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  • sports_nerd

    The purpose of this thread is to generate constructive ideas on the rake system that creates fairness for everyone. I know the rake is necessary, and I don’t desire any feedback of the sort, “if you don’t like the rake, go play elsewhere”, because I enjoy playing on DK and quite frankly, I don’t like change. I hope this thread creates enough positive ideas that maybe some representatives of the DFS sites will read it and take the suggestions seriously. Obviously there is a lot of legal and administrative fees the sites are undertaking given the recent restructuring of policies for the DFS industry.

    My first thought on a restructured proposal begins with an example of the Friday 8/26 4:05pm MLB DK slate:

    1. MLB Quarter arcade rake is at 14.89% resulting in a rake amount of ~$875 (forgive me, I’m a physicist, so I round my numbers often)

    2. MLB Perfect Pitch ($300 entry) rake is at 9.75% resulting in a rake amount of ~$8,100

    If they lower the Quarter arcade rake by 5% to 9.89% and ADD ONLY 1 ENTRY to the perfect pitch:

    1a. MLB Quarter arcade reduced rake at 9.89% resulting in a rake amount of ~$580

    1b. MLB Perfect Pitch add one entry => rake now at 10.07% resulting in a rake amount of $8,400

    With the reduction of Quarter arcade rake and the addition of one entry in the Perfect pitch results in DK losing ~$5. This is just one single example, but when the industry is getting spotlighted for fairness wouldn’t it make sense to retain the low dollar customers and attract beginning customers? For this simple example (and I’m sure there are many) does that $5 really outweigh customer satisfaction of the many that play the low dollar contest? Are they concerned the ‘Sharps’ and ‘high rollers’ will notice the extra entry in the Perfect Game contest and the contest won’t fill? I doubt it.

    I’m interested on anyone else’s take on this and ideas of improvements. I’ve been playing for awhile now and it only took me until day 3 of DFS to recognize rake, so I’m sure it doesn’t go unnoticed by many participants.

  • TheRyanFlaherty

    I don’t think it would be a very good idea to raise the rake in the higher priced game, as in your example.
    It does make sense that the quarter arcade would have the highest rake, and I say that as someone that pretty much only plays .25 and $1 games on DK.
    They also can get away with it more there because a large percentage playing in those games probably don’t even know how to calculate the rake, and for the higher bankroll players that play in them, it’s such a minute portion of their bankroll, so it’s not the greatest concern.

    I’d say I’m good as is.
    Any higher I’d start re-thinking, but it all seems more or less reasonable at the moment for the service provided.

    If I had to go a bit outside the box and think of something, I guess it would be a sliding scale providing less rake in cash games.
    Maybe keep the 10% at the lower values, but as you move up the percentage can go down some. Or even lower that starting percentage, something.
    Many of those games have become so competitive the risk has started to outweigh the reward, so that can be used as a way to bring people back to cash.
    It could also help with competitive balance. There could be some “pros” that will see less value in x25 $1 games with higher rake, if they can get a better ROI in a higher stakes game.
    And from the sites perspective – those games aren’t guaranteed, so it’s not like they’re risking anything with cash games. If I was in charge I’d take the chance and see if that modified structure increases cash game play, resulting in a positive for them as well.

  • AssaniFisher

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    @sports_nerd said...

    1a. MLB Quarter arcade reduced rake at 9.89% resulting in a rake amount of ~$580

    1b. MLB Perfect Pitch add one entry => rake now at 10.07% resulting in a rake amount of $8,400

    In a well maintained ecosystem, the rake that the sites take will reflect the win-rates that are achievable at those stakes. I haven’t updated my DFS Tracker in a few months so my information is outdated, but here are the stats I have on myself:

    3823 $0.25 contests entered($955.75 in buy-ins): $1298.36 profit for a 135.85% ROI
    1881 $300 contests entered($564,300 in buy-ins): $176,138.91 profit for a 31.21% ROI

    Obviously people of different skill levels will have different ROIs, but I would expect that most people’s relationship between their ROI at $0.25 and their ROI at $300 will look something similar to mine. As such, it only makes sense to have a much higher rake at $0.25 compared to $300.

