Why Online Poker Is Dying

I’ve been playing online poker for 8 years now and I have never seen the industry in as bad of shape as it is today. It is beginning to feel like online poker is dying. Online poker volumes have declined significantly in the past year. Anecdotally, I can also tell you that it appears the last 3 months have been especially bad. It seems that online poker fell off the cliff this summer and has failed to recover. The industry faces major challenges and I want to talk about some possible solutions.

Is Online Poker Rigged?

As someone who has played the game for 8 years and been successful at it, I can definitively tell you the answer to that question is a resounding no! However, the real problem is that people are even asking the question. Like it or not that is the perception a ton of recreational poker players have about online poker. The brand of online poker has been completely destroyed. What has polluted the brand so much? Why do thousands of live poker players around the world think that online poker is rigged? This is a more complicated question than it might seem at first glance. Here are some answers for you.

Why Are Online Poker Loss Rates so High?

1) Online poker is fast! Turbo, zoom, etc. All of these games have increased the loss rates of recreational players. Because recreational poker player’s loss rates are so much higher than they are live it is natural for them to think that online must be rigged. After all if you are a recreational fish who plays 5 hours a week and loses an average of $100 per week then losing $500 per week in 5 hours online might also make you think it was rigged.

2) Poker players are much more skilled online than they are live. The volume players are able to play online combined with highly sophisticated poker tools has dramatically increased the edge of “serious players” over “recreational players”. As the games have gotten tougher many professional poker players have tried to compensate for decreasing win-rates by improving their games. Unfortunately, in a way this has actually contributed to the online decline of the game. When bad players never win they don’t like to play anymore or they retreat to the live game where it is not “rigged”.

3) Reduced player incentives. Rakeback payments have been cut significantly over the past 5-10 years. There used to be frequent “redeposit” bonuses etc. With less money being returned to bad players their loss rates have accelerated further. Operators are acting like this because they are struggling but the unfortunate result is they are just cannibalizing what little business they have left.

Why Nobody Cares About Online Poker

Why? Because it isn’t fun! It used to be fun back in the day and sometimes weak players would win. Now all that happens is you deposit, get slaughtered, and the game is over. What are some solutions to bring the fun back?

1) When I first started playing online poker there were tremendous incentives for players. Here are some of the experiences I have had as a player. I was hosted at extravagant parties in Las Vegas, had limousine service (provided by my online poker website) when I arrived in Vegas for the WSOP, won trips overseas to play in tournaments, bubbled winning a Caribbean poker cruise, was given an Iphone and other gadgets, and had European specialty chocolates delivered right to my door for Christmas. Actually come to think of it I used to received birthday gifts as well lol. These benefits make a difference especially to recreational players. As time has gone by poker operators have cut back almost all of these player incentives. For recreational players who are losing money at poker benefit programs are an important part of keeping them engaged. Networks should be more targeted in cutting incentives on good players while continuing to provide incentives to recreational players.

2) No Chat!? The website that I currently play on does not automatically show the chat. I don’t even know when a recreational player says nice hand. To make the experience more user friendly at least give the more serious players a chance to chat with recreational players if they want. At the very least it will allow them to be courteous toward them.

3) Slow the game down! Get rid of the damn zoom poker. Get rid of turbo poker. If you want to make an online poker website friendly to recreational players it requires a serious commitment on the part of the operator. They can’t pretend to be friendly to recreational players while also promoting zoom and turbo poker. All these platforms do is allow serious players to play huge volume.

4) Poker HUD’s (see poker resources page to get one) are controversial, but also a negative for the industry in my opinion. More networks should move to eliminate HUD’s if they want to reduce the loss rate of recreational players. Obviously, this will not stop all pros from having some kind of helpful software but it should help the recreational players a little bit.

5) It is time to get back to a maximum of one table. Party poker just made this change for their “recreational tables” and it should be adopted more widely in the industry. This is a great idea! Do any of you remember back in 2004-2005ish when Pacific Poker used to be a haven for weak players and they only allowed one table maximum?

