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CardRoomanomics
Aug. 30th, 2006 02:00 pmAaron Brown observed that cardrooms looked after their regular winners, because the regulars paid the rent, while casinos did not, because they perceived the winners as taking losers' money that rightfully 'belonged' to the casino.
This is a bit simplistic, but it explained why Gardena, with its own little economy, did little to help tourists compared with the largesse lavished upon losers at casinos in Vegas, whereas it did a lot to keep the regulars happy compared with the lack of largesse lavished upon the grinder in Vegas.
A recurring argument on 2+2 is whether the online poker sites should or should not be nice to the regular multi-tablers. One line is that Party is right to resent them, because they take money out of the game which Party might otherwise win, whereas the second group argue that these multi-tablers (at lowish stakes) probably pay an average of $1,000 a month to Party -- far more than Party gets from your typical loser. Therefore Party 'should' be nice to the regulars.
Of course, this is falling into the frequent fallacy that life is somehow fair. Party can be both at once. It can allow people to play 10 tables at once so that they contribute more rake, but then it can be less than nice to them because it knows that they are "locked in" provided Party keeps provding new fish fodder. I don't see Party throwing me any deposit bonuses at the moment...
But the big change is surely that Party now has its own house games. It's a casino as well as a card room. If I were Party, I would do all I could to get players from card room to casino. And I wouldn't see any reason to be nice to regular winners, despite the rake they generate.
However, I, and Party, might be wrong. The mistake is seeing the online gambling world as an enclosed economy. Obviously, for the losers, it isn't. They can spend their money elsewhere.
There is a time factor here. If Party seriously discouraged multi-table winners, then its income would drop. In theory, the people who were losing to the multi-tablers would now be on a much more level playing field and they would all lose their money rather more slowly to the house.
There are two flaws in this argument. One is that weak players are not uniformly weak. Getting rid of one set of multi-tabling winners (say, by closing their accounts) would just create another set of winners, who would then play more tables. All that would have changed is that Party would have barred some players who were now playing elsewhere, and would be earning less.
But, supposing there was a flat level of losers, that does not mean that Party would make more money. Because it presupposes that the losers sit down and say "I'll play until I lose $100". In fact, they may sit down and say "I'll play for three hours or until I lose $100, whichever comes sooner". If the player survives the three hours (because Party has closed the accounts of the multi-table winners) then he goes out and spends what he has left (or even his winnings) on something else.
So, Party gains by having multi-tablers, because some losers would become winners if the current set of multi-table winners were barred, and because some losers would lose less, but wouldn't pay any more rake, because they play according to time rather than according to money lost.
As a cardroom, keeping the winners happy is in Party's interest.
But, what if you could get the losers over to the casino? Ahh, well that's a much better proposition. But not necessarily phenomenally better. If a player is playing by time, rather than money lost, Party could still lose out by having the fish in the casino rather than at the card table. Because the multi-tablers are paying the rent as well. At the card room, Party has two sources of income - they take their share of what the fish lose (in terms of rake) and they charge the winners a "tax" on what they take from the fish (in terms of rake). If they shift all the fish over to the casino then, sure, they take 100% of what the fish loses in three hours, but they lose the rake that was paid by the multitablers (who won't play if they aren't winning) and, if the fish quits after three hours, no matter how much he has spent, then Party may gain no more from the fish than they would have won anyway.
This is a bit simplistic, but it explained why Gardena, with its own little economy, did little to help tourists compared with the largesse lavished upon losers at casinos in Vegas, whereas it did a lot to keep the regulars happy compared with the lack of largesse lavished upon the grinder in Vegas.
A recurring argument on 2+2 is whether the online poker sites should or should not be nice to the regular multi-tablers. One line is that Party is right to resent them, because they take money out of the game which Party might otherwise win, whereas the second group argue that these multi-tablers (at lowish stakes) probably pay an average of $1,000 a month to Party -- far more than Party gets from your typical loser. Therefore Party 'should' be nice to the regulars.
Of course, this is falling into the frequent fallacy that life is somehow fair. Party can be both at once. It can allow people to play 10 tables at once so that they contribute more rake, but then it can be less than nice to them because it knows that they are "locked in" provided Party keeps provding new fish fodder. I don't see Party throwing me any deposit bonuses at the moment...
But the big change is surely that Party now has its own house games. It's a casino as well as a card room. If I were Party, I would do all I could to get players from card room to casino. And I wouldn't see any reason to be nice to regular winners, despite the rake they generate.
However, I, and Party, might be wrong. The mistake is seeing the online gambling world as an enclosed economy. Obviously, for the losers, it isn't. They can spend their money elsewhere.
There is a time factor here. If Party seriously discouraged multi-table winners, then its income would drop. In theory, the people who were losing to the multi-tablers would now be on a much more level playing field and they would all lose their money rather more slowly to the house.
There are two flaws in this argument. One is that weak players are not uniformly weak. Getting rid of one set of multi-tabling winners (say, by closing their accounts) would just create another set of winners, who would then play more tables. All that would have changed is that Party would have barred some players who were now playing elsewhere, and would be earning less.
But, supposing there was a flat level of losers, that does not mean that Party would make more money. Because it presupposes that the losers sit down and say "I'll play until I lose $100". In fact, they may sit down and say "I'll play for three hours or until I lose $100, whichever comes sooner". If the player survives the three hours (because Party has closed the accounts of the multi-table winners) then he goes out and spends what he has left (or even his winnings) on something else.
So, Party gains by having multi-tablers, because some losers would become winners if the current set of multi-table winners were barred, and because some losers would lose less, but wouldn't pay any more rake, because they play according to time rather than according to money lost.
As a cardroom, keeping the winners happy is in Party's interest.
But, what if you could get the losers over to the casino? Ahh, well that's a much better proposition. But not necessarily phenomenally better. If a player is playing by time, rather than money lost, Party could still lose out by having the fish in the casino rather than at the card table. Because the multi-tablers are paying the rent as well. At the card room, Party has two sources of income - they take their share of what the fish lose (in terms of rake) and they charge the winners a "tax" on what they take from the fish (in terms of rake). If they shift all the fish over to the casino then, sure, they take 100% of what the fish loses in three hours, but they lose the rake that was paid by the multitablers (who won't play if they aren't winning) and, if the fish quits after three hours, no matter how much he has spent, then Party may gain no more from the fish than they would have won anyway.
