Why Are High Stakes Games Bad for Online Poker?

Posted by on Tuesday, July 31st, 2018

Party Poker announced recently that they were removing all no limit holdem games at stakes of $10/$20 and above from their lobby without notice and with immediate effect. The move was designed to, in their own words: “make improvements to our poker ecology and [is] in our players best interests.” While the poker purists may find this repugnant, there is a logic to it that requires a good understanding of how the online poker ecosystem or ‘ecology’ works.

For a site to make the maximum amount of revenue possible, they would like 6 players of completely equal skill, playing a low variance game, while they rake every pot until the money has been passed back and forth enough until everyone is broke and the site has all of the money. If you look at the $2-$3 game in the Commerce Casino in Los Angeles, this is effectively what happens as the buy-in is capped at $100 and the rake is an enormous percentage of the average pot. In fact you may remember that it was only in 2006 that games with caps of more than 50 big blinds made their way into the Party Poker lobby.

Of course if they enforced such a poor value system like this in today’s games they’d lose the vast majority of their professional and semi-professional players overnight. This player group is a necessary evil for the operators; on one hand they generate huge rake and provide a player base for the fish to play with, but on the other hand they are the ones who are cashing money out of the poker economy to pay for their life expenses…money that the operator could have raked if it had remained on the site being passed from one player to the other.

The conspiracy theorists would have you believe that the random number generator was tainted to favour the shorter stacked player in all-in situations just to keep him in the game, but that’s not a matter for this piece!

If you take the case of a rich fish who loves to gamble and sits in with the exceptionally talented players at $25/$50 with $5,000 he’s likely to lose that $5,000 pretty quickly, and the amount of it that’ll be raked by the site is likely very low. If you look at the graph below (data from www.pokertableratings.com) you’ll see the proportion of rake to winnings for the top 50 players at PokerStars at all stake levels. At $25/$50 the money won by the good players dwarves the rake taken by the site in percentage terms and it’s evident that the $5/$10 games and below are where the money is for the poker sites. If that same fish is restricted to playing $5/$10 capped at $1000 buy-in, he’s most likely going to lose his $5,000 a lot slower, meaning a lot more of it will be eaten up by rake before it finds its way into the accounts of the professional players. 

While moves like this will always cause outrage among the ‘die hards’ on the poker forums, the sites to a large extent don’t care about them; their number one goal is maximising revenue. It is recreational players that keep the poker economy alive, they’re the people who are bringing money into poker from elsewhere, and without net depositing players there would be no poker economy. Obviously then doing what’s best to protect the fish is the real goal of the operators.

Remember it’s not too long since poker was booming and Full Tilt were happy to host the $500/$1000 games at a loss (due to payment processing fees associated with huge deposits). They figured the number of low stakes railbirds the nosebleed games attracted who wanted to ‘play, chat and, learn from the crooks’ easily helped cover these losses. Those days are long gone however and now poker like all sections of the economy has to tighten its belt.














Of course many argue that there are other more pressing problems in the poker eco-system. The one that is most frequently bandied about is the state of the heads-up game, where the lobby consists of dozens of regulars at individual tables refusing to play each other, but waiting for a fish to sit with them. Surely playing heads-up no limit holdem or pot limit Omaha against a single good player is one of the quickest ways for a recreational player to go broke?


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