PokerStars Rolls Back Rake Increases
The second half of 2014 was not a good one for the PokerStars public relations department. After being purchased by Amaya Gaming for $4.9 billion, PokerStars announced a series of policy changes, nearly all of which were decidedly customer-unfriendly. As 2015 starts, however, PokerStars may have seen the light on one of those changes and announced this morning that most of its planned rake increases have been reversed.
The rake increases were to come in two stages. On November 3rd, 2014, rake went up for all heads-up hyper-turbo Sit-and-Go tournaments, hyper-turbo scheduled tournaments, and knockout tournaments (though not progressive knockout tourneys). Ring games were also affected, with significant rake increases seen in No-Limit and Pot-Limit games with exactly two players, along with games of stakes $25/$50 and higher with five or more players (there were some other instances of rake escalation, but the given examples were the most severe). Spin & Go rake was also increased at the $3 stakes and above.
Then there were changes to be made as we rang in the New Year. At stakes below $2,000, hyper-turbo Sit & Go fees were to go up. In certain countries subject to specific local taxes or VAT (value-added tax), PokerStars was going to start charging the same tournament fees for re-buys and add-ons as it did for the initial entry fee in scheduled tournaments.
Most players, it seemed, were furious at PokerStars, seeing the changes as another step away from the customer-focused management style we had been used to and a move towards a “money is everything” decision making process. Players were even more furious upon reading a post by PokerStars Head of Corporate Communications, Eric Hollreiser, on the PokerStars blog, which was basically interpreted as “Hey, we’ve done a lot of great things for you, so you can’t really complain about this.” An example:
We feel that we’ve always done right by our players and by the game. Look at what we’ve achieved in spreading the game globally, both live and online; how we’ve built liquidity in ring games of all shapes and sizes; how we’ve created hugely popular online tournament series; and how we’ve behaved as a responsible corporate citizen over the years. We’ve built trust and respect largely because we’re willing to make tough and sometimes unpopular decisions.
The game is constantly changing and evolving, as is society and technology at large. Like any good poker player, we know that you have to adapt or risk being left behind. We’re committed to keeping poker exciting, fresh and relevant to new players and to loyal grinders.
We’ll continue to make changes when they have to be made. Some will go unnoticed, some you’ll cheer and some you won’t agree with or you will say are self-serving.
But today, Hollreiser announced that the rake increases implemented on November 3rd will be rolled back to their pre-November 3rd levels, except for Spin & Go’s, whose tournament fees will stay at the new, elevated levels. Planned rake increases for 2015 have also been cancelled, except in the cases where it was deemed necessary in the jurisdictions that have seen “increased gaming duty or VAT.” In those countries, VIP rewards may be lowered, as well.
Hollreiser concluded his update by saying, “Rake changes have a complex impact on the poker economy. We always strive to make changes that “get it right” and we’re not afraid to make adjustments based upon feedback and new analysis (as explained here). We continue to pride ourselves on offering what we believe to be the best online poker experience at the lowest price.”
The reaction to this announcement has generally been very positive, as one might expect. People seem to understand the need to pass along some of the increased tax costs to customers and are pleased that the rake increases that were seen as egregious have been reversed.
At the same time, some have joked (half-joked, maybe?) that this may be the PokerStars equivalent to when The Coca-Cola Company introduced New Coke in 1985. Experiencing stiff competition from Pepsi, Coca-Cola reformulated its legendary soft drink to make it sweeter, something it thought would work in part because of market studies and taste tests. New Coke was a complete replacement for the original Coca-Cola, not just another flavor, and it totally bombed. Coca-Cola drinkers were irate that their drink was changed and less than three months later, the company re-introduced the original formula, dubbing it Coca-Cola Classic.
Conspiracy theorists believe that the entire debacle was planned by Coca-Cola as way to increase sales. By replacing its loved product with one that people didn’t like, it was able to rejuvenate customer loyalty when it brought the old one back. A kind of “you don’t know what you got ‘til it’s gone” scenario. In the PokerStars situation, some have opined that PokerStars just employed a similar strategy, though the rake rollback was almost certainly made because of a combination of player backlash and lower than expected financial results/projections.