What if We Valued Variety, Not Volume?

Alex Weldon : November 4th, 2015

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In recent years, the poker industry has slowly been coming to realize that the standard rewards systems which worked so well for sites during the boom years are not sustainable in a contracting poker economy. The changes made by PokerStars this week represent the endpoint of that realization, as the near-monopolistic giant of the industry finally throws in the towel on the old ways. The question on many lips then, is what is the new way, and I’m not sure anyone knows the answer.

I don’t know the answer either, of course, but an idea struck me this morning that I’d like to toss out there.

What’s the point of structured rewards?

If we’re trying to come up with a new model which will work in the current poker climate, I think the first thing we need to ask ourselves is what the point is of having a structured rewards system in the first place.

The obvious answer is customer loyalty – after all, such rewards systems are often called “customer loyalty programs” – but there’s more to it than just that. There are lots of ways to encourage customer loyalty, after all; if you want to get recreational players to stick around, things like freerolls, special promotions and random giveaways are good for that, while the easiest way to appeal to professionals is simply to lower the rake. And yet, nearly every poker site has some sort of points-based rewards program.

Part of that is simply sites copying one another (and the Caesars Total Rewards system, which worked so well in the brick-and-mortar world). Ultimately, though, the real value in a structured rewards system is that by rewarding players unevenly based on their behavior, you can encourage people not just to play, but to play in a certain way.

Volume-based rewards are good for growth

The next question is why the old model was so successful for many years, and what has changed that it no longer works now.

The model in question was of course a progressive one, based on volume. Different sites implemented it in different ways, but generally speaking, the idea was that the value of a player to a site was proportional to the amount of rake that player generated, and that high-volume players should be compensated appropriately.

The behavior such a system encourages, then, is obviously to drive players to play more: longer sessions, more tables, more days per month. To this, many sites added various kinds of thresholds; point cutoffs to achieve certain reward tiers, point targets to purchase things in the site store and, in the case of PokerStars, Milestone Rebates and Stellar Rewards goals on top of all that. It’s a well-studied psychological principle that this sort of incentive will provoke bursts of behavior as the subject (or customer) approaches the threshold to attain the reward.

It seems obvious that a site would want all of its players to play as much as possible, so by the same token, that this sort of rewards structure would work consistently well, but the trouble is that the incentives grow stronger the more highly rewarded a player already is. It therefore mostly serves to encourage high-volume players to push themselves even further, while only rarely having an effect on the lower-volume players.

For the sites, what this amounts to is essentially a growth strategy. That worked very well during the pre-Black Friday years, because that was a time of growth for the market itself. Propelling the best, most active players to play as much as possible was an effective way to have lots of tables going, more high stakes action, and big guarantees for the tournaments… so long as there was also a corresponding influx of weaker players for them to play against. It basically acted as a growth multiplier for the sites themselves, because for every few new players signing up, an existing player would also be opening a new table to play against them.

Once the boom died down, however, and there were no longer so many new players entering the game, a growth strategy was no longer appropriate. If you keep building a tower taller without also widening its foundation, it’s going to fall down. Players’ direct winnings began to dry up, which meant that the volume incentives became increasingly important to their overall profitability, leading people to move down in stakes to be able to play even more tables, which made it even harder to beat the games, and so on. This is the situation we’re all far too familiar with today.

What’s the alternative?

The most obvious alternative to a progressive rewards system would be a regressive one, in which increasing volume to pursue rewards results in diminishing returns. In a way, special promotions work something like that: If the site gives away, say, $5 in free tickets for a deposit of $50 or more, that $5 in equity is much less significant to a professional player already playing $50,000 in buy-ins per month than to a recreational player for whom that $50 deposit is their whole monthly gambling budget. In fact, for the pro, those tickets are probably not even worth the time it would take to collect and use them.

Unfortunately, although these erratically-distributed regressive rewards serve their purpose, a persistent, regressively-structured rewards system would be a terrible idea, because sites don’t operate in a vacuum. If a site were to adopt a regressive rewards system, the behavior induced in the most active players would not be to reduce their volume and move up in stakes; it would be to play their usual volume up until the rewards dropped below what’s being offered by competitors, then move to those other sites for the remainder of whatever time period the rewards are based on. It would amount to a customer disloyalty program, in other words.

