Tournaments tax the bad players (x-post)

[t_perkin]

I posted this in reponse to something about the zero-rake site. But I thought some people here might be interested. I am pretty sure my thoughts are correct - but if anyone can see any holes in my thinking, please point them out.

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As a tournament player I am surprised that you don't recognise the practicality of a zero-rake policy.

All tournaments are effectively run on a zero-rake policy.
Rather than taking a percentage of the prize pool they take an equal amount from all participants, whether they win or lose.

The alternative would be to simply take 10% of the prize pool and nothing at buyin. This would penalise the winners more than the losers. In fact I am amazed that none of the poker rooms run their tournaments like this.


For example:
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2 players play 10 heads up $10+1 SnGs at Poker Stars

Player A wins 9 for a profit of $70
( 9 * 20 - 11 * 10 )

Player B wins 1 for a profit of -$90
( 1 * 20 - 11 * 10 )

Total rake = $20
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If instead Poker Stars said they would take 10% of the winnings and charged no rake. Again 2 players play 10 heads up SnGs:

Player A wins 9 for a profit of $62
( 9 * 20 * 0.9 - 10 * 10 )

Player B wins 1 for a profit of -$82
( 1 * 20 * 0.9 - 10 * 10 )

Total rake = $20
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It is not quite the same; tournament fees penalise those who win less, whereas the zero-rake site penalises those who play less. But it is a very similar concept. It is just considered more palatable in tournaments, because that is the way it has always been done.

If zero-rake were to be run on ring games as $x flat fee per 100 hands (i.e. somewhat equivalent to a seat charge) then it would be exactly the same as playing in a tournament.

So basically you can set the rake tariff however you like depending on who you want to tax the most.

If you want to tax the bad players:
For ring games you set a flat rake per hand.
For tournaments you have a buyin, just the way it is now.

If you want to tax the good players:
For ring games you have a rake from the pot, just as you do now.
For tournament you have a rake taken as a % of the prize pool.

If you want to tax the players who play a lot:
Don't have a flat fee.

If you want to tax the players who don't play very much:
Have a flat fee.


Just some thoughts


Tim

[AleoMagus]

This doesn't make sense to me.

taking a % of the prize pool or taking a flat rate beforehand works out to the same thing. The reason why your values work out differently is because the ratio between buy-in and vig is different in the two examples.

Compare instead the following two scenarios

10+1 tourneys
$11 buy in tourneys where about 9.1% of the prize pool is raked

or maybe I am just confused

regards
Brad S

[durron597]

Ok, now consider this:

Player A is a new player. He doesn't know it yet, but he is a losing player. He buys in for $100, cashes once or twice and loses a whole bunch. He has played maybe 15 games, decides he doesn't like online poker and quits.

Player B is a new player. He doesn't know it yet, but he is a winning player. He buys in for $100, and starts making money. He then starts thinking more about what site he plays on, etc. and the mathematics behind playing (since he will be playing a lot), and will realize he can make more playing at a site with the 10+1 style rake instead of the 10% rake.

So basically the 10% style would attract the losing player that is going to quit after a short time, and all the winning players will eventually gravitate to a site with the 10+1 style. Thus the 10+1 style will be more profitable for the poker site because it will attact more of the long-term players.

[t_perkin]

Yes it is all wrong. It was the middle of the night, I obviously didn't have my head screwed on.

Sorry

Tim

[viennagreen]

Aleo,

Compare $30+3 tournaments where the payouts are $150, $90, and $60---- to $30 tournaments where the payouts are $135, $81, and $54.

The site would make the same amount of money per tournament, but in the $30+3 sites, a good player will make more money, and a bad player will lose more money.

You need to calculate absolute dollars won/lost.

If you compare the ROI between the two structures, you will find that both good and bad players will always have a higher ROI using the $30+3 structure (except when the ROI is -100%, the only place where the two structures' ROI are equal), but comparing dollars won/lost, the $30+3 clearly favors good players.

[viennagreen]

I don't think that your logic extends to ring games. I might be wrong, but....

I've played a lot in California, where they either take a time charge or a button charge--- essentially a pay-per-hand policy. While I've been patiently paying for every hand that I fold, I've thought that the time charges were screwing me.

A good player doesn't get involved in many hands, or typically win as many pots as a bad player--and, if a rake is being taken from the pots, pay as much rake as a bad player.

[Marcotte]

[ QUOTE ]
Aleo,
Compare $30+3 tournaments where the payouts are $150, $90, and $60---- to $30 tournaments where the payouts are $135, $81, and $54.


[/ QUOTE ]

Read Aleo's post again. These are not the same tourny. In the $30+3, a total of $330 is taken in, of which $30 goes to the house. Thus the rake or vig is 10% of your buyin, but only 9.0909% of the total money taken in.

In the second example (flat $30), 10% taken for the house out of a total of $300, so a slightly higher % of the total money is going away (in this case a full 10%). So this is actually a higher "rake" game. I think it's equivalent to $27+3 (but I didn't do the math to make sure /images/graemlins/tongue.gif )

[ QUOTE ]

You need to calculate absolute dollars won/lost.


[/ QUOTE ]

This isn't true. You might win more absolute dollars at $20+2, but your ROI will be better with the same win rate at a $10+$.25 structure.

[viennagreen]

thanks--- i get it now.. the % rake is different in the two examples, and making the % rake equal makes the results equal.

[LinusKS]

[ QUOTE ]
This doesn't make sense to me.

taking a % of the prize pool or taking a flat rate beforehand works out to the same thing. The reason why your values work out differently is because the ratio between buy-in and vig is different in the two examples.

