IN-DEPTH 30 May 2018
Poker's State of the Union: Generating the Moneymaker Effect 2.0
With growth in poker stalling, land-based and online operators are exploring different strategies to attract new blood to their communities. But is that easier said than done? And is it possible to change and keep current players happy? Some operators have tried, none have succeeded. So where should they go from here?
By Gambling Insider
Perhaps more so than any other vertical in gaming, poker, and more specifically poker players, have been the subject of stereotyping throughout the years. From the depictions of its Mississippi riverboat or Wild West origins; through the mob controlled illegal dens of
the early 20th century, or the early rise of Las Vegas that saw figures such as Nick the Greek and Johnny Moss etch their names
into folklore, poker has always been a game that has been inseparable from the characters that played it.
That trait has not eroded with time. The common characteristics of members of the poker community have certainly evolved through the poker boom and the rise, fall, and re-emergence of online poker, but they remain nonetheless.
That isn’t to say that there is an identikit poker player today. In 2018 the poker community is more diverse than ever,
and the game is certainly richer for it (and in any case the history of poker is littered with highly successful players that have broken the accepted mould of the time). However, for both land-based and digital operators and suppliers, being able to accurately assess how rapidly the demographic of the poker community is shifting, and in which direction, is crucial to future-proofing the revenue stream.
So what can we learn from studying the poker landscape today? And what are the trends that will have the greatest metamorphosis effect moving forward?
THE MONEYMAKER EFFECT AND ITS INFLUENCE ON TODAY’S POKER LANDSCAPE
For the outside world, the 1998 film Rounders was probably the only point of reference to the inner workings of the professional poker community at the turn of the Millennium. Insomniacs living in the UK also had Channel 4 television show Late Night Poker to keep them company in the late hours, but regardless of whether Teddy KGB or Dave ‘Devilfish’ Ulliot was your icon of choice back then, the overall impression of high stakes poker was that it was very much an underground operation populated a collection of somewhat shady characters.
That perception was shattered on 19 May 2003 when Chris Moneymaker, an unknown amateur player, bested the world’s top professionals to win the 2003 World Series of Poker Main Event and with it $2.5m. Virtually overnight ‘The Moneymaker Effect’ came into force; poker was thrust from the shadows into the mainstream, attracting thousands of new players from the worlds of gambling, professional gaming, financial markets, Ivy League college dorms, and everywhere in-between. 839 players ponied up the $10,000 buy-in to participate in Moneymaker’s WSOP Main Event; the following year that number topped 2,500, and by 2006 hit a record high of 8,773 players, a tenfold increase in just four years.
However, the story of poker’s rise in popularity was not to remain on that trajectory forever. 2006’s WSOP Main Event field remains the largest in poker history, and following the 2008 financial crisis coupled with the banning of online poker in the US and subsequent decline of poker shows on television, participation in poker has tailed off. None of those factors can be attributed to operators; however, that does not absolve casinos entirely from poker’s community growth stalling, as the evolution of the stereotypical player has been driven by casinos to an extent and this has discouraged participation from certain demographics.
With the influx of players, and consequentially money into the poker community, came bad habits which were not stamped out by casino operators and card rooms. Ask most frequenters of card rooms or poker media watcher to describe the average poker player of today, they would probably describe an ‘online wizard’; a player in their early twenties who disengages himself from the rest
of table through the adoption of a hood, sunglasses and headphones. He also plays the game in a slow, methodical manner, taking a deliberately longer period of time to make actions.
Whilst you are unlikely to see fistfuls of players fully kitted out in this uniform at a provincial G Casino, there are mimics of the new wave of pros on show in Vegas and the bigger London casinos, and at most tables up and down the country there are hints of this evolution to be found i.e. players listening to music or watching smartphone screens rather than engaging in conversation at the table or slowing down the pace of play with prolonged decision making.
The result is that the game, which is intentioned to be sociable and enjoyable, is more serious and less fun. The poker tables of most casinos today are littered with players that are only there to prey on the weak, profiting from recreational players looking for a good time. The barriers to entry preventing new players from enjoying the game continue to grow, dissuading more and more participants from exploring poker as a form of gambling.
