meals, and his experiences. Similarly, Disney doesn’t spend time, to the best of my knowledge, explaining their pricing and price-setting philosophies.

I know you thought Disney and Run It Once were exactly the same, but this is where we finally differ!   

Being a poker pro my entire adult life, I know how important rake is to serious players.  When poker is your profession, or just a game you’re passionate about one day becoming a winner in, pricing is no longer about what people are willing to pay – it’s about what is sustainable and what is fair.

A poker site shouldn’t simply charge whatever it can get away with.  A poker site’s pricing decisions should be guided by their values and beliefs.

The very first words I ever wrote about Run It Once Poker outlined my belief that a poker site should value all types of players.

While I have plenty of thoughts on rake, and while we’ve poured countless hours into setting our rake levels, it’s not the most intriguing topic to read about, so I’m going to do my best to stick to the key points: Our initial rake numbers, and our beliefs surrounding rake.

It’s quite difficult, as a new site with none of our own data to work with, to set rake levels that we’re very confident in.  This is why our beliefs matter – as we get more information, as we learn about our ecosystem and the effects of the rake we’ve started with, as those factors change over time, and as we introduce new stakes, new formats, and new game types, we will be making rake decisions again and again.

Run It Once and Rake

We’ve made some unique and innovative decisions in building our platform, but at the end of the day, rake is rake.

Though I wish I could tell you we’ve come up with some groundbreaking method to reduce rake by 75%, that’s just not the case.

That said, we have certainly set our rake on the lower end. With the wide variety of sites today: unregulated, regulated, segregated, etc. popping up all the time it’s impossible for me to make any universal guarantees. But what I can say is this. We estimate our net rake to be lower than the “big two”, Pokerstars and Partypoker, across the board.

In some cases, we’ve reduced it by what I consider a wide margin. In others, the numbers are closer.  How much we beat them by also depends, of course, on what type of player you are and what you qualify for in terms of rewards at our competitors’ sites.

Rake has been a topic we’ve revisited and tweaked many times over the last couple of years, and as mentioned above, will be an ongoing decision for us.  The belief system that will guide our pricing is quite simple:

We believe that all poker games should be beatable, and that common sense should be used to adjust rake based on game types, speeds, and achievable edges.

This common sense element is important as we move into the future and introduce new gametypes, both existent and currently non-existent.  As a basic example of the common sense I’m talking about: Games with faster structures and lower achievable edges should be raked lower than their slower counterparts.

A poker site shouldn’t simply charge whatever it can get away with.

I’ll be sharing our initial rake numbers towards the end of this post.  These numbers will likely change – hopefully for the better, but not necessarily in all cases.  We will continually monitor the health of our player pools and make changes, guided by our principles, when necessary.

None of us know what the future may hold for online poker regarding edges and profitability (for both players and operators).  While it is one of our core values at Run It Once Poker, and I think we will always be able to, I can’t 100% guarantee that every poker game we ever spread will be beatable, but what I can promise you is this:

If a day comes when we make a decision to spread a game we don’t believe is beatable (for reasons I can’t yet foresee), I will tell you, I’ll explain our reasons, and those reasons won’t include, “because we can.”

Run It Once and Rewards

Okay, now that that’s over with, maybe we can talk about some more fun stuff! Or maybe we can’t? Let’s see…

The term “net rake” was introduced in my last post. It is, simply put, the amount that a player ends up paying in rake after you build in any rakeback or rewards.  A poker site can reach their net rake targets in many ways.  Low rake and no rewards, on one end of the spectrum, or high rake and high rewards on the other.

If I pay €500 in rake and get 0% back, I’ve paid €500 in net rake. If I pay €5,000 in rake and get 90% back, I’ve paid €500 in net rake.  In either case, I’ve paid the same amount.

To Reward or Not Reward

In early meetings on this topic, we reasoned that however we reached our net rake numbers, the professional players would figure it out and judge us on our bottom line. We felt that this demographic, so long as we didn’t make anything inconvenient for them, would be somewhat indifferent to how we structured things so long if the end result looked good.

We assumed that casual players wouldn’t be sensitive to the base rake rates we were charging, but would be highly responsive to a well-designed, engaging rewards system.

In reality, I believe that while professionals like to think they are indifferent to rewards mechanisms and simply judge them based on expected value, most of us will still have a good time if a fun rewards system forces us to.  We’re only human, after all.

So, we decided that all types of players would get more enjoyment out of a fun system that achieved our net rake targets through higher base rake and high rewards.  And even if the price sensitive players were indifferent to the rewards mechanism, it would still be better for them if the price insensitive players had more fun by seeing rewards coming their way.

Who to Reward?

