Amaya - A Strategic viewpoint

 photo Quadvquadme: :D Poker player by day, superhero by night
Just my thoughts on the history of their company, the recent insider trading incident, as well as their general strategy potentially as to how they plan on running the business.

There's been a lot of hate towards amaya recently, and understandably so with all the changes they are making impacting directly on our pockets. While it feels disgusting to see the monopoly on the industry effectively increase rake across the board so regularly and destroy sub-sectors of the game there might be a lot of method to the madness from their perspective and this is what i hope to look at.

Amaya Aquires Rational Group LTD - August 1st 2014  for 4.9 Billion dollars

At this point in time the system has full hu sngs, spin and goes are not a thing, the VIP system is still intact and the company has new plans to expand into various sports betting/casino-like markets and grow as a global brand.

The first thing to note is that the way that online poker has worked in the past is gradually changing. When poker was running in the early to mid 2000s there were a lot of fish and free money in the poker economy, players likely took much longer to lose their deposits to the regulars then what they do now. GTO wasn't even a thing and our methods of extracting fish's stacks were far from refined. Software such as huds were still in stages of infancy and programs like icmizer weren't around but programs like Sit and go wizard were (lol, memories). The market was exploding in size with all the TV coverage and sponsorship deals floating around, guarentees were huge on the regular across FTP and stars since the economy wasn't monopolized just yet.

Back then sites really did need regs to supply the tables with action for the fish, since the reg to fish ratio was drastically better back then. Fast forward to now and the cross site economy looks very different.

The competition

We have party poker which offers terrible software and doesn't really pay attention to its users (im still getting error 118 every time i log on for the past year), and haven't even bothered looking into a basic understanding of how the HU rake system works in sit and goes. ($7.90 rake @ 100 turbos vs $10 rake at 5ks).

We have 888 which offers equally bad software and ignores a lot of its issues and corruption such as the basic problems in their pushfold games with just posting the blinds, or the collusion that happens on that site on a regular basis. Who soon enough i believe have announced they are scrapping their VIP system as well.

We have the Ipoker network which has numerous problems with bots they take no effort to ban, and a vicious rake system which offers high rakeback to regulars and looks to extract its profits from fish (counter-productive logic to me but whatever).

We have Full Tilt which more or less offers nothing of interest to anybody, and has a very high regular %. It never fully recovered from black friday and despite it having great software and its core values in the past being an exciting site offering the newest and exciting formats it has nothing going for it anymore and shows no relation to its old self.

We have the winner poker network (black chip/Americas card room etc) which admittedly has been trying to pump its guarentees up and has a vip system which is somewhat similar to stars but also has various problems

We have korean and chinese sites which use loop holes in the law to have play money that people offer to buy and sell (which from my experience have all been scams)

And we have the merge network which had a cashout issue last year lasting months which i have zero faith in.

So to sum it up pokerstars has a huuuuge monopoly both with its level of customer service, quality of software and game types. Its got the largest player base and global brand recognition. So this begs the question, how are they using that positining to maxemise their companies results?

The Rakeback System - Why its somewhat illogical from a company standpoint

The Rakeback system was designed to create games and allow fish to join and always get action at any hour. The problem with this is, the times changed and now there is a huge quantity of regs in the industry, to the point that every limit is almost regged out. You will find regulars grinding from $2 180s upwards, putting in consistent volume.
Games revolve around fish, and thats how it will always be. We don't grind for the sake of grinding, we grind for a living. And that revolves around hunting down players who are weaker then ourselves. This leads to the problem however that should be quite evident, our methods at hunting fish down (tracking sites, software such as sharkystrator (RIP), spin wizard (RIP) and scripts) got more and more efficient. Money going off the site doesn't benefit stars, for them to profit they need to keep the fish alive as long as possible. By giving out a high % of rakeback it means more regulars can join the same table since their winrates aren't as impacted which results in a situation where a fish might be playing on a 6max table 5 regs, vs if rakeback wasn't a thing they might only be playing 3 or 4 regs.

This ultimately means the fish's money lasts longer since it has less of a skill disadvantage when there are more recreational players at the table. So the flow on effect of reducing rakeback which mostly benefits regs means that there is a better player experience for the fish and a longer time taken for them on average to lose their deposits. As well as this there is more overall rake generated at the table for pokerstars to scoop up, so by reducing rakeback pokerstars isn't "killing online poker" since the game always has and will run around the rec's.