  • kaetorade

    • 2013 DraftStreet DSBBC Finalist

    @AssaniFisher said...

    In a well maintained ecosystem, the rake that the sites take will reflect the win-rates that are achievable at those stakes. I haven’t updated my DFS Tracker in a few months so my information is outdated, but here are the stats I have on myself:

    3823 $0.25 contests entered($955.75 in buy-ins): $1298.36 profit for a 135.85% ROI
    1881 $300 contests entered($564,300 in buy-ins): $176,138.91 profit for a 31.21% ROI

    Obviously people of different skill levels will have different ROIs, but I would expect that most people’s relationship between their ROI at $0.25 and their ROI at $300 will look something similar to mine. As such, it only makes sense to have a much higher rake at $0.25 compared to $300.

    Kudos for those numbers, but it shouldn’t be about expected ROI at given price points. If you spend more, you save. That’s kind of how the real world works. High stakes has a lower percent in terms of rake, but they are certainly contributing more to the sites’ bottom line. For example, If I buy a single can of soda, I’m going to pay more per can than a guy that buys a 12 pack. However, the guy who bought the 12 pack certainly contributed more to the store’s bottom line.

    As far as OP is concerned, I would disagree with the assertion that lower rake in low stakes leagues would be effective at maintaining newer players. Most new players want a chance at that big score with as little investment as possible. There’s a lot of value in that. If you look at it in terms of percentages, sure, it seems bad. However, the reality is, 15% of .25 or a dollar isn’t very much. Literally pennies. For the high stakes players, who generally prioritize rake, every percent of rake is paramount.

    I do have a bone to pick, however. I’ve maintained for some time now that rake with cash games should be substantially lower than their GPP counterparts. Reason being? Little to no risk of overlay. To further add to my point, cash game players are the most rake conscious group.

  • RangerC

    @kaetorade said...

    High stakes has a lower percent in terms of rake, but they are certainly contributing more to the sites’ bottom line.

    Does it really?

    Golf:

    Birdie ($3) – 52800 rake this week
    Dogleg ($33) – 62000 rake this week
    Short Game ($1) – 2200 rake this week

    Thunderdome ($5200) – -800 rake this week (overlaid)
    Clubhouse ($1060) – 4800 rake this week
    3 Wood ($300) – 19100 rake this week

    Highstakes PLAYERS in general generate far more rake (but the rake % difference is so ridiculous that a guy who plays 1 entry in the Clubhouse at $1060 and 2 $530 HtH generates less than a guy playing $810 worth of entries in $1-12 GPPS) but highstakes contests generate next to nothing compared to the large $3 to $33 contests.

    The people who get screwed as always on DK are midtier players. Random gamblor doesn’t care about rake. Highstakes players don’t love the 15% rake in low stakes contests (because they max enter them too), but if they max enter every level their total rake % for the slate is still around 10% as the two highest stakes contests are 6%. Its the guy who tries to play $200-800 a slate who is screwed – bankroll too small for the 6% rake contests, ground down by the 12-15% rake.

  • Mphst18

    @AssaniFisher said...

    In a well maintained ecosystem, the rake that the sites take will reflect the win-rates that are achievable at those stakes. I haven’t updated my DFS Tracker in a few months so my information is outdated, but here are the stats I have on myself:

    3823 $0.25 contests entered($955.75 in buy-ins): $1298.36 profit for a 135.85% ROI
    1881 $300 contests entered($564,300 in buy-ins): $176,138.91 profit for a 31.21% ROI

    Obviously people of different skill levels will have different ROIs, but I would expect that most people’s relationship between their ROI at $0.25 and their ROI at $300 will look something similar to mine. As such, it only makes sense to have a much higher rake at $0.25 compared to $300.

    Why in the world are you playing .25 gpps don’t you think you should allow beginners and people with low bankrolls or only a weekly appetite to risk single dollar digits to play on those Gpps.