MILLENNIALS, WOMEN, AND THE CASUAL PLAYER: WHY NEW DEMOGRAPHICS ARE KEY TO POKER’S SECOND BOOM
So what is the next step for operators? Clearly, if there is to be a second poker boom this will require a mammoth change in the perception of the game’s target audience, much like the original ‘Moneymaker Effect’; the question then becomes who the new target audience is and what will attract them to take a seat at the poker table.
For land-based casinos, the answer lies in looking across the rest of their gambling operations, as the question of how to attract new players is not isolated to poker. Slots and table games also need to be viewed through a new pair of eyes, namely with a view to attracting the oft-disregarded yet always discussed demographic that is Millennials. Serge Mukhanov, Connective Games CEO states: “In regions where our poker software is available (mostly unregulated markets in Latin America, India, CIS-countries, South East Asia) we see a constant increase in the Millennial demographic. Interest in poker peaks at age 25-26, and the most important demographic for us is 20 to 30 years. Most of these players are new to Poker, and after playing for some time they become recreational players (rather than intermediate payers polishing their skills).”
Research into the gaming wants of Millennials to-date has indicated three key factors primarily; that gaming should be more enjoyable, it should be more causal, and most importantly it should be more sociable. Poker lends itself towards those traits more than perhaps any other game in the casino, yet every trend of the evolution of the poker player since 2003 has been in the opposite direction. This progression must be arrested.
It is true that you cannot force players to interact, but removing the obstacles to doing so, specifically electronic entertainment at the table and face-obscuring clothing, would be a start. Speeding up the game through the introduction of an action clock (which is already operational in some tournaments) would also keep recreational players more engaged. Promotional offers (e.g. a free round of drinks to the whole table if a player turns over a particular hand at showdown) and themed prizes (e.g. a free table at a nightclub for winning with a particular starting hand) have also proved to work as mechanisms to entice Millennials to the table in other areas of the casino.
Encouraging more women to play the game is another area in which casinos can do more to grow the community (see Nicolas Colon’s column on page 48 for more on achieving this). This strategy has already been in operation for a number of years, but there is still much the casinos can do to attract more women to the poker table. As Mukhanov explains, women are increasingly becoming an important part of player acquisition: “Women are 10-15% audience of rooms powered by us. And we see that this number slowly increases. As for ambassadors in newly opening markets (like India and South East Asia) it is one of the most important tools for player acquisition. And it is used more and more actively.”
ONLINE POKER: PRODUCT DIVERSIFICATION AND APPEALING TO THE CASUAL GAMBLER
Of course, it isn’t only within the brick-and-mortar walls of casinos and card rooms that are anticipating, hoping for, or in some cases driving the change in poker player demographics. Online operators and suppliers are equally determined to understand the evolution
of the community, and in the case of perhaps the most important name in the industry, it appears to be more important to dictate the evolution than to be able to predict it.
In order to take the temperature of the room when it comes to online poker, online operator colossus PokerStars is the most important port of call. As the winds of change blow through online poker, as they have done consistently throughout the past two decades, their origins can inevitably be traced back to PokerStars or one-time competitor Full Tilt poker. With Full Tilt now assimilated into the PokerStars operation (both sites have been owned by PokerStars’ parent company Amaya Gaming Group since 2014) PokerStars is the
only trendsetter of any significance left in the market.
From the origins of the poker boom (Chris Moneymaker’s 2003 World Series of Poker victory began by qualifying for the tournament via winning a $33 tournament on PokerStars, and in the process opening millions of pairs of eyes to the possibilities online poker proffered), through more than a decade of success, the consensus was that the operator was content to market itself to a growing and maturing customer base without overly manipulating the demographic of the player pool.
However, 2017 was the culmination of a concerted change in strategy that is set to have a lasting impact on the demographic of online pokers moving forward. Simply explained, that strategy is to de-professionalise the poker community, making the game more appealing for casual players instead.
