My Thoughts On Weighted Contributed vs Dealt Rake Methods at PokerStars

The poker world (or a small subsection of it pertaining to those who play online at PokerStars) is in arms over speculation that a change in the way rewards will be given at Stars is about to happen. There is a tonne of misinformation and uninformed opinions floating around and I’d like to give my thoughts on the topic; hopefully making this post a reference for people wanting to know more about the situation. I will be unbiased in my opinions and look at the issue from all angles. First of all it should be noted that as of this post there has been no official statement indicating that any change will be made. There is a lot of evidence that points towards a change being likely though. The entire discussion was sparked by this post by PokerStars Steve in the Supernova Elite thread on 2p2:

I plan to announce VIP Program changes by December 17th. Any changes to rake and offering planned for early January may be announced then or may be announced later. There aren’t any new VIP levels planned. The only possible change for .com that would be considered major would involve changing away from the dealt method of assigning VPPs. No, I have no further information to provide prior to the final announcement of changes. http://forumserver.twoplustwo.com/showpost.php?p=30267568&postcount=8921

Due to whatever reasons over at Stars, the changes were delayed, and have yet to be posted. We can expect them any day now. The following was then sent in an email to affiliates of Stars:

CHANGES TO THE CALCULATION OF AFFILIATE REVENUE SHARE COMMISSION FOR 2012 

      On January 1, 2012, we will be changing the way we calculate revenue share for affiliates. When calculating revenue for commission purposes, instead of rake being split between all players dealt into the hand, rake will now be calculated based on the players who contribute to the pot. This has been updated in the Terms and Conditions, which you can review at:

https://www.pokerstarspartners.com/public/about/termsAndConditions.html 

This is currently all the information that has been given to us by Stars. It does indicate that they are contemplating making a change from dealt to weighted contributed but nothing is certain yet. We also don’t know if any other changes are planned or what they might be (though once again we can speculate). First of all let me emphasize that the above email indicates that the change is strictly for affiliate based commission. Stars is different to FTP and most other sites in that there is no directly proportional relationship between the amount of rake paid and the rewards received by either party. For “rakeback” in all other sites the amount of money is paid to the affiliate and they then give a percentage of that to the player. So if the affiliate gets less, the player gets less. This has never been the case with Stars due to their VIP program. It has ensured that affiliates get paid separately and any rewards to the players are given straight from Stars. Affiliates have always received a flat percentage of rake back paid by the player under the dealt method. This is now changing to contributed. I won’t go into whether this is good/bad/fair/unfair on the affiliate end of things in this post as I assume most people are more interested in how any possible changes might effect them and the games they play.

Before I go on let me explain the differences between the dealt method and the weighted contributed method. These are not methods of calculating the rake paid into a pot but rather methods of calculating the rewards received based on the rake paid. Under the current dealt system every seated player at a table who is dealt cards receives the same amount of rewards as everyone else at the table for every hand that is played. For instance at a 2/4 6max PLO table if everyone folds except the blinds who each end up putting their stacks in then the total rake is $3 (the cap). This number is then multiplied by 5.5 to arrive at the total number of VPPs given to the table which is 16.5. Divide that by the number of people dealt in and you get 2.75 VPPs per player for that hand. Under the weighted contributed system the only people who would receive points would be the people who put money into the pot, and they receive points based on the % of money they put into the pot. In the above scenario assuming each blind put in the same amount they would receive 8.25 VPPs each and everyone else at the table would receive zero. There is no arguing that a weighted contributed system is more fair than a dealt method. Why should someone who folds most their hands receive the same amount of rewards as someone who plays every hand (and thus pays most of the rake)? The system has been flawed since it’s inception and almost every other poker site has changed to a weighted contributed system and I think Stars is going to do that now.

What does this mean for you as a player?

For almost everybody it will result in a decrease in rewards / rakeback. The tighter you are, the more you will lose. Some people are under the impression that since they play a bit looser than most people they will actually benefit from this change, and this is untrue for most people. The exact figures won’t be known until some time after the changes (if made) are made but based on people’s experiences on other sites when similar switches happened you can expect a noticeable decrease. A question that comes up a lot is “If they’re taking money from the nits and giving it to the fish then that sounds good to me. Why is that bad? How would Stars profit from it?” They profit from a discrepancy in rewards occurring by giving less VPPs to the tight regulars and more VPPs to the loose fish. For every VPP you get you get a certain number of FPPs depending on your VIP club level. A supernova elite gets 5x as many and a supernova gets 3.5x as many. Gold, silver and bronze star get less. The weighted contributed system will result in fewer VPPs being awarded to the tighter players and more being rewarded to the looser players. Since the tight players are far more likely to be regulars and have a higher VIP level, each VPP they lose will be worth more than each VPP gained by the looser players who are more likely to be fish and/or casual players with lower FPP multipliers.