    You are playing for a million dollars this weekend and you still want to multi enter .25 gpps to take advantage of beginners and or lower bankrolls.

    You said yourself your goal was to be play dfs at the highest stakes which you have accomplished yet you still want to pillage those on the quarter arcade. Yes you are allowed to and yes I know it’s no extra work to import the same lineups at higher stakes into the quarter arcade.

    IMO You (and other self proclaimed top players) shouldn’t be playing any gpp under $3 with a top payout that isn’t 10k plus or any H2H below 50.

  • AssaniFisher

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    I clearly said that the data I was giving was months old- It has nothing to do with the games I am currently playing, and I started out in DFS as a low/mid stakes player with < $1000 bankroll.

    Regardless, this thread is about the rake and not about pros playing in low stakes games. If you want to discuss pros playing in low stakes games then start a new thread, and if I feel like giving my input there then I will.

  • Mphst18

    Let me clearly make the point a different way for you to understand.

    As the sites allow for you and the other mass entry individuals who want to pillage the unsuspecting to line your own pockets to mass enter even the lowest of low stakes gpps they can thus charge a higher rake as their risk of overlay is severely diminished since they know you and others will max enter. It’s just more of the you scratch our back and well scratch your activities

  • AssaniFisher

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    @kaetorade said...

    Kudos for those numbers, but it shouldn’t be about expected ROI at given price points. If you spend more, you save. That’s kind of how the real world works. High stakes has a lower percent in terms of rake, but they are certainly contributing more to the sites’ bottom line. For example, If I buy a single can of soda, I’m going to pay more per can than a guy that buys a 12 pack. However, the guy who bought the 12 pack certainly contributed more to the store’s bottom line.

    As far as OP is concerned, I would disagree with the assertion that lower rake in low stakes leagues would be effective at maintaining newer players. Most new players want a chance at that big score with as little investment as possible. There’s a lot of value in that. If you look at it in terms of percentages, sure, it seems bad. However, the reality is, 15% of .25 or a dollar isn’t very much. Literally pennies. For the high stakes players, who generally prioritize rake, every percent of rake is paramount.

    I do have a bone to pick, however. I’ve maintained for some time now that rake with cash games should be substantially lower than their GPP counterparts. Reason being? Little to no risk of overlay. To further add to my point, cash game players are the most rake conscious group.

    I strongly disagree regarding“it shouldn’t be about expected ROI”. I think the relationship between potential profitability vs rake has to be the #1 factor in determining how much the site should rake, and the sites absolutely need to change rake as potential profitability changes. In online poker, for example, the worst possible thing happened at the low stakes PLO games: The games got tougher(thus decreasing the potential profitability) while the rake remained the same, and we hit a point where there was literally nobody winning at $0.25/$0.50 PLO on PokerStars. This cannot happen or else the economy will die. However, when its possible to achieve huge ROIs(50+%) then the economy can survive just fine even if the sites take a large rake. This is why I’ve been pushing for them to decrease rake at the nosebleed stakes(maybe offer something like $51,000 HUs where $1000 goes to rake)- these games are 90% pro vs pro(and even the amateurs who play them tend to be quite good), and you simply can’t sustain an ecosystem when nobody’s expected ROI is enough to beat the rake. I can’t imagine high stakes HU DFS surviving much longer unless changes are made.

    Otherwise though, I agree with a lot of your post. In particular, I had never thought of your point about cash game rake vs GPP rake. Imo you’re spot on there- overlay is essentially a form of rake-back that GPP players get and cash game players do not, so it would definitely be fair to have a lowered rake on cash games.

  • AssaniFisher

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    @Mphst18 said...

    they can thus charge a higher rake as their risk of overlay is severely diminished since they know you and others will max enter.

