Amaya acquires Rational Group (owner of Stars/FTP) - Page 2

On June 14 2014 23:30 devon06atX wrote: Are you fucking serious? Look at their business model for fucks sake. How much of their capital is spent on the actual software? Nil. How much do you think is spent on Customer Service? Yeah, they're awesome at it, but I assume I rake more than every other 30,000 person. A few mins here nor there isn't bad. Servers? Yep, cash. Marketing, there's the big one. That would cost at least a few tens of millions. Sitting there, acting like they have tons of overhead, is a fucking joke. Many businesses have tons of overhead, this one is pretty DAMN GOOD. I'd be shocked if I found other businesses with less. Well, maybe thugging it up in Baltimore, but even then, you gotta pay. This is a cash cow to the max, don't think for a fucking second their rake is fair.

On June 14 2014 23:36 devon06atX wrote: And btw - No, I don't blame them. I'd do the same in their shoes if I had a monopoly on us idiots. Make those dollars where you can, right? .. Just don't give me that 'civil rake' bullshit ever again.

lol didnt take long for one to come out of the woodworks.

how much research did you put into your 'breakdown' of the stars business model? none at all by the looks of it. nil spent on software is the first zinger.

1500 total employees with customer service in 29 languages - is it possible you're underestimating some of the expenses that you're aware of? a few tens of millions for marketing - is it possible you're an entire order of magnitude off here? that might be how much they spend on the top 2 or 3 earning members of team pokerstars alone (negreanu), let alone significant advertising in more countries than i can imagine.

More significantly do you think it's possible there are expenses you're apparently not aware of or forgot to mention? Did you think gaming licenses and payment processing come for free? Banking services? Legal teams and lobbying in tons of different jurisdictions across the world? (still far from a comprehensive list of all expenses incurred by pokerstars, just naming a few more off the top of my head)

"I'd be shocked if I found other businesses with less" - its not a surprise at this stage you dont know much.. big pharma, financials and big tech have comparable margins. Did you actually read the basic numbers in my previous post? Do you dispute that 20-25% is a reasonable guess for profit margins after tax for stars? Or do you think they're lying about the numbers (lol) and still think they're actually making 90% of revenue in profit? How do you define what level of margin is "fair" or what level of rake is "fair"? What does "fair" even mean??

On June 15 2014 06:08 Romm3l wrote: Show nested quote + On June 14 2014 23:30 devon06atX wrote: Are you fucking serious? Look at their business model for fucks sake. How much of their capital is spent on the actual software? Nil. How much do you think is spent on Customer Service? Yeah, they're awesome at it, but I assume I rake more than every other 30,000 person. A few mins here nor there isn't bad. Servers? Yep, cash. Marketing, there's the big one. That would cost at least a few tens of millions. Sitting there, acting like they have tons of overhead, is a fucking joke. Many businesses have tons of overhead, this one is pretty DAMN GOOD. I'd be shocked if I found other businesses with less. Well, maybe thugging it up in Baltimore, but even then, you gotta pay. This is a cash cow to the max, don't think for a fucking second their rake is fair.   On June 14 2014 23:36 devon06atX wrote: And btw - No, I don't blame them. I'd do the same in their shoes if I had a monopoly on us idiots. Make those dollars where you can, right? .. Just don't give me that 'civil rake' bullshit ever again. lol didnt take long for one to come out of the woodworks. how much research did you put into your 'breakdown' of the stars business model? none at all by the looks of it. nil spent on software is the first zinger. 1500 total employees with customer service in 29 languages - is it possible you're underestimating some of the expenses that you're aware of? a few tens of millions for marketing - is it possible you're an entire order of magnitude off here? that might be how much they spend on the top 2 or 3 earning members of team pokerstars alone (negreanu), let alone significant advertising in more countries than i can imagine. More significantly do you think it's possible there are expenses you're apparently not aware of or forgot to mention? Did you think gaming licenses and payment processing come for free? Banking services? Legal teams and lobbying in tons of different jurisdictions across the world? (still far from a comprehensive list of all expenses incurred by pokerstars, just naming a few more off the top of my head) "I'd be shocked if I found other businesses with less" - its not a surprise at this stage you dont know much.. big pharma, financials and big tech have comparable margins. Did you actually read the basic numbers in my previous post? Do you dispute that 20-25% is a reasonable guess for profit margins after tax for stars? Or do you think they're lying about the numbers (lol) and still think they're actually making 90% of revenue in profit? How do you define what level of margin is "fair" or what level of rake is "fair"? What does "fair" even mean??

pwned

When i watch a sports channel I see a pokerstars or fulltilt add every 3 commercials those are not cheap.

