Randomized Payout Promotions Haven't Been A Boon For Poker Cash Game Liquidity, But Do Well Elsewhere
Online Poker Report

Are PokerStars’ Randomized Rewards Working Out So Far?

Random payouts PokerStars
Slated for June, PokerStars will move away from its current monthly tiered rakeback system toward one that offers players more immediate rewards based on more than just volume.

The finer details of the new scheme have yet to be fully revealed. However, in a recent blog post by PokerStars Director of Poker Innovation and Operations Séverin Rasset, PokerStars indicates that reward amounts will be randomized.

PokerStars is no stranger to randomized reward systems, having crafted the crux of its 2016 online poker promotions around the concept. The new rewards scheme appears to be, at least in part, a massive extension of its favored promotional vehicle.

But how has this direction worked out for PokerStars so far? Were the results positive enough to warrant a complete revamp of its loyalty scheme around randomness?

The structure of a PokerStars promotion

In 2016, the average PokerStars promotion adhered to the following basic roadmap:

  • Players were tasked with completing a daily challenge. This was usually a trivial task that could easily be completed by a recreational player.
  • The challenges typically encouraged players to try and win hands, either post-flop or at showdown.
  • Upon completion of the challenge, the player would be rewarded in accordance with a randomized payout table.
  • The overwhelming majority of players would win a few bucks. A select few — usually less than one-tenth of a percent — would score a big win.
  • The challenge could be repeated once per day of the promotion.

Clearly, these promotions were targeted at net depositing players. They tend to be more attracted to the idea of a sizable score than concerned about their average rakeback rate.

This fits with Stars’ new marketing directive, where the bulk of its spend is now dedicated toward the acquisition and retention of frequent depositors.

Randomized promos have been a mixed bag for Stars

It’s early yet, but PokerStars’ love for randomized promotional payouts doesn’t appear to be setting the online poker world on fire.

Here’s a look at how three of its 2016 offers have fared relative to the rest of the dot-com industry. (The following data was provided by Poker Industry Pro via PokerScout):

Card Hunt

  • Concept: Win cash game hands with between 16 and 20 predesignated hole cards, and claim a daily prize
  • Running dates: March 23 – April 15, 2016
  • Performance: Liquidity shot up 10 percent during the first week of the promotion. It was still up 3.5 percent after two weeks before flatlining near the end of the promotional period.

By relative standards, Card Hunt was a stronger performer for PokerStars, providing a nice initial uptick and helping the site maintain increased cash-game liquidity for almost its entire duration.

It also appeared to have worked to retain some players, as liquidity was down just 3 percent from the day the promotion started to a week after it ended.

While that doesn’t sound too great, consider that cash-game liquidity on other dot-com sites was collectively down 8.7 percent over an equivalent time frame.

Pyramid

  • Concept: Win cash game hands with a pair of kings or better. Fill in the pyramid and win a random prize.
  • Running dates: June 1 – July 10, 2016
  • Performance: This one never really caught on. Liquidity was up just 2.5 percent after just one week, and down 8.3 percent from the time the promotion started to just before it met its end.

Usually cash game promotions inspire an uptick in liquidity, at least initially. That wasn’t the case with Pyramid. Liquidity on PokerStars actually lagged behind the dot-com market for nearly the entire duration of the promotion.

Mega Bonus Rewards

  • Concept: Make a deposit of $30 a week and receive a randomized bonus reward.
  • Running dates: January 4 – January 24, 2016
  • Performance: Liquidity on PokerStars was up and down, but mostly up, during Mega Bonus Rewards. However, the gains were more a byproduct of the seasonal uptick.

It wouldn’t be fair to look at promotions that encourage cash game play exclusively.

That said, this promotion, which effectively increased cash flow on the site, did little to spark increased cash game play.

Traffic on PokerStars was relatively on par with other dot-com sites when Mega Bonus Rewards was running. It was up 7.1 percent one week in, versus 8.5 percent for the rest of dot-com.

The big picture is more favorable

We can somewhat neatly conclude that randomized payout promotions have not been a boon for PokerStars’ cash game traffic.

Furthermore, over the past two years, ring-game liquidity on PokerStars and its regional branches has fallen off at a much swifter pace compared to most other top ten sites and networks:

Change in cash game traffic online poker

But cash game liquidity is only one part of a much bigger whole.

In terms of revenue, PokerStars fared much better in 2016 than the activity of its cash-game lobby would indicate:

  • Last year, PokerStars parent company Amaya generated $846.1 million in gross gaming revenue from online poker, a scant 4.6 percent drop-off from 2015. Thanks to mammoth gains on the online casino front, overall revenue was up 7.8 percent, to $1.16 billion.
  • The number of active real-money online poker players was up five percent year-on-year for Q4 2016.
  • Amaya barely increased its marketing spend, from $164.4 million in 2015 to $168.7 million in 2016.

Collectively, this suggests that PokerStars’ overall strategy for online poker — which randomized payout promotions are a big chunk of — was at least partially effective.

This is especially true in the context that PokerStars was forced to exit some smaller markets in 2016. Its online casino and sportsbook also cannibalized some of its online poker traffic.

More on Amaya’s 2016 financial results here.

Bottom line

Although PokerStars’ new promotional strategy has been largely ineffective at growing cash-game traffic, any losses were partially offset by rake hikes, and by increased traffic for other, highly-raked online poker verticals.

In particular, Spin & Go’s, which are heavily based around randomness and have been the focal point of many randomized payout promos, continue to thrive.

What this suggests is that randomized award structures can work when applied to more “gambly” formats, but less so when the skill cap is high.

Whether PokerStars will overplay its hand by extending randomness into the daily lives of poker players is yet to be seen.

But the new demographic that it’s been targeting — which, let’s face it, is losing players — does appear more amenable to playing the lottery than the average cash-game grinding regular.

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Robert DellaFave
- Robert DellaFave is a game designer and avid poker player. He writes for several online poker publications and dreams of one day programming a poker simulation clever enough to beat the pros. Read more by following @RobertDellaFave on Twitter.