    To the best of my recollection, I’ve never put more than 10 entries in the quarter arcade(or any $5 or lower contest other than the absolutely huge ones with like $50k to 1st). On most of the days that I’ve played the quarter arcade, I put in 3 or less entries. Where are you getting your information from? Why do you speak so confidently(“they KNOW you will max enter”) when you clearly don’t know what you’re talking about?

    And I’m definitely not following your logic about decreased overlay chances resulting in higher rake. The more often theres overlay, the more likely we are to see a future rake increase to help the sites make the money back.

  • kaetorade

    • 2013 DraftStreet DSBBC Finalist

    @AssaniFisher said...

    However, when its possible to achieve huge ROIs(50+%) then the economy can survive just fine even if the sites take a large rake. This is why I’ve been pushing for them to decrease rake at the nosebleed stakes(maybe offer something like $51,000 HUs where $1000 goes to rake)- these games are 90% pro vs pro(and even the amateurs who play them tend to be quite good), and you simply can’t sustain an ecosystem when nobody’s expected ROI is enough to beat the rake. I can’t imagine high stakes HU DFS surviving much longer unless changes are made.

    Although we disagree on the premise, the end result is that we both think high stakes leagues should be raked lower. Our difference is that I don’t believe the sites care about our ROI; they care about their bottom line and everything else is just lip service.

    Curious, were your stats earlier just from cash games? If not, do you have a similar breakdown for just cash? I did something similar a few years ago, but I only posted difference in cash percent among different stakes. Across different stakes, my percentages were all quite similar(cash only).

  • awesemo

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    I don’t get the big deal: there are beginner games where there is 0 possibility of facing a well known dfs player. If you’ve played enough games to exceed the threshold the sites designate as beginner, then you should be comfortable enough with the game to compete with people of any level, regardless of the stakes.

    Regarding rake, I think it would make sense to have different rake structures depending on the format as Assani mentioned. None of us really have enough data to say what games should be raked lower and which should be raked higher, unfortunately, so we have to rely on the sites to do the right things.

    One change that I saw recently that I like is some of the games on Draftkings going to a single entry structure, like the 66 person $100 double up. Although the rake may still be high, that will go a long way in making that particular contest more beatable.

  • Mphst18

    @AssaniFisher said...

    And I’m definitely not following your logic about decreased overlay chances resulting in higher rake. The more often theres overlay, the more likely we are to see a future rake increase to help the sites make the money back.

    Economics 101, supply vs demand. I can keep raising the rake until the data shows the contests aren’t filling. You appear to only be looking at rake as way to make money back instead of also looking at it through the lens of if the data shows that we already have contests that fill at current rake structure can we raise the rake and still fill them.

  • sports_nerd

    I see my original post opened up some banter of discussion as well as some useful ideas, including keeping it’s structure the same. However I still think to improve the overall fairness of DFS, rake should be equal across all price contests.

    I 100% agree the double ups need to be reduced, most 50/50s sit at 10%, very reasonable.

    I disagree with the ROI comparison from Assani. Everyone should have a higher ROI from the smaller GPP games than the significantly larger $ GPPs. You have to view the type of competition you are dealing with in the higher buy-ins. In the quarter arcade you have the random i don’t care gamblers throwing the most junk lineups out there just in case. I’ve seen numerous lineups in the quarter arcade with players not even in the starting lineup. I’ve even seen Melancon in as pitcher in a lineup. The competition and the vast number of “dead lineups” in the arcade is much greater than the $300 buyin. The higher buy-in have much more thought put into almost all of its lineups, greater competition, and lower ROI for most.

    As far as comparing it to consumer products like the soda discount example, you are purchasing an entry into a contest. If you buy a higher merchandised item at a department store the “rake (sales tax)” is the same percentage no matter the price.

    The quarter arcade regularly fills a couple hours before lock daily even this late in the MLB season, if it lowered it’s rake and increased the number of entries, it will still fill.