The first indications of a new strategy aimed at appealing to casual players came in 2014, with the introduction of a series of new games that not only relied far more on luck than the skill elements of poker, but also marketed themselves as offering huge (seven figure) prizes in exchange for single figure stakes.
The “Spin & Go” series of games is a relatively simple concept used by gaming operators across all verticals; a limited number of players’ stake to join a game and these stakes are then randomly multiplied to create a prize pool (PokerStars overall rake on the game remains at 4%). The players then play a much-abbreviated version of poker (more often than not players push all in with any two cards on
the first hand), with the winner scooping the entire prize pool. The number of million-dollar pots, some of which have been generated by player stakes of under $30, is well into double figures.
This quickly concluded, simple to understand, and difficult to find an edge game has got more traits in common with casino games and even slots than traditional poker. More variations of the popular game, including Spin & Go Max and Omaha, have been added since the original launch.
The diversification of product aimed at pulling in more punters focusing on casual gambling than perfecting a skill game hasn’t been limited to new variations of poker either. At the end of 2014 PokerStars announced that it would be launching PokerStars Casino to run alongside its poker product; sports betting brand BetStars followed shortly afterwards.
The launches were not without bumps along the road. Victoria Coren-Mitchell, perhaps the most famous British member of Team PokerStars Pro due to her television personality status and being the only two-time European Poker Tour main event winner, ended her long-time association with the company over the move.
“I cannot professionally and publicly endorse [the launch of PokerStars Casino], even passively by silence with my name still over the shop”, Coren-Mitchell wrote on her blog in November 2014. “Poker is the game I love, poker is what I signed up to promote. The question I’m probably asked most often in interviews is about the danger of addiction, going skint and so on. I’m always careful to explain the difference between the essentially fair nature of poker, where we all take each other on with the same basic chance, and those casino games at unfavourable odds which can be (especially online) so dangerous for the vulnerable or desperate. Although PokerStars assured me I would not have to actively promote the casino arm, I know in my heart that continuing in my current role could risk helping to send people to a place where they would encounter something I think is dangerous. That’s not the way I want to make a living.”
THE (FORCED) EXTINCTION OF THE ONLINE REG
Through appealing to a wider demographic of player, particularly prioritising and targeting casual gamblers through product development, Amaya and PokerStars has evolved the make-up of the poker community and in the process redefined the perception of the average poker player. But attracting a new type of gambler isn’t the only influence on this shift; there are those who would argue that PokerStars has actively turned its back on the regular players and online pros that have supported the site through its years of growth.
Accusations of PokerStars’ animosity towards regular players range from the overt to the subtle. One of the reasons behind the launch and growth of Zoom Poker, a variant applicable to cash and tournament play whereby players move from table to table after each hand rather than remain stationary at a single table, was that it would prevent regular players targeting perceived weaker, recreational players. Nowhere is this more evident than heads-up cash games, best known as a natural habitat of the online pro and the game at which a large percentage of regs specialise; all PokerStars heads up cash games at every stakes are Zoom, preventing any players from targeting or being targeted by players with a skill edge.
Online cash pros certainly didn’t take too kindly to these game developments that chipped away at their competitive advantage over recreational players, but it has been the direct hits to their bottom line which has caused most outrage within the community.
In late 2015, PokerStars announced that it would be changing its VIP rewards programme in 2016, the result of which would dramatically reduce the kickback generated by regular high volume and high stakes play. Bonuses would be scrapped completely on certain games
and severely capped on others. A percentage of the of the retained revenue was reallocated to freerolls, thus spreading profits between recreational players.
“We were starting to have too many professional players for what we could maintain for a good, healthy eco system.” These were the words of Séverin Rasset, now Director of Operations and Innovation for Stars Group, when the announcement of the VIP reward programme was made.
For players attempting to make a full-time living playing online poker, the revenue generated by achieving Supernova or Supernova Elite status in the VIP reward programme was potentially the difference between making and affordable income and not. By making sweeping changes to prevent players from generating additional income to straight up winnings by playing more poker, PokerStars has intentionally removed a financial incentive to becoming a frequent player, deliberately culling the number of professional online players in the process.
