Negative Sum Game

This post is about sustainability.  It’s about inefficient legislation.  It’s about the future.  It’s about economic trends.  It’s about special interest groups.  It’s about corruption. 

Are we talking about politics?  No.  Well, mostly no.  We’re talking poker, and the future of the game we all enjoy.

Poker is currently a negative sum game…  ….What does that mean?  Well for every dollar you put into the poker community, the dollar shrinks.  Regardless of if you are a winning player or not.  Why?  Two things:

Rake and Fish

1. Rake – Rake is something we all know and love.  We understand it is how the poker sites, and cardrooms make their money from us.  A certain percentage of each pot is taken away and given to the house.  A major example of the rake is at the WSOP operated by Harrah’s.  Of the 55 events held at the 2007 WSOP, they take a rake on….100% of them.  Let’s look at what that does to the poker economy.  One tournament, the Main Event, had $67million contributed by the poker community – through satellites, direct buy-ins, whatever.  Harrah’s took out around $8million for their ‘rake.’  Leaving behind approx $59million to play for.  Basically the house comes in 2nd in every tournament hosted…same thing applies to online sites.

Now, ok, they need to pay dealers, rent casino space, pay insurance, whatever other bills….so it’s a fact of life.  But an industry becomes tough to sustain when new money is becoming harder to come by.  Which leads us to factor number 2:

Fish.  New poker players, aka guppies, fish, noobs, are what drive the poker economy.  Without new money coming into the industry, the dollars shrink, and become harder to win.  The average skill level of the poker population rises, because it’s like darwinism…survival of the fittest.  The weakest players go broke and never return.  If these players are not being replaced, then the whole food chain struggles.  If you were a winning $1/2 player six months ago and would take an occasional shot at 2/4 or 5/10 you were supplying money ‘upstream’.  Now you find yourself a break even 1/2 player because the game got tougher, and you’ve stopped taking ‘shots.’   This is a bad thing for the industry.

There have been some pro’s recently commenting on this condition, and are looking to improve their own situations by allowing multiple sponsorships – similiar to nascar – when they play events.  They want to wear one, two, three product patches, providing endorsement income.  In a sense, they are replacing the lack of new player money, with the influx of corporate capital.  This could work for the pro’s.  Establish a more consistent circuit of players, keeping ‘name’ players more front and center. 

This is a good thing for the industry because having name players in the poker news creates a fan base, and a following.  If a one-hit-wonder wins every tournament – what kind of skill does that show – what kind of following can be created?  none.  It basically becomes the monthly lottery…and that’s no fun.

If you find yourself struggling these days to make money on the felt, don’t worry you aren’t alone.  The games have gotten tougher, the dollars have shrunk, and there is less new money at all levels.  Suggestions: Get better.  Improve your bankroll management.  Play live. or start an Affliate site and get new money coming back into the game.

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