When I said nil, I meant nil compared to the revenue the company takes in. Of course they have to hire coders and do market research to see what people like, etc. Even if it costs them ~10 million a yr. to upgrade their software, I consider that 'nil' considering that's ~3 days of rake. And their software *is* their product imo. Well yeah, and customer service, reputation, etc. etc.

And no, I had no idea they had 1500 employees. I just did a quick calculation, giving all of the employees a salary of $50k, that's roughly 75 million. That equates to the revenue they'd generate in ~25 days. Obviously some people will make much more, and some people would make much less, but again, I'm just throwing that number (I thought I was generously high with it) out there to show that their employees are a small % of their total revenue.

Its more than likely I underestimated many expenses such as banking fees, transferring funds, permits, etc. But I have less than 0% of a clue how much that kind of stuff would cost, so I can't even begin to guess.

As for taxes, I was under the impression they located in Isle of man so as to circumvent them? Even if their margin is 25-30%, that is pretty damn awesome imo.

Again, I didn't look through the slides, nor their financials, and yes I did look at your numbers. All you posted was their revenues for the last few years. I don't really know how that relates to an 'acceptable' amount of rake to be honest.

I guess all we're arguing about is their profit margin. And to be honest, yeah, I always thought (without real thought or analysis) that they did have a ridiculously high margin. I would have guessed 60-80% tbh heh. Even if it is ~30% (I doubt they're getting taxed ~10% ...), that's outrageously great *for them*.

All that being said, they have a monopoly, and like I said, I'd rake the shit outta us as well if I was them. It really is too bad there's not 5-6 solid, reputable, decent traffic sites out there. I'm positive rake would go down. Or bonuses/rakeback would go up, whichever.

All that being said, I'm still a firm believer that it's a cash cow.

edit - and yeah, they probably do spend a BOATLOAD more on marketing than the '10s of millions' I previously said. It's just hard to quantify, ya know? I forget that they're also advertising all around the world, having events all over the place, etc.

It does feel ridiculous debating about something that I really have no clue about haha, so I'm gonna stop.

On June 15 2014 17:05 devon06atX wrote: When I said nil, I meant nil compared to the revenue the company takes in. Of course they have to hire coders and do market research to see what people like, etc. Even if it costs them ~10 million a yr. to upgrade their software, I consider that 'nil' considering that's ~3 days of rake. And their software *is* their product imo. Well yeah, and customer service, reputation, etc. etc. And no, I had no idea they had 1500 employees. I just did a quick calculation, giving all of the employees a salary of $50k, that's roughly 75 million. That equates to the revenue they'd generate in ~25 days. Obviously some people will make much more, and some people would make much less, but again, I'm just throwing that number (I thought I was generously high with it) out there to show that their employees are a small % of their total revenue. Its more than likely I underestimated many expenses such as banking fees, transferring funds, permits, etc. But I have less than 0% of a clue how much that kind of stuff would cost, so I can't even begin to guess. As for taxes, I was under the impression they located in Isle of man so as to circumvent them? Even if their margin is 25-30%, that is pretty damn awesome imo. Again, I didn't look through the slides, nor their financials, and yes I did look at your numbers. All you posted was their revenues for the last few years. I don't really know how that relates to an 'acceptable' amount of rake to be honest. I guess all we're arguing about is their profit margin. And to be honest, yeah, I always thought (without real thought or analysis) that they did have a ridiculously high margin. I would have guessed 60-80% tbh heh. Even if it is ~30% (I doubt they're getting taxed ~10% ...), that's outrageously great *for them*. All that being said, they have a monopoly, and like I said, I'd rake the shit outta us as well if I was them. It really is too bad there's not 5-6 solid, reputable, decent traffic sites out there. I'm positive rake would go down. Or bonuses/rakeback would go up, whichever. All that being said, I'm still a firm believer that it's a cash cow. edit - and yeah, they probably do spend a BOATLOAD more on marketing than the '10s of millions' I previously said. It's just hard to quantify, ya know? I forget that they're also advertising all around the world, having events all over the place, etc.

before you were saying marketing was the only significant expense running into the "tens of millions", as if that is a benchmark for a significant expense, now you do a back-of-envelope calc and figure employee salaries is in the high tens of millions and claim that is insignificant. not very consistent.