6) Put a cap on stake levels! Why do you want to allow a weak player to drop $15,000 in a night? Do you really think that is sustainable? How much rake does a network collect when a whale loses 15k to a reg in 10 hands? To be player friendly you need to reduce the stake levels offered so bad players don’t lose all their chips immediately. There was a time when some websites never even offered NLHE games higher than 3/6. Why not try this again…..

7) Eliminate heads up poker games. Heads up poker has to be one of the worst games for the industry in the long term. All that happens is weak players get completely annihilated and outclassed by sharks. They could be spreading money around the ecosystem but instead they are just dumping it off rapidly.

8) Anonymous tables I am torn on. I the one hand they provide recreational players a chance to avoid being chased around a network by regs, but I also think they are a haven for cheating (see anonymous poker cheating).

Why Rakeback Should Be Eliminated

I know this sounds like a drastic solution but why the heck are you giving money back to winning players? If you provide a poker environment that has plenty of recreational players there will be lots of regs around to play with them. Therefore, it seems quite evident that the primary focus of poker rooms should be on the retention of their recreational players. Take the money from the regs and give it to the fish. Let’s take a closer look at a couple of the different business models in the industry.

1) The PokerStars model. They are friendly toward professional poker players and have historically not been linked with a gaming house. Note: PokerStars is now switching their focus and adding in casino games because their online poker traffic is declining. Over the past several years as online poker volumes have declined on most networks Pokerstars has benefited from players having fewer and fewer options in terms of websites to play at. They only offer their VIP’s large amounts of rakeback, and they have kept affiliate revenues to a minimum. Because of PokerStars powerful brand they have taken over a larger and larger portion of the marketshare. Increasing market share is not sustainable in the long run since at some point you run out of room to grow. Serious poker players have played on PokerStars because it has been the gold standard in the industry and because there have been enough weak players sprinkled in the mix to provide a win-rate to regulars. In my opinion there is no doubt that PokerStars is the most difficult network in the world to win at. Unfortunately, what is beginning to happen is that there are not enough weak players left to support increasing volumes. If there was a way to determine the results of a huge sample of regulars I would guess that more and more regs are losing at the game and experiencing “wicked down stretches”. As a result these players are either pulling out of the games or playing lower, which is starting to affect revenues. It will be interesting to see how PokerStars poker revenues fare in the futures. I expect them to continue to decline and they will increasingly focus on monetizing through casino games. This is yet another negative for poker players.

2) The second type of model that can be executed is one that focuses on providing a friendly and fun environment for recreational players to be in. If the recreational players come so will the regulars, and you will have significant volume. Few if any operators have done this.

What have we learned?

  • Player volumes are declining and the online poker environment has become increasingly hostile to recreational players.
  • It is time to change some network policies to favor recreational players. Make it maximum one table, eliminate heads up games, lower maximum stake levels, and getting rid of rakeback for sharks to increase the perks for recreational players.
  • Without some major changes in this industry the environment will continue to deteriorate. It is time to take some radical steps before online poker dies.

It would be great to hear your thoughts on this subject! Also, be sure to pick up your copy of Exploitive No Limit Holdem while it is still on sale.

Regards,

ThePokerCapitalist

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2 Comments

  1. Tony says:

    Uh…no. Banning HUDs, getting rid of rakeback, and one table max? Sure it makes it fish-friendly but it also makes it impossible for regs to make a living. The root of the problem is that the initial hype about online poker has died down. Old fish are no longer interested and there’s not enough new fish that are interested. The only solution I see is for Pokerstars to look at the long-term picture and reduce the rake.

  2. Tony,

    Thanks for the comment. You are of course correct. The initial hype has died down, but card rooms are making it worse through their actions. It would certainly make it challenging for pros if that was the environment. Having said that for the past few years I think card rooms have focused too much on regulars and not enough on the recreational players. Going forward for the long term sustainability of the industry it is IMO best for a more recreational friendly model to be adopted.

    -Paul

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