Once we decided that we would have a rewards system, we had to tackle the tricky topic of who to focus those rewards on.  There’s no clear consensus in the poker world regarding the best way to go about this, as evidenced by major sites taking very different approaches.

PokerStars moved away from a system that heavily rewarded high volume players with a relatively straightforward points system to one that is more gamified, opaque, and weighted away from winning players and towards losing players.

PartyPoker took this opportunity to implement a system somewhat like the old PokerStars one – high rewards to high volume players, and an easy-to-understand implementation.

This also adds new dimension to a game that some of you may fear is getting too close to “solved” – another test of your ingenuity at the table.

I think that when the PokerStars of old first introduced their Supernova program, it was a brilliant idea. The ecological concerns of today weren’t much of a problem back then, which meant the high volume winning players were more valuable to a poker site. Pokerstars wanted these players to put in all of their volume on Stars, so they structured their rewards program to encourage just that.  This, among other things, propelled them towards becoming the market leader.

Today, giving a lot of rewards to the winningest players (which high volume players often are), and fewer rewards to the casual players, does some more noticeable damage to your ecosystem than it would have back then.

On the other hand, there are clear benefits to giving more rewards to recreational players, as PokerStars is now doing. It’s fun and exciting, which likely increases redeposit rates, and a reasonable portion of those rewards should find their way back to the winning players anyways (so long as your games aren’t rake traps).

The major downside to heavily rewarding recreational players is that you’re lowering your pricing for the group of players who care least about it and raising your pricing for the players who pay the most attention. In fact, generally speaking, a number of recreational players don’t know about rewards programs, and many leave their rewards points unclaimed, which means added profits for a poker site at the expense of unaware recreational players.

While I expect that PokerStars’ decision to gamify rewards has led to more casual players noticing, appreciating, and cashing in on those rewards, I’m not sure how many price-conscious recreational players they’re attracting to sign up with them, and they have obviously frustrated a lot of high volume players who had grown accustomed to better pricing and a less toilsome rewards collection process.

Though we spent a lot of time debating all of our decisions, the choice of where to focus our rewards was a particularly challenging one for us.

In the end, we are launching with a system that rewards everyone equally.

Equal rewards works well with our beliefs as a company. We believe in fairness, and in providing a level playing field. In fact, the very first words I ever wrote about Run It Once Poker outlined my belief that a poker site should value all types of players.

The thing I have always loved most about poker as a career is that you’re rewarded based on your abilities. It doesn’t matter what school you went to, what experience you have, or whether you excel at office politics. Perform well and you’ll have an edge.

With rewards often having a significant impact on win-rates, I like that we are giving everyone that same fair shake. Why shouldn’t the equally skilled player who has a full-time job or family obligations be able to achieve the same edge as a full-time player who’s able to put in much more volume?

Equal rewards means that no player type feels slighted, and hopefully, that all player types feel appreciated and are happy with what they’re getting.  

We have so many exciting things planned for Run It Once Poker, and I can’t wait to tell you about more of our ideas and innovations as we build them into our platform.

There is one clear marketing downside to this approach – we lose the ability to trumpet our highest tier rakeback percentage in our advertisements.

A site could payout an average of 20% rakeback, but if their highest tier is 50%, they still get to say “up to 50% rakeback,” which looks way more attractive than an equally costly “20% rakeback” (for all players).

At the end of the day, we decided that the best system for our players was more important than optics.

Designing a Rewards Program

There are several rewards systems out there:  Chests, missions, rakeback (or points redeemable for rakeback).

We didn’t go with any of them.

We wanted a system with the fun and excitement of variable prizes like chests, but without the hassle for high volume players, and without the opacity regarding the way it works.  

We wanted something that could engage users throughout their session, like missions, but one that engaged their poker mind rather than their ability to complete a checklist.

We wanted our rewards to be easy to collect, like automatically deposited rakeback, but with a little more flare.

We wanted to avoid taking advantage of players, not allowing them to leave their rewards unclaimed.

We wanted the most visible rewards system in the industry – one that every single player would see and benefit from.

Bonus points if we could throw a bot deterrent in there 😉

Introducing Splash The Pot

At the start of randomly selected hands, chips will fall from the sky into the middle of the table.

Now they’re in the pot. Let’s play some poker.

These splashes, which effectively become (gifted) antes, will range from 1 big blind to 1,000 big blinds, with the smaller amounts occurring significantly more frequently (of course).

Splash the Pot is highly visible (you can’t get much more visible than having your rewards thrown on the table in front of you), fun, and equitable.  Unredeemed rewards are a thing of the past, and all reward money goes back into the poker economy immediately.

