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 [img]/images/graemlins/tongue.gif[/img] )

[ 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.