Is the Introduction of Lottery Style Poker Games Good or Bad for Online Poker?

Prompted by the launch of a petition to end PokerStars Spin & Go tournaments, PokerStars’ top Team Pro Daniel Negreanu has told complainers that it’s not the new format that’s damaging, it’s winning players.
Editorial/Opinion
October 13, 2014
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Prompted by the launch of a petition to end PokerStars Spin & Go tournaments, PokerStars’ top Team Pro Daniel Negreanu has told complainers that it’s not the new format that’s damaging, it’s winning players.
 

Prompted by the launch of a petition to end PokerStars Spin & Go tournaments, PokerStars’ top Team Pro Daniel Negreanu has told complainers that it’s not the new format that’s damaging, it’s winning players.

“Do you know what kills games and destroys the poker ecosystem above and beyond all the things mentioned? Winning players.” And Daniel continued, “winning players as a whole win a lot more money than the company makes each and every year.”

Now Daniel is one of the world’s greatest poker players. He sits at the top of the Hendon Mob’s all time money list ranking for live tournament winnings with almost $30 million of cashes—there is a certain irony in him accusing winning players of killing the games.

But he has a point—and then he doesn’t.

Opposition Mounts

One regular player using the screen name Masuronike took to TiltBook to complain about the new Spin & Go tournaments. These are hyperturbo three man winner take all sit and gos where the prize fund is determined by a random number generator according to a pre-defined payout probability.

His argument is that the format turns poker into a gambling game, since even when good players play weaker players, the variance they will experience makes it almost impossible to beat the games over any reasonably defined “long run.”

He subsequently turned his opposition into a petition asking PokerStars to end the new games.

Customers Love Lottery Style Sit and Gos

The lottery style tournaments have proved spectacularly successful since they were introduced; first in the Expresso format on Winamax France, then by iPoker as Twister, Full Tilt as Jackpot Sit & Gos, and finally by PokerStars as Spin & Gos.

Their success has boosted revenues—the latest figures from Italy show that they have helped the Italian market to register higher net revenues from tournaments than from cash games for the first time since regulation began.

The bottom line is that the product is giving customers what they want—which is what poker operators are in business to do, that’s how they make money.

Some play has shifted from other sit and go formats, and there seems to have been some drop off from cash games too. It will be up to PokerStars to determine how the new game has affected the overall balance of its revenue streams.

Not All Changes to the Player Ecology are Beneficial

To complain about a business seeking higher profits by offering a product customers want seems naïve. But Masuronike and his supporters on the forums raise a confounding issue.

Regular winning players don’t want the variance of the new format, and if the games they regularly play become illiquid, then they will seek alternatives elsewhere.

Daniel Negreanu appears to have missed the vital contribution that winning players make to the poker ecology—they provide liquidity.

The value of having sufficient player liquidity to offer a wide range of game types at stakes and times that recreational players want to play is critical to online poker operator revenues.

Winning Players Don’t Pay Rake—They Generate It

Winning players may point to the amount of rake they “pay” but from the operators point of view, they actually contribute no cash at all to the bottom line. The rake is generated from the deposits made by losing players.

Winning players turn losers’ deposits into rake for the operator and an income for themselves. Their high volume determines the rate at which deposits can be turned into revenues. As has become apparent in segregated markets like Delaware and New Jersey, low liquidity kills the online poker business.

A game like Spin & Go which introduces changes to the player ecology—the balance between winning players and losing players—is always a risk. PokerStars will monitor its impact closely, but the likelihood that it will be a net revenue loser for them seems slim—so it’s a game that isn’t going away and it may even convert gambling Spin & Go players into “real” poker players as they explore what else PokerStars has to offer.

Daniel got it right when he said “I love, love, love, and love this concept and if it helps to level the playing field a little bit, while allowing rec players to stretch their dollars a bit further than before, I think in the end that is a win for everyone- even the winning players who are upset about it now.”

He was wrong when he suggested that winning players are killing the game—everyone hates a football referee, but just like winning players, he’s essential because he allows the game to be played.

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