PokerStars HUSNG Protest Arrives, Leaves; Not Much Changes

In case you missed it, a one-day player protest by several hundred PokerStars heads-up sit-n-go (HUSNG) came and went on Wednesday, November 5th, with what appears to be no real impact or effect.  The single-day protest was organized by high-volume SNG grinders in response to a rake increase announced by Stars a week ago that targeted the HUSNG games and a few other closely related offerings.

The news was met with virtual screams of protest from a small but very vocal minority of dedicated regulars (dubbed “regs” in the close-knit group), who have vowed all sorts of revenge and protests, despite the fact that the new levels of rake actually brought Stars in line with the rake charged by other sites offering similar HUSNG games.

What the changes did were to remove an artificially low rake price for the format that had been exploited by hundreds of self-described “rakeback pros” who took advantage of high-volume play and rakeback deals to carve out a regular monthly income, including the prominent use of such software exploits as seating scripts and the formation of so-called “cartels” — groups of players that coordinated their use of the scripts in a way that did provide for “reg-v.-reg” play (though only because of the below-market rake), while commandeering the lobbies for these games in a way that prevented most weaker players from ever getting to play each other.

In one sense, it’s somewhat of a surprise that the cartels and script usage had been allowed to proliferate for as long as it had, and what we’re seeing now is best described as painful — but necessary — overdue correction to an abused market niche.

It’s rare that charging higher rake might actually turn out to be to the benefit of the larger population of online players, yet this may well be that rare instance.  Looked at from outside its particular market-niche bubble, the move is only one of many by several different online-poker networks, large and small, all designed to level the field and provide a more equitable playing experience for all who deposit. The HUSNG community was very likely achieving disproportionate profits on a player-percentage basis, thus violating the truism that some players can win at poker, but only a small percentage over time.

The sharks were, quite simply, hunting the fish to near-extinction in this particular format.

Perhaps the most confounding thing about the outcry from the Stars HUSNG player community is the misplaced entitlement, the supposed claim that PokerStars or any site owes them a living.  Unfortunately, that’s just not true.  PokerStars is a business offering a specific service, and, more or less, it gets to set whatever terms it wants.  It’s up to each customer to choose whether or not to play, and if so, where.

I’ve been watching the situation for a week, seeing how it would develop, reading analogy after analogy to describe the situation.  None of them truly quite captured it, until I read a snarky post in one of the many threads over at 2+2 on the topic.  Sarcasm aside, poster “N3CR0S” nailed it, writing,

well guess what, you arent an employee and PS is not your employer.

and striking by sitting out at tables preventing everybody from playing is like when a restaurant increases prices on their meal and you and your friends go there (coz it’s ur favourite place to eat and u dont wanna go somewhere else) and sit at tables not ordering anything just blocking space and expecting not to get kicked out lol

He might have been more polite in stating that, but he couldn’t have made the core point any better.  And that’s why players outside the collective HUSNG community have given the protest and the threats against PokerStars and Amaya a collective “Ho-hum.”

Both sides, however, have let their objectivity lapse.  I’ve been in contact with several members of the HUSNG player group of late, who have tried to convince me that the seating scripts and formation of the cartels — they were down to the $30 level at last check — were actually a good thing.  One well-respected player in that niche even said that the entire situation was Stars’ fault, because they refused to add more tables to the HUSNG tables to address the fact that the regs didn’t want to play each other, and it was because of that that the cartels started to form.

That may be true in a timeline sense, but it ignores the greater truth: Stars was already providing hundreds of HUSNG tables that were being occupied by one player (who would usually then sit out and see who else might show up as an opponent).  Hundreds and hundreds of tables were being partially occupied, but no games were being played.

So Stars should have created hundreds or thousands more tables so each reg could occupy and sit out on 24 tables of his very own?  That’s the absurdist extreme, taken literally, but it’s obvious that just adding tables would have been a very wrong solution.

What the HUSNG community utterly overlooks is the added overhead and processing load that all those non-producing tables must have been placing on Stars’ servers and software client, relative to the overall rake that the HUSNG niche was generating.  Toss in the reduced rake — which appears, belatedly, to be the only way that Stars could have induced significant table action to occur — and despite Stars’ overall immense profitability, this simply could not have been a very profitable niche.

Toss in all these factors, and it’s pretty easy to see why Stars HUSNG offerings were in trouble:

1) The hidden software and server overhead, which few parties in this argument have accounted for;

2) The extremely low rake, which induced high-volume grinders to join the format and attempt to exploit secondary-market deals (rakeback) to grind out a profit;

3) The proliferation of the seating scripts and the coordinated efforts of the cartels, which despite likely increasing the overall “reg-v-reg” battles, are still a form of collusion in a metagame sense.  Worse, their proliferation removed a significant amount of control over the format from PokerStars itself.

4) The outsized profitability of many practitioners of the format, seemingly in large disproportion to the percentages of profitable players emerging from other game formats.

That last is its own special problem.  The protesting HUSNG grinders repeatedly come back to two main arguments: That the reg-v-reg wars and the activities of the cartels significantly increase rake generated in the format; and that PokerStars is an immensely profitable company (over $400 million in EBITDA) in its latest financial reports, and thus can somehow afford the profitability of the HUSNG grinder group.

Both arguments are red herrings.

First, rake is the direct measure of an online poker site’s profit, but it’s the constant flow of player deposits and the reasonable enjoyment of the games for all players that are the long-haul concerns.  Rake flows as a result of the initial deposits, over time, not from the activities of reg-v-reg wars, and given all the narrow margins and high software overhead involved, it’s likely that in -percentage- terms, HUSNG is a very low-profit niche for Stars.  That sounds odd, but it may be the truth, and it’s as good an argument as any for raising the rake to market levels and allowing other market forces to reshape the niche.

Second, the immense profitability of any company as whole doesn’t mean that the company shouldn’t plug growing leaks.  Getting profitable is one thing, but staying profitable is something different.  The changes that have taken place within the HUSNG games in the last year or two are significant and very likely need to be addressed.  If any single game format produces too many winners, when looked at as a percentage of players who participate, then that format is out of whack.

That’s bad news for the HUSNG grinders, who are really the inevitable victims of their own success.  Nothing lasts forever, and this group of players is learning the same sort of lesson that players in older poker formats learned decades ago.  The games themselves are always changing, and too good of a thing never really lasts.

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