This also adds new dimension to a game that some of you may fear is getting too close to “solved” – another test of your ingenuity at the table. Adjust to the splashed pots better than your opponents do, and you’ll increase your bottom line.

In addition to keeping the game more interesting and dynamic, this serves as a bot deterrent for the same reasons – a bot (if able to get past every other security measure) would have to process the splashed pot, and then adjust properly to a 1bb, 2bb, 7bb, 15bb, 23bb, 75bb, 231bb (you get the point) splashed pot structure. Those familiar with how bots are built can tell you that this is no small annoyance.

You might say, since the larger splashes are rare, a bot could just forego a little bit of EV and play all pots the same way.  But then, in addition to other data we’ll use for bot detection, we’ll see that an account plays 5bb and 100bb splashed pots the same way – valuable information in an investigation.

I like my rakeback variance-free, thank you very much”

Over the past few years, I’ve played in a mixed game in Las Vegas with an average of 12 games in the rotation.  One or two of the plaques in the mix say “PLO Flip.” When that round comes up, we each put 10 big blinds in the middle, get dealt 4 cards, and run out a board.  

We only play one hand of it before moving on to an orbit of the next game, but it still has an unmistakable impact on the quality of the game.  Play loosens up, we gamble more, and we have more fun. Though there’s no way to know, I’d bet that the game would have run less frequently if we didn’t have the flip plaques in the mix.

Some poker players may not like variance in their rakeback, and others won’t like that Splashed Pots are bigger pots, which force more action and create added variance as a result. I understand this take, and while I can agree that there is a level of variance that you could theoretically reach that would be “too much,” I’m confident we’ll stay far below that threshold.

If you’re expecting a wild, absurd Run It Once Poker experience where you’re playing with big splashes every other hand – that’s not how the math works out. The majority of pots won’t be splashed and the majority of splashes will be small.

The right amount of variance is very healthy for a poker ecosystem.  I could expand on this topic for many paragraphs, but I don’t believe it’s a controversial statement, so I’ll keep it at that.  I’m confident that the bit of added variance from Splash The Pot will be an undeniable positive for our games.

Let’s Talk Numbers

For a long time, we intended to keep our base rake numbers equal to or lower than our competitors, and then add as much in rewards as we could fit until we reached net rake that we were happy with.  After playing around with data tables full of Splash The Pot calculations, we couldn’t get the frequency and size of the splashes as high as we wanted to, so we made the terrifying decision to cross the threshold, going over our competitors’ base rake numbers in many places while increasing the rewards percentage concurrently.

We ended up deciding to Splash The Pot with…

Why 51 instead of 50? Because it sounds cool, that’s why.

Keeping in mind that 51% of rake collected gets splashed back into your pots, for all players, here are our base rake numbers:

Note that we won’t launch with every one of these stakes initially, nor are these the only stakes we ever plan to add.  This is our main list of stakes that we’re working towards adding in the near term.

I annoyed the hell out of our (very talented) design team because I told them to increase the emphasis on “For All Players” like, 15 times. (Sorry!)  Many of you are used to seeing big numbers for potential rakeback tiers that you have no real chance of qualifying for, so I don’t want it to be lost on anyone that you, whoever you are, are getting 51%.

‘Til Next Time

I hope you’re excited about the rake and rewards numbers we’ve settled on, but if there’s any aspect of it that you think is unfair – a certain stake not seeming beatable or anything else out of whack – rest assured that if our data proves you right once we start operating, we will proactively adjust to something more fair, and you’ll hear about it from me – explanation included.

If there’s one thing I hope you take away from this post, it’s that we believe in beatable games and fair pricing for a healthy poker ecosystem – not in charging whatever we can get away with.

If you were to take away a second thing, which would be cool of you, I hope it would be that we’ve come up with an exciting and innovative way to reward our players.  One that makes the game more interesting and also manages to help with bot prevention and detection.

And if you’re kind enough to have stayed with me this whole time and to take away three things from this post, I hope you’ll have the number fifty-one etched in your mind.  51% rakeback, regardless of what type of player you are, how many hands you play, and whether or not you even know about it.  We value and welcome all of you, and you all deserve equal rewards.

We have so many exciting things planned for Run It Once Poker, and I can’t wait to tell you about more of our ideas and innovations as we build them into our platform.

With this post, I’ve now shared the final major details on the platform we’re initially launching with.  The next time I write to you, it will be to announce Run It Once Poker’s launch date.

I speak for our entire team when I say that we are grateful for your support and enthusiasm for our ideas and for our project as a whole over these past couple of years.  Hopefully, you’ll be hearing from me again soon!

As always, we’ll have a discussion on this post over in the Run It Once forums. Please hop in with any feedback, suggestions, or questions, or just to say hi!

51%!