I agree with you by the way employee salary by itself is not significant compared to revenue (<10%). The trouble is you're still estimating costs that you can identify and ignoring all the unknown unknowns. While employee salary by itself not a double figure % of expenses, there are plenty of other expenses in the same order of magnitude that you haven't even thought about which are insignificant by themselves but all add up really fast. You have no idea of the true costs of running a business of this scale that operates in and has locations in many countries, and you just assume all the costs for the masses of things you don't know about are zero. Just in terms of employees alone, salary paid is just what workers get, employers pay more: pension contributions, buildings/offices where they can work, resources/training for employees, significant hiring/firing costs. Software is probably 5x what you think it is because they have so much to lose in terms of customer trust/goodwill if they get any one small thing wrong with regard to security, bugs, etc. It wouldn't make sense for them to try and cut costs here if the alternative is reducing risk. So far they have gotten virtually nothing wrong. You can get guys like genjix coming here saying software can be developed for free, stars are robbing us etc, but then he gets one of his sites hacked and loses ppl mass money like immediately. Any btc poker site associated with him has its credibility destroyed forever.

the software is not the product. it is a source of competitive advantage over other sites but by itself it's nothing without people playing on it. online poker has strong network effects and the player liquidity is the product. the trust and perceived safety of your funds and of game integrity is the product. go play on the bitcoin site for free and see how many fishy games you can find at your limit at any given time and how many tables you can play. Go play on shady sites and see if you feel as happy to play.

anyway the numbers on the slides don't lie, stars have healthy margins like I said but they're not robbing us blind and creating an unsustainable situation. They've directly had an extremely significant role in the large growth of online poker outside usa. Your rake dollars are paying for growth of players, and paying stars a generous cut in profit so they have incentives to create that growth which benefits players. Don't get the impression that worldwide growth in online poker happened by itself and dont get the impression it would happen if the leading business isn't making healthy profits it can reinvest. Look at that rate of revenue growth! that's directly linked to the amount of play happening.

And another thing, it's amazing how many times I hear entitled grinders talk about the amount of rake they're paying and how that means stars owes them something. Is stars forcing you to play so much volume? Would you play that much for the fun of the game if you were somehow guaranteed a breakeven result at the end of it? You play for self-interest, because you figure you might win some money for yourself. Stars offer you the product for a price and you choose to buy it because you figure you'll make some money and it'll be worth your time. They have to let you make money to get your contribution to rake. In the same way you have to let stars make decent profit if you want them to exist and to continue tempting casual players worldwide into your games through lots of advertising and handling their money etc.

As soon as you start talking about what a "fair" distribution of the fish money between grinders and rake is, you have started talking shit. It's a meaningless concept in a free market system. Fair is the market price. Any other interpretation you care to have about what's "fair" is your own, and when it comes to "fair" every side in every debate will have their own version with their own self-interested bias attached. It's meaningless to even talk about.

I hope you enjoyed writing your holier-than-thou posts, because, I didn't disagree with a word you said. Yet, you felt the need to come back writing condescendingly anyway.

If you re-read my post, you'll see I agree with most of what you wrote. Especially the market system. I would quote it, but I doubt that would make a difference, as writing it the first time didn't do much good.

However, like I also said, without knowing their actual expenses and their real profit margin, there's no sense talking about how paying ~80$ of rake a day is 'too much'.

Sincerely,

Another entitled grinder.

not really against you specifically.. there are plenty of entitled grinders here. my initial comment you replied to in the beginning was aimed at them.

It's a monopoly but yes you rely on the kindness of Pokerstars' hearts to give you something fair.

incorrect. there are clearly other players so it's not a monopoly. it's possible for new players to enter the space so it's not a monopoly. it happens to enjoy dominant market share now because it gives you a better proposition than other existing players. it didn't happen by accident. partypoker used to have the lion's share once but players went to the better proposition. nothing to do with kindness of any hearts, it's just good business. if they doubled their rake overnight you think that situation would last long? Even in the best case where it leads to higher revenues and profits, it just makes the space that much more attractive for a new entrant or rival firms to be in and undercut, and those huge margins will get competed away.

Monopolies are usually built or helped by the state and require a immense ammount of infrastructure however on PokerStars case, a software to play poker is as free as the market goes, if a company can offer an alike product quality at a lower price (rake) then it will quickly start eating its user base, however we see the opposite happening, competing softwares go down when they cut their price and have never been able to remotely offer the quality of service PokerStars does.