  • cb35

    2013 FFFC Finalist, 2013 DFFC Finalist

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    Thinking about this and DFS is operating in a new regulatory environment. The states all have their hands out with specific license fees and specific pro rata shares of the profits (varies greatly by states.) I think the fairest way to go about keeping rake at a manageable level is to charge membership fees based on what state you currently live in. If your state is a bunch of SOBs with their regulatory fees then your membership fee would be higher. I’m sure people would try to get around it but it seems the technology is getting there to determine how frequently your are logging in from a particular state.

    I just don’t know how can have a rational discussion about reducing rakes when the sites costs are increasing state by state. Prize pools are lower than the same time last year meaning less rake for the sites. Rakes are likely to rise and we need an outside the box solution to attempt to get DFS to a sustainable level.

  • Matthew

    StarsDraft Rep

    This is a really interesting conversation with great insight and thoughts on the rake structure of DFS and how it impacts the overall game and market viability.

    I thought I would chime in with a few thoughts from an operator perspective, especially one that’s come previously from the business side of the poker industry.

    I’ll make a few separate posts to distinguish between the different thoughts.

    New Players and $0.25 Buy-in Games

    I’d like to first address the lower buy-in games with the understanding that they play an important introductory role for new players. I often hear / read the argument that because new players are not yet price conscious — that they don’t fully understand what rake is or how it impacts their profitability — that it’s somehow excusable that these games receive a large and inflated rake.

    I’d argue that the approach should be the exact opposite. These lower buy-in games, often times played by new and beginning players, should be run with comparatively reduced rake. This was our thinking behind running rake-free $0.25 buy-in contests.

    When you spend marketing dollars to introduce new players to the game, you should be seeking to onboard, educate, and provide as enjoyable experience as possible. I contend that the benefit of profiteering 10% – 15% rake in a $0.25 buy-in is drastically outweighed by the benefit gained from reapplying that cash to a deeper payout prize pool structure.

    By increasing the rake on the lowest buy-in games, the site is acting as the shark, vaporizing liquidity and decreasing their own longer-term viability. As we all know in skill-based ecosystems, player introduction, retention and yield are key — as an operator, why purposefully act against your own interest?

  • tooltime

    I would rather them do rake like the poker days. A $1 entry would be $1.10. A 10k gpp would then be a 13k with the same amount of entries. They make rake and prize reflects the actual entries.

  • catmando

    I wish rake was posted or standard in all events..you can be in one squeeze and it be 13.5 and another and it be 14.9. Just never know unless you do the math and who does that

  • catmando

    Since no site anywhere has disputed the fact that about 1.3 or at best a small percent win money lower rake really only prolong our agony

  • Matthew

    StarsDraft Rep

    I wrote the below to address one of the topics at the top of the thread. Even though the topic has shifted towards the desire for rake difference by game type (certainly agree), I thought it might be worthwhile to touch on the topic of rake difference in same game type but at different stake levels before jumping to differences in H2H v. Cash v. GPP.

    Low vs. High Stakes

    One topic that’s always raised during these discussions is whether or not the rake should be treated differently between low and high buy-in games. For the purposes of this post, please ignore the new player / micro games (discussed above), and instead concentrate on the low, mid, high stakes games.

    When we first launched Victiv in 2014, I was staunchly in the minority with my thinking that the **lower buy-in games should be raked LESS ** than the higher buy-in games.

    Why? The theory behind that approach was that the lower buy-in games are often where the newest players concentrate until they’re able to increase their education and close the game’s inherent skill-gap.

    As such, and with concentration on the ecology of the game environment, keeping money active and circulating at these levels will eventually allow for players to naturally increase stakes (and thus rake attribution) as their skills increase and they start to earn higher amounts of winnings.

    That being said, one of the biggest items I missed was the time-debt difference between DFS and a game like poker. Poker requires active engagement (bet, call, fold) and thus the optimum stake levels occur naturally to fit where a player’s most profitable considering their physical playing time commitment.

    However, in DFS the time debt occurs when someone is researching and analyzing the list of athletes, effectively a precursor to actually participating in contests. Thus it’s just as easy (if not sometimes optimal) for an advanced player to participate in a wide range of buy-in, including the smallest amounts available.