Introducing more variance filled games at every corner means that less of that money goes off the site and into pro's pockets. Which explains the 1 million dollar freerole going from a deepstacked supernova only entry event to something that had 25000 people + which i couldn't even be bothered regging.

Spin and goes - The real money maker

With the introduction of spins, stars saw its profits soar and being that the larger the potential payoff the more people are willing to play they jacked up their multipliers twice within the release. They increased the overall rake after seeing how much they were generating from it and how much fish love them. The rake is also somewhat hidden in the respect that registering you see $100 spin, you do not however notice it being a $95 + 5 spin until you click the lobby. Fish again most likely pass right over this.
With the banning of spin related software such as spin wiz they stopped regulars avoiding eachother meaning roi's went from 6-8% down to the current roi's of 1-5% respectively depending on the stakes. And with rakeback about to be removed in 2017 the market is about to be very protected as the rake and variance is already so high, rakeback was extremely important in the profit margin.

Software - the next i expect to go

Software holds a few different functions but ultimately they can be broken down into 4 different categories.
Huds - offering players trackable data on their results, expected value and data on best how to play villains
Study software - there is ultimately nothing stars can do about this

Multitable software - this has some merit in keeping around for reasons i will go into shortly

Registry/Hunting software- this optimizes players hourlies against the softest of players and i expect all remaining programs to be stamped out

You see, anything that impacts the amount of money that is being extracted from recreationals is bound to be removed or limited as much as possible. Which in the process will help fish regain the feeling of online poker being less rigged and more trustworthy. Which isn't necessarily a bad thing at all.

Multi tabling software has some merits for sticking around as the only real field that will be left in a still beatable state that stars has no incentive to really attack is the MTT field. This is because the bigger the prizepools the more fish are likely to play, so a funneling effect of pushing regs off the cashtables and sng tables towards big fields still benefits them in the respect that they get additional rake reguardless of how many fish are in the field since regs tend to either not have enough players tagged or just ego/yolo reg anyway. Take most mtts 100+ buy ins for example, a decent % of the regs in those games nowdays are still losers and the fields are often 85% regs on non-sunday days but the regs flick it in anyway for the gamble. With any time on sharkscope searching regulars for $100 + limits you will generally find this trend.

This also has importance since overlays are highly undesirable, and increasing player counts mean they can increase the guarentees which ultimately drag fish out in excitement.

The other competition - A couple theories

Ultimately i have no idea what the logic of the other sites are but i have some ideas. They may not be improving their software for the purpose that doing so leads to the reg count increasing. When their software is bad it means that its harder to multi table which is beneficial in the respect that the fish aren't multi-tabling as much anyway. It gives fish a higher % chance of battling other fish.
With the announcement of 888 removing its vip system shortly after stars made directions towards that it could be doing this to dis-incentivize regulars to shift sites and extract its fish deposits too quickly.

With the generally terrible withdrawl and deposit times and bad customer service i can only imagine they are saving on costs as much as possible. And that botting and colusion doesn't really matter to them since its all extra rake generated in the end.

Future Goals

I can only see stars making every attempt to drive its regs from the games by reducing their profit margins and finding poker less fesible as a career, and looking to appeal to fish in every which way they can come up with.

I expect mtts to have many more promotions arise while cashgame rake can be expected to increase, and even potentially another increase in spin and go rake or the introduction of a spin and go structure offering 10bb poker.

The Recent insider trading

Personally i expect the charges to be cleared, it doesn't make much sense for the CEO of a 4.9 billion dollar company to commit this type of crime over money as small proportionately speaking as 1.5million dollars when he stands to gain so much. It might just potentially be some angry folks who have financial incentive or something against the industry who pointed investigators in his direction, or it might be legit. Only time will tell.

Personally while the stock prices have plummeted, once he's cleared of the charges (or inprisoned, we won't know just yet) i honestly could see myself buying shares while they are at such a low based on my opinions of the industry and what the company is doing thus far.

Its understandable why people are mad at the company, they're taking more money out of the industry and not putting it back in, they're making changes that directly effect us and they are also not following through on promises they made such as SNE. But i don't necessarily think the companies going into the ground either.
Anyway, those were my thoughts, feel free to post below with opinions, disagreements or counter-arguements (in hopefully) a civilized mannor.



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