A further candid example of Amaya looking to push winning regular players out of the game was the dramatic increase in rake PokerStars began extracting from the game in 2016. Accused of being a flagrant money-grab by the new owners to line their own pockets, PokerStars responded to criticisms of the rake rise by claiming this had been done for the benefit of the game, as making the game harder to earn an income from would force more regular players out of the game, thus making it easier for recreational players to enjoy the game and win money, albeit smaller prize pools.
“If the rake is ‘too high’ for good players, then all you are left with is bad players, who are going to lose”, Daniel Negreanu, poker pro and head brand ambassador for PokerStars, said in an online video justifying the rake increase.
“But they are losing less per 100 hands than they would be if the pros were playing with them. Overall for the game it is actually better. They’re losing the rake money which is more, but [the recreational players] are passing around [money] more, there’s nobody dominating.
“What that ends up creating, is the perfect ecosystem that you want. The best players make money. The bad players lose money to a lesser degree. The guys that get hurt are those that break even or make a little bit. They go from winning a little bit to losing a little bit and they can’t sustain themselves. That middle tier evaporates, and you’re left with the best of the best, and the worst of the worst.
“That hurts a lot of people, but what they need to understand is that the most important person in the ecosystem is the losing player. You have to do what is necessary to make them happy first.”
Online poker pro Doug Polk, one of the most outspoken critics of PokerStars since the Amaya takeover, posted several scathing reviews of PokerStars’ revenue increase and its demonising of fellow online pros on his YouTube channel in the subsequent months following the announcement. Polk is perhaps the most popular and vocal personality in the online poker community, and his criticism of PokerStars has been roundly praised by the regular poker players. In April 2017 Polk launched a satirical #RakeIt online competition, in which he challenged participants to send a video of themselves explaining how more rake going into the pockets of PokerStars was better for the poker community, with the top ten entries receiving a signed garden rake as a prize. The YouTube video announcing the winners currently has over 100,000 views and a 9:1 positive to negative review ratio.
“I understand the seriousness of pros taking all the recreational players money”, Polk conceded on his first video criticising Negreanu’s stance backing the rake increase.
“But you can’t take away the right for people to want to move up in the world and become a great poker player. By having an ecosystem where all of the bad players lose together to the house, there will be no players moving up in the stakes to play in higher games, and those games are what lead people to want to deposit to begin with. Those [winning players] are being treated like parasites, when actually they have made hundreds of thousands of dollars for PokerStars playing by the rules PokerStars set out.”
In rounding out his dismay at how PokerStars has turned its back on the regular players in general, Polk surmised the situation as follows: “They’re increasing the rake in all the games, they basically butchered the game I can even play [heads up cash games through making all stakes Zoom Poker] they’re getting rid of a lot of the rakeback rewards that they had for a long time, they’re making games tougher to beat, they’re getting rid of skill formats, they’re adding in Spins [Spin &Gos]. You can say whatever you want to make this sound good, but we all know that it is getting worse [for regular players and online pros].”
As the principle advocate of the winning online poker community, Polk’s prediction that many winning players will vote with their feet and move on from the online poker community is one that should be taken seriously. If that is PokerStars’ goal in the first place, it seems inevitable, and the evolution of the typical online poker player will be drastic as a consequence.
In many aspects the path forward for land-based and online gaming is the same; operators must be focused on making the game appealing to the casual player, which in turn will evolve the poker landscape as more and more fresh players from different backgrounds join the community.
The difference at this juncture though is who the evolution of the poker player is at the expense of, with online poker actively trying to morph its player pool by forcing certain actors out of the market. Land-based casinos should attract more recreational players to the table in part by influencing the attitude and actions of more experienced players, Amaya is evolving the stereotype of the online poker player by crowbarring long-time regulars out entirely.
Whether this evolution in poker proves to be commercially successful for operators can only be judged in hindsight, but what is not in doubt is that the evolution is happening. The ball is now in the court of the players who grew to love to game under the old regime to decide whether to go with the flow or to jump out of the boat.