    So the question becomes, does it make more sense to increase the rake on the lower levels so that the more skilled players naturally migrate to higher buy-ins to avoid ROI hits? As @AssaniFisher showed in an earlier post on ROI, it would be unrealistic to increase rake to a degree that would be high enough to offset that level’s ROI % (especially assuming equal or similar volumes could be played per stake level). And even if it were able to effectively discourage play by more advanced users, again you run into the issue where the site acts as the shark and against their own ecological interests.

    What is an operator to do then? I don’t think the answer lies in the rake percentage or rake attribution per price point.

    Operators must think holistically about the combination of game ecology, skill-gap differences and the impact of rake on a different subsegment of players. If an operator doesn’t have the capacity to develop complex new features or the latitude to dramatically enhance game dynamics for the better, maybe raising rake for this-or-that game is the extent of what they can do.

    But DFS is an incredibly interesting game to manage, and as the players, market and operations mature, the sites that will survive and flourish will be those that are intelligent about their rake application, ecosystem and more innovative in their approaches to its management to ensure great games and experiences for all players.

  • Mphst18

    @Matthew said...

    What is an operator to do then? I don’t think the answer lies in the rake percentage or rake attribution per price point.

    So I guess a follow up question for you is why isn’t the solution to restrict their high stakes players (they can define it using their reward tier levels) from playing in the low stakes contest thus allowing a lower rake in those contests (and more of a level playing field for beginners) while still cultivating what you explained as “the ecology of the game environment, keeping money active and circulating at these levels will eventually allow for players to naturally increase stakes (and thus rake attribution) as their skills increase and they start to earn higher amounts of winnings”.

  • kaetorade

    • 2013 DraftStreet DSBBC Finalist

    @sports_nerd said...

    As far as comparing it to consumer products like the soda discount example, you are purchasing an entry into a contest. If you buy a higher merchandised item at a department store the “rake (sales tax)” is the same percentage no matter the price.

    The rake goes directly to the sites whereas sales tax doesn’t add to a store’s bottom line.

    I feel like I’m in the minority here, but it bears repeating: Sites don’t care about our ROI. Like any responsible business, they structure their games and rake based on the best interest of their site.

    @cb35 touched on a topic that I’d be interested in. A while back, I mentioned the idea of a membership fee to play at reduced rake and even rake-free. It was dismissed, but this was several years ago. Things have changed. Maybe it’s time to revisit that idea.

  • colinwdrew

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    Matthew, I agree with many of your points. I tend to think at macro level that the current rake structure with higher rake at lower stakes is the best practice with lower rake at higher stakes.

    That said player acquisition is costly and going up with the value of each user going down. To rake somebody out before they learn the game, grow to enjoy it, and are capable of making an educated decision on staying a customer, is not effective. One solution would be for the sites to offer rake back programs and free low limit tickets to new players (every 10th game is free) to offset rake for those specific players while still charging experienced users a higher rake for the low entry fee contests. Deposit bonuses were one attempt at this, but less tangible to a new user than free tickets or 5x incentive points during your first 6 months.

  • Matthew

    StarsDraft Rep

    @Mphst18,

    That’s certainly one potential approach to solving that issue, and in fact, is something we previously discussed at great length as a team.

    I wrote a lengthy continuation to this post that outlined two features we’ve built that provide an alternative to restricting stake levels; however, these have yet to be released into our U.S. product, and I want to spare the office shouting match that would inevitably stem from me announcing product team features before they hit production.

    But just as important as the detailed solutions is how an operator might approach these types of problems. I find that first exploring whether a creative solution exists before defaulting to heavy-handed player restrictions is almost always optimal. For us, it’s always better to encourage and incentivize the proper play vs. adding conditions of constraint to force it to balance.

    @colinwdrew

    “To rake somebody out before they learn the game, grow to enjoy it, and are capable of making an educated decision on staying a customer, is not effective.”

    Absolutely spot on.