But if a 180-degree turn couldn’t work, what about a 90-degree turn? What if a player’s effective percentile rakeback was not based on her volume of play, but its variety?

If volume is good for growth, what’s variety good for?

To be clear, what I’m suggesting is a system whereby the player who plays only a particular format and stake level receives the least compensation, while a player who is spreading himself out between cash games, sit-and-go’s and tournaments, playing games other than Hold’em, and moving around between stakes is receiving the greatest.

There are a few ways this could be implemented, but for the sake of simplicity, imagine a system similar to PokerStars VIP Club Rewards levels, but where the player’s VIP level is determined based on the number of different formats and stakes she’s played within the month (with a minimum of, say, 50 hands played in order to count). The rewards points doled out would still be proportional to the player’s total rake generated, as they are now, but her multiplier would now be based on variety, not volume. What would this do?

Since it has never been tried to my knowledge, my answer to that question is entirely speculative, but here are a few of the things I believe it could accomplish:

First of all, it would kill grinding, which is a much larger problem than the contraction of the economy itself. After all, the problem isn’t just the pro-to-recreational player ratio, it’s that so many for-profit players in the current online poker world are focusing on the most formulaic formats, so that they can play robotically at as many tables as possible in the pursuit of volume. This means that every table in these formats is overrun with such players, and that the style they’re playing is neither fun for them nor for anyone else. In a variety-based system, profiting through rakeback would still be possible, but not by using a formulaic strategy, since it would require ability at all of the games, rather than mastery of a single, nearly-solved format.

Secondly, it would encourage recreational players to broaden their horizons. Recreational players are, after all, paying to have fun. The increased cost of playing due to the proliferation of sharks is part of the problem, but so is boredom. There are two sides to the equation, in other words, and increasing the amount of fun people have is as good for keeping them around as decreasing the amount of money they lose. Novelty is a good way to increase fun, but people are reluctant to learn new things without being prodded to do so. A variety-based rewards system could provide such an incentive.

Thirdly, it would mostly solve the third-party software issue. For one thing, software tends to be targeted at a specific game, so it would be of lesser use to someone trying to play all the games. More importantly, tracking software is of most value when playing against the same opponents constantly. Even if the player himself chooses to ignore the rewards system in favor of grinding a specific game, most of his opponents will be moving around, and it will no longer be possible to gather as much data on them.

Finally, it would bring back the low-volume winning player. The combination of high rake, a progressive rewards system and tough competition means that profiting in the current environment requires a high commitment level, in terms of purchasing software, mastering a single format, and then devoting huge amounts of time to achieve the desired rewards level. With software being of lesser importance, and a broad skill set being more important than time commitment, semi-professional, part-time play would once more emerge as a profitable option.

The most likely downside would be to penalize those players who actually prefer to specialize, but I’m not even sure it would do that. Yes, someone dedicated to playing, say, $1/$2 No-Limit Hold’em cash games would suffer from increased effective rake, because their rewards multiplier would be low. On the other hand, they would no longer be playing at tables full of other No-Limit Hold’em cash game specialists; rather, many of their opponents would be people moving up from lower stakes or passing through from Sit-and-Go’s, tournaments and other games entirely, chasing their next rewards level. As a result, the specialist would hold a larger edge than he does today, and maybe enough that he wouldn’t actually need to rely on rakeback to turn a profit.

Essentially, I think that rewarding players for playing a variety of games would produce a corresponding increase in variety among the players themselves, and to my mind, that’s what’s really missing from online poker today. Whereas once we had people from a variety of backgrounds and at a variety of skill levels, now most tables are filled with a half-dozen or more regulars all familiar to one another, plus one or two clueless and soon-to-be broke gamblers. A system like I’m proposing might not result in the same number of tables we once had, but just maybe it could restore some of the character and texture of the boom years.

So, the question I’m putting forward for consideration is: If volume-based rewards were good for growth, could variety-based rewards be good for revitalization?

Alex Weldon (@benefactumgames) is a freelance writer, game designer and semipro poker player from Montreal, Quebec, Canada.

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