the rake in poker

[Thythe]

Why does everyone think having "zero rake" is a step in the right direction? If Best Buy started giving away all of their store would that also be a step in the right direction? Why shouldn't card rooms charge the equilibrium price for rake?

The market is quite advanced and moves quickly to adjust to various conditions in the world such as technological changes, droughts, etc. Prices we see in stores are not just arbitrary guesses by business managers. They are an indication of the supply and demand of various services.

Most people here would know that in plotting demand we will have price on the y-axis and quantity on the x-axis. Given an increase in demand then, holding supply constant, we will see an increase in price and an increase in quantity. This is exactly what has happened with Party Poker in the last years. As people flocked to the site given a pretty stable amount of quality cardrooms, rake went up. It is inevitable. It isn't Party Poker screwing us over. The rake reflects the true conditions of the market.

If they were to decrease their rake, they would find an excess in demand which they may not be able to handle with their current software (we've even seen tournys crash due to an excess of people! Imagine if they decreased the rake of these tournys). Likewise if they increase it more, there would be an excess of supply. It's Econ101 people!

Edit to include that I am now an old hand! Yeeeaaah

[Schneids]

[ QUOTE ]

If they were to decrease their rake, they would find an excess in demand which they may not be able to handle with their current software (we've even seen tournys crash due to an excess of people! Imagine if they decreased the rake of these tournys). Likewise if they increase it more, there would be an excess of supply. It's Econ101 people!


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I don't think them offering a multi that is 150+11 instead of 150+12 is going to make one person decide to play it who normally wouldn't. Or even 150+5 for that matter.

Likewise, I do not think relating rake costs to economic models about supply and demand is totally fair and accurate. Where as most people who go out to buy a new television generally know what the "going price" of a TV is, new poker players are unaware of rake and its implications on the game. We've been through it many times already that a new player does not understand how 20 cents taken out of a $10 pot is going to effect their long term results versus 25 cents from a $10 pot. You cannot measure supply vs demand when the customer is unaware and clueless.

[Jimbo]

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You cannot measure supply vs demand when the customer is unaware and clueless.


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Actually the law of supply vs demand has very little to do with whether or not the consumer has a clue.

Jimbo

PS: And for those insulting Ray Zee, they are truly the clueless.

[Thythe]

[ QUOTE ]
[ QUOTE ]

If they were to decrease their rake, they would find an excess in demand which they may not be able to handle with their current software (we've even seen tournys crash due to an excess of people! Imagine if they decreased the rake of these tournys). Likewise if they increase it more, there would be an excess of supply. It's Econ101 people!


[/ QUOTE ]I don't think them offering a multi that is 150+11 instead of 150+12 is going to make one person decide to play it who normally wouldn't. Or even 150+5 for that matter.

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On the contrary, it is the people on these borders who influence price the most. Best Buy sells millions upon millions of DVDs every year. If say the price is $20 and no one would change their buying habits if the price was booted up to say $20.10, they should go ahead and do it.

As for your second point, it is pretty much entirely accurate. Economic models do typically assume perfect information and you are right that the average poker player doesn't really have any idea of the prices elsewhere. That being said, I think a lot of the model still holds...I will think about this further, though.

[Syntax]

You can buy DVD's at Best Buy for $20 or you can get them for $9 at Columbia House. You get that price because you agree to buy at least 7 DVD's. It's a matter of knowing what your options are. Not a lot of people realize how much better deal they can get at Columbia House.

However, It shouldnt be too hard to get the word out to the poker community. Once a site with no rake is the biggest cardroom, everyone will go there if for just taht simple reason alone.

[Drunk Bob]

columbia house now thats a real blast from the past.

32 or so years ago I signed up for both their book and 8-Track Clubs.

Their books fell apart and the 8 tracks broke after 10 or 15 plays.

So I say up your ass Time Warner@.


And they still wonder why I don't have cable.

[_2000Flushes]

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You cannot measure supply vs demand when the customer is unaware and clueless.

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Actually, you can. The customer doesn't have to know all (or any) of the alternative prices to be able to decide whether he finds one particular price worthwhile. Once a competetor makes his lower price more widely known, it could have an impact on demand, but the principles still apply.

It's a fairly open market, so there is little to regulate Party's rake except their motivation to make a profit. Their overhead cost is irrelevant, so there's not much hope for arguing for a "fair" rake.

That said, I hear Absolute might relocate to Cuba where their rake will be only high enough to cover food and housing costs.

-2kF

[Syntax]

Im my town, gas is about $2.03 a gallon. There are 50 different stations and the prices vary by less then .03 If you drive a few exits up the interstate, you can find it a $1.90/gal. In other states, I hear of it as low as $1.70/gal. So, if selling gas is still profitable at $1.90, wtf happened to the competion in my area?

Why arent the gasoline prices driven down by competition within each region. Why does every cardroom whether they have a 100 players or a hundred thousand still charge the same rake?

I think its a little bit of an implied price fixing. No one wants to lower the rake now because once they do, there will be no turning back.

[Dingo Puppet]

Post deleted by Mat Sklansky

[Syntax]

well, that went right over your head