    On-boarding and education are paramount, especially in a skill-based game. Our way of addressing this, instead of immediately pressuring users to deposit and enter a large, top heavy GPP, was the Bankroll Builder program. The flow was:

    1. New users are given multiple free tickets to play against our beginner AI

    2. Each time they beat the AI, they win real-money tickets to our $1 rake-free H2H Anonymous pool (against real users)

    3. If they’re successful there, they end up having won a $2 ticket that can be used for any $2 buy-in game

    The goal here was to allow multiple chances to learn & play for free, against both an educational AI and real users, prior to deciding whether or not they’d like to invest their own capital.

    In general, I’m not a big fan of rakeback given the issues it’s caused in similar industries. That said, you’re right — there are certain things that can be done with a loyalty program that can address this / @Mphst18 topic.

    When I have a few extra minutes I want to address something @kaetorade posted about, as I think he’s spot on — yes, there should be different rake structures by game type.

  • MaverickUSC

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    I’m glad y’all are still doing things Matt. Can’t wait until y’all are operating in Colorado again.

  • Matthew

    StarsDraft Rep

    Thanks @MaverickUSC.

    As I mentioned in my last post, I wanted to write a final bit to support the notion that rake structures should differ by game type. Additionally, with the start of NFL season this week, I’ve seen scattered comments on GPP prize pool sizes across the industry, so thought it would also be worthwhile describing some of the issues that large GPP prize pools present to the operators.

    Cash vs. Guaranteed

    @kaetorade mentioned in an earlier post that he’s maintained that cash games should have a different and lower rake structure than guaranteed contests.

    We couldn’t agree more.

    In fact, I’d go further and say that there should be different rake structures between H2H, Cash, and Double-Up / Regular Guaranteed contests. Here’s an example of the rake structure we ran previously, broken down by $10 buy-in game type:

    Guaranteed = 9% – 12%
    H2H Anonymous = 6.5%
    H2H Regular = 8.5%
    Double-Up Cash (6 – 20 man) = 7.5%
    Regular Payout Cash (6 – 20 man) = 8.5%

    We structured our rake in this manner to reward play in the types of contests that are best for both the player ecology and for us as an operator.

    One of the biggest concerns I see with the continued viability of the DFS game is the reliance on GPPs to drive business value.

    From an operator standpoint, GPPs are extremely difficult to manage. Each time we place a guaranteed contest in the lobby, we have to be exactly correct in our modeling of how many users will enter that contest, otherwise we cause ourselves some type of value loss.


    Example

    If we are releasing a $100,000 guaranteed contest that accepts 11,000 users at a $10 buy-in, we’re setting the maximum rake on that contest at 9.1%.

    It’s important to note that this is the maximum rake, but that actual rake is variable up until the point the contest fills.

    Here are the different scenario outcomes for the operator:

    1. The contest receives less than 10,000 entries causing overlay (negative rake)

    2. The contest receives more than 10,000 entries but less than 11,000 (less than maximum rake)

    3. The contest fills with 11,000 entries and not a single other player wanted in (exactly optimal)

    4. The contest fills with 11,000 entries, but some players wanted in and aren’t allowed (opportunity cost)

    And despite how some operators incorrectly calculate their revenue from GPPs, the only scenario above that equates to optimal value for the operator is #3. All else either leaves money on the table or actually requires the operator to add their own operating funds to the prize pool.

    Thus we’re introduced to the operational difficulties that GPPs inject. While they are an excellent acquisition tool, in their current form and structure, they are a real long-term burden on the viability of DFS operations.

    So as @kaetorade noted, there are higher risks associated with GPPs vs. cash games, and thus the rake pricing should inherently be applied differently.

    That said, as an industry we must ensure that rake pricing doesn’t raise to levels that impact the following:

    1. Skilled users successfully profiting from their play
    2. Operators running a solvent and value-driven business

    Favoring short-term profits — while maybe uniquely necessary in DFS to ensure a next funding round — needs to certainly be weighed against the long-term viability risks to the market as a whole.

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