Decline Graph

PokerScout Report: Blame Lottery Sit-and-Go’s

Online poker liquidity is on a downward trend yet again, as PokerScout’s Weekly Online Poker Traffic Update reports that cash game traffic decline three percent last week, the third consecutive negative week for the industry. As one might expect from that news, it was rough at the top of the rankings, with nine of the top ten internet poker networks and stand-alone sites seeing their traffic fall.

It has not been a good year, either. Since the same time one year ago, online poker cash game traffic is down twelve percent. If cash games were an investment, we would be firing our financial advisors about now. Actually, we should have fired them long ago, as cash game liquidity has been down-trending for several years.

There could be any number of reasons that online poker cash game traffic has landed on infinitely more Chutes than Ladders over the last few years. Certainly, Black Friday was a factor, as starting on April 15th, 2011, three of the biggest players in the industry – PokerStars, Full Tilt Poker, and the Cereus Network (Absolute Poker and Ultimatebet) – either disappeared like Keyser Sose or simply exited the United States market. Regulations have gotten tighter in some countries, which probably has not helped. And maybe people just are not interested in internet poker as much as they used to be. Who knows?

lotteryballsLooks, though, may be at least somewhat deceiving, according to PokerScout. No, cash game traffic has not been what one would call “good” in recent years, but it may not actually be as bad as it seems, either. PokerScout notes that over the last twelve months, five of the top ten internet poker rooms and networks have introduced their own versions of the Lottery Sit-and-Go, the smash hit tournament variation that has taken the online poker word by storm.

Lottery Sit-and-Go’s are three-handed, hyper-turbo, short-stacked affairs in which the prize pool is not announced until after all three players have registered and the tournament is about to begin. Unlike in regular Sit-and-Go’s where the prize pool and payouts are known ahead of time, Lottery Sit-and-Go prize pools are determined by random selection using a pre-determined probabilities. Most of the time (about 70-75 percent of the time depending on the poker room), the prize pool will be double the buy-in. On very, very (very, etc.) rare occasions, though, the prize pool can grow to 1,000 or 2,000 times the buy-in, making for one hell of a payday for the winner. For example, in the Winning Poker Network’s newly-launched Jackpot Poker, the prize pool will be two times the buy-in 70,518 times out of 100,000, so about 70.5 percent of the time. Another 21.4 percent of the time, the prize pool will be four times the buy-in. Thus, those two prize pool levels account for about 92 percent of the possibilities. One in every 100,000 Jackpot Sit-and-Go’s, though, the three lucky players will be competing for a prize pool that amounts to 2,500 times the buy-in. There are several other prize pool levels in between the bottom two and the big 2,500 jackpot.

What this all gets at is that Lottery Sit-and-Go’s have been crazy popular. Recreational players have been attracted to them because of the chance to win huge with just a low buy-in a short amount of time (players can win a lot of money on a small buy-in in a multi-table tournament, but those take hours) and with the combination of hyper-turbo blinds, tiny starting stacks, and just three players, casual players have a better chance to win in Lottery Sit-and-Go’s than they do in standard Sit-and-Go’s. More experienced players like them for most of the same reasons, but also probably because so many recreational players are flooding the tables that the more skilled players see it as shooting fish in a barrel.

As such, Lottery Sit-and-Go’s have drawn a lot of traffic away from the cash game tables. The five of the top ten poker sites and networks that were mentioned earlier account for half of the market’s cash game liquidity. Thus, because of how popular Lottery Sit-and-Go’s have been, PokerScout estimates that the new tournament format is the cause of a five to seven percent drop in cash game traffic. That is not peanuts. PokerScout, in turn, opines that were it not for Lottery Sit-and-Go’s, online poker liquidity would have only declined about five percent since last April. That still is not good, of course, but it would actually be the best yearly period since 2010, corresponding roughly to Black Friday.


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