Compare instead the following two scenarios

10+1 tourneys
$11 buy in tourneys where about 9.1% of the prize pool is raked

or maybe I am just confused

regards
Brad S

[/ QUOTE ]

Not confused. It's the same either way.


I'd argue the winners pay the rake/tourney fee/percentage no matter what.

If a loser pays $11 to play, it doesn't really matter what percentage or amount goes to the house. It's all the same to him whether the house takes 10%, $1, or $5.

He loses his $11 no matter what.

The person it matters to is the winner.

Eg, in an $10, 10-person winner-takes-all event, none of the money in the pot goes to any of the losers. If the house takes a $10 cut, on the other hand, that costs the winner $10.

[LinusKS]

From the poker site's pov, it's probably better to market their rake as a set fee, rather than a percentage of the win - because winners are less likely to notice how much it's costing them.

Which is probably why they do it that way.

[PrayingMantis]

[ QUOTE ]
I'd argue the winners pay the rake/tourney fee/percentage no matter what.

If a loser pays $11 to play, it doesn't really matter what percentage or amount goes to the house. It's all the same to him whether the house takes 10%, $1, or $5.

He loses his $11 no matter what.

The person it matters to is the winner.

Eg, in an $10, 10-person winner-takes-all event, none of the money in the pot goes to any of the losers. If the house takes a $10 cut, on the other hand, that costs the winner $10.


[/ QUOTE ]

This is fuzzy thinking. In a tournamnet, each player pays the same vig (whether it's described as % of prize-pool or whatever. It does not matter. In that sense I must say that the original post by Tim was a bit confused, and Tim admitted this himself, as he wrote it while being tired... /images/graemlins/tongue.gif. He was getting ready for the Olympics on that day.).

Saying that only the winners pay the the rake/fee/vig for a specific SNG is meaningless. Think about it.

What confuses you is the fact that the winners end with something to "take" the vig from, while the losers finish with "nothing". But this is the wrong way to look at it.

Edit: The ONLY way for this to be different, is if the site decides that certain SPECIFIC players, which are chosen somehow, before or after the game, pay less rake. For instance, if YOU win the SNG, you take 50% of the prize pool (say there's 0 vig to begin with). But if *Jack* wins it, he pays 10% to the house. Fun idea, I think.

[t_perkin]

Yes, thats right - I'm in the olympics...representing england in poker for the logically and mathematically retarded. I think I may well get gold.

No excuses - my post was just complete BS. I would delete it if I could.

But it does at least demonstrate one thing - by presenting the rake/fees in different ways you can really influence the way (stupid) players *think* they are paying.


There are however a few points in my original post that are quite valid. Unfortunately all the interesting bits of my post that are correct are not about tournaments. So I wont re-iterate them here.

Tim

[LinusKS]

[ QUOTE ]
[ QUOTE ]
I'd argue the winners pay the rake/tourney fee/percentage no matter what.

If a loser pays $11 to play, it doesn't really matter what percentage or amount goes to the house. It's all the same to him whether the house takes 10%, $1, or $5.

He loses his $11 no matter what.

The person it matters to is the winner.

Eg, in an $10, 10-person winner-takes-all event, none of the money in the pot goes to any of the losers. If the house takes a $10 cut, on the other hand, that costs the winner $10.


[/ QUOTE ]

This is fuzzy thinking. In a tournamnet, each player pays the same vig (whether it's described as % of prize-pool or whatever. It does not matter. In that sense I must say that the original post by Tim was a bit confused, and Tim admitted this himself, as he wrote it while being tired... /images/graemlins/tongue.gif. He was getting ready for the Olympics on that day.).

Saying that only the winners pay the the rake/fee/vig for a specific SNG is meaningless. Think about it.

What confuses you is the fact that the winners end with something to "take" the vig from, while the losers finish with "nothing". But this is the wrong way to look at it.

Edit: The ONLY way for this to be different, is if the site decides that certain SPECIFIC players, which are chosen somehow, before or after the game, pay less rake. For instance, if YOU win the SNG, you take 50% of the prize pool (say there's 0 vig to begin with). But if *Jack* wins it, he pays 10% to the house. Fun idea, I think.

[/ QUOTE ]

You say it's "fuzzy thinking," but you don't say what's fuzzy about it, or in what way I'm confused.

We agree, don't we, that the loser gets 0,and that the winner gets the pot, minus the house's take?

[PrayingMantis]

[ QUOTE ]
You say it's "fuzzy thinking," but you don't say what's fuzzy about it, or in what way I'm confused.

We agree, don't we, that the loser gets 0,and that the winner gets the pot, minus the house's take?


[/ QUOTE ]

That's exactly what is fuzzy about this thinking. They both paid the same to begin with, the fact that the winner in the end "gets the pot, minus the house's take", has no baring on the question "who pays the vig?", since the house vig could have been taken before the tournament started, in *exactly* the same proportions as in the case of "rake as % of this or that prize", and the end result would have been the same. And then you can't say "the winner pays the vig", so what's the difference? No difference. There are other ways to look at it, in order to understnad why it's fuzzy thinking. For instance: with regard to EV. But I won't get into it.

Again, All players pay the same vig, unless in very specific circumstances, as in the example I have given in the previous post, or when (it's the same idea, but another example), people pay a flat "monthly vig" to the house, and can play as many SNGs as they want. In this case, players who play more SNGs during the month, pay less vig per SNG than players who play less. But again, it has nothing to do with "winners" or "losers", in the pure sense, i.e, if you don't consider some big-picture assumptions about the financial dynamics in a poker-site, which are not relevant to this specific discussion.