So no my friend, saying PokerStars is a monopoly is denying the most basic workings of a capitalist economy, PokerStars dominates the market because they offer a quality product people are willing to pay for, you simply have absolutely no clue about PokerStars expenses, and how would you?, you are just being silly having such strong opinions on things you simply dont know about.

On June 19 2014 04:14 Baalim wrote: Monopolies are usually built or helped by the state and require a immense ammount of infrastructure however on PokerStars case, a software to play poker is as free as the market goes, if a company can offer an alike product quality at a lower price (rake) then it will quickly start eating its user base, however the we see the opposite happening, competing softwares go down when they cut their price and have never been able to remotely offer the quality of service PokerStars does. Its a monopoly because its the best hands down, by far. when its taken from you (black friday) - you learn stars is 500x better i'd pay more rake to play on stars tbh. my 2 cents, agree w/ baal here obv So no my friend, saying PokerStars is a monopoly is denying the most basic workings of a capitalist economy, PokerStars dominates the market because they offer a quality product people are willing to pay for, you simply have absolutely no clue about PokerStars expenses, and how would you?, you are just being silly having such strong opinions on things you simply dont know about.

A monopoly can most definitely exist resulting from superior service and product. Whether or not PokerStars is a monopoly is too complicated for me to judge, but I don't see how it isn't at the very least in the running for being one. Additionally even if they were one, being a monopoly isn't necessarily unlawful that all depends on the type of conduct and whether anti-competitive measures are applied. As I'm sure you understand having a superior product is in no way mutually exclusive with anti-competitive conduct. In fact the both of them make for a great combo.

Can you give an example of what you mean by anti-competitive measures or anti-competitive conduct specific to pokerstars?

A monopoly is generally protected by barriers to entry and has free reign to do whatever they want with customers having zero choice of alternatives. Usually that results in them charging higher prices and serving fewer customers to maximise profit, because they can. Stars invest heavily in its dominant market share position and have very competitive pricing - from a customer pov they're the best value proposition by a country mile imo (prices similar to elsewhere for a safer, more liquid network). If stars became less competitive than it is now - went for more profits by cutting costs and raising prices, the big question mark is whether their profits would sustainably increase. If they were a true monopoly the answer would be yes. We saw in the past decade that when partypoker had the "monopoly" position and tried to capitalise on their "monopoly power", it turned out they weren't a monopoly after all.

I'm not saying they are one I'm saying that having a superior quality and product isn't supporting not being a monopoly.

Pretty sure the Pokerstars / Full Tilt entity is indeed a monopoly.

For example, they are by far the single largest provider of the online gaming service, where they control, what, roughly 90% of the market? That puts them on part with Microsoft. While there is technically competition, they make up a fragment of the market and have little to no impact on what Pokerstars does.

Pokerstars also adjusted its rake and VIP structure to match its market demand. Other sites with cash rake back have had zero influence, further proving my point. Sites that offer 'more desirable' rake back packages or VIP promotions still can't grab any more market share. Pokerstars sets the bar as far as service and the demand for it.

A monopoly is created when there is a lack of economic competition or the inability of others to produce similar goods or services. No one has the funds, creativity, staff, etc. to mimic Stars and no competitor has been able to take market share away - unless you count the DOJ freezing the US market.

On June 22 2014 09:58 chris wrote: For example, they are by far the single largest provider of the online gaming service, where they control, what, roughly 90% of the market?

59% of online poker market in terms of traffic. I'd be surprised if it turns out they've more than 25% of online gambling market. Online gaming is something completely different.

monopoly or not, its because they are the best, not because buy-outs, they were prior to fixing ftp if anyone brings that in

On June 22 2014 08:03 Nazgul wrote: I'm not saying they are one I'm saying that having a superior quality and product isn't supporting not being a monopoly.

Wrong, when a company dominates a market doesnt automatically make it a monopoly, monopoly its an intrinsically bad thing that stops free market, Wikipedia lists these as its characteristics, which PokerStars clearly does not fill.

Characteristics Profit Maximizer: Maximizes profits. Price Maker: Decides the price of the good or product to be sold, but does so by determining the quantity in order to demand the price desired by the firm. High Barriers to Entry: Other sellers are unable to enter the market of the monopoly. Single seller: In a monopoly, there is one seller of the good that produces all the output.[5] Therefore, the whole market is being served by a single company, and for practical purposes, the company is the same as the industry. Price Discrimination: A monopolist can change the price and quality of the product. He or She sells more quantities charging less price for the product in a very elastic market and sells less quantities charging high price in a less elastic market.

For example Apple would be way closer to a monopoly than pokerstars