The tighter players are also far more likely to spend their FPPs on the rewards that give them the highest return (ie the $4k bonus for 250k points) whereas the fish are more likely to use the points on lower rate cash bonuses and assorted items from the store. There’ll definitely be a slight boost to their BRs from being able to hit additional stellar rewards bonuses that they wouldn’t have under the dealt system but I think this is fairly negligible in the grand scheme of things. There isn’t a direct redistribution if the only change was to be to weighted contributed. The discrepancy in funds is pocketed by Stars.

What remains to be seen is what (if anything) will be done with that money. It’s possible that they will make some changes in the VIP program so that the money is redistributed back to the players in some way or form. I am hopeful for this to happen. If this happens it is unlikely to work out to be exactly the same as before and will affect every person differently. My best guess is that the tightest players will notice an overall drop in rewards, the middle of the range TAGs/LAG regulars will end up somewhere around neutral, possibly slightly down, and the fish and looser than average regulars might see a slight increase. If there is an overall loss in money given back to the players I hope that it isn’t enormous (which it would be if they simply switch to WC and make no other changes). I also hope that some (all?) of that money is at least spent in areas that will be beneficial to the games. Marketing to bring new players to the site and promotions to redistribute the money back into the poker economy are two that come to mind. Either way we just have to wait and see what happens. There are three likely scenarios in my mind:

  1. Everything stays as it is.
  2. A switch to WC with no other changes.
  3. A switch to WC with tweaks in the VIP program so that players are compensated in a more “fair” manner.

I think #3 is the most likely to happen. It’s a slightly optimistic viewpoint but I have faith. Some people seem to think that if a direct change to WC is made then the quality of games will improve. I disagree with this. Based on empirical evidence from when this has happened on other sites, games did not improve. If a 24 tabling player takes a 20% hit in their rewards/profits, will they just give up poker? Unlikely. They will either increase their volume by 20% or play fewer tables and focus their attention on beating the game rather than raking in the RB. Neither scenario results in softer games. Regardless of what happens there is no need to panic. Like any change in life you take the information given to you and make the best decisions you can. Hope for the best. plan for the worst. Start thinking about what would happen if they make a direct change to WC and make some contingency plans if you had previously planned to grind on stars and make a large amount of your profits from RB. Someone posted an awesome youtube clip that is somewhat relevant (and it’s just a great clip in general): http://youtu.be/JDgit3oYmF0

  • http://godlikeroy.com GodlikeRoy

    One thing I didn’t mention in my post is the possibility of a third system, WTA (winner takes all). This would be the person who wins the pot pays all of the rake and receives all of the rewards. I might make a quick new post later today with my thoughts on this system.

  • http://godlikeroy.com GodlikeRoy

    Also, any change in dealt vs contributed would solely affect cash game players and have no impact on MTT or SNG players.

  • NA

    “A switch to WC with tweaks in the VIP program so that players are compensated in a more “fair” manner.

    I think #3 is the most likely to happen. It’s a slightly optimistic viewpoint but I have faith.”

    This is what FTP did when they went WC. They kept points on dealt system and put in cash rewards like Black Card.

    We still complained.

  • SodOmi

    strange clip. pure propaganda in my eyes. no explanation, no alternatives.

  • cntgetmedown

    Haha, great video.

  • Nakamator

    great analyses roy…. really helpfull.. ;)

  • http://raizorsedge Austin Bayne

    hey roy! hows it going. i miss plomaha.com/ i dont know if it still exists or is just blocked in the states… i tried to look up dougie mills. i found a linked-in profile but nothing else… i hope he didnt off himself after last april… i started playing on oddsmaker a few weeks ago. i had an account there years ago way before i joined STARS…. they use the contribuetd method and i think it sucks… it will take forever to earn the $200 (free money) from my first deposit… i miss the good ol days…. my gf yelled at me for hours the other day cause i redeposited another $250 (lost more than half of my initial deposit on aces vs one pair on some dry flop 60% fav. u know how it is… i tried explaining that variance and omaha bankrolls should be 100 buy ins… ugh talk about a losing battle. i hate this fascist country…