A Winning Poker Equation: How a Math Professor Helped Us to Reduce the Rake

Recently, it was brought to our attention from one of our long-standing regular players, that the rake structure we had in place for micro-stakes Heads Up No-Limit holdem (HUNL) tables was making it too difficult for players to effectively turn a profit.

Upon him bringing the matter to light, we evaluated his case and saw that his reasoning was sound.  It resulted in our decision to make the following changes to the rake cap on micro-stakes HUNL tables:

Stakes:                                   Previous Rake Cap     New Rake Cap
$0.05 NLH and Below                     $0.50                           $0.10
$0.10 NLH and $0.25NLH               $0.50                           $0.20

In his words, Dr. Palamourdas describes below his experiences and history with WPN, and the situation that resulted in the rake change.    

A Player’s Perspective:

Who am I?

I am Konstantinos "Duncan" Palamourdas, a math professor who teaches poker to people of all levels at UCLA Extension (https://www.uclaextension.edu/instructors/duncan-palamourdas). Early on I found that math helps me make sense of the world, so I have applied it to several subjects over the years, with poker being at the top of the list. Poker is a numbers game after all, so if you learn how to make decisions based on statistics, you will be profitable.

My goal has always been to try and simplify its complex concepts so that everyone can understand them. I even wrote a poker book for beginners where I am examining the skill factor through the eyes of a professional risk-taker. This helps give the reader a simple but deep understanding of the game and help them formulate their own winning strategy, rather than copying others. I have helped losing recreational players turn into profitable full-time poker players.

Setting roots:

Like everyone else, I was looking for a new online home back in April 2011. With all the shenanigans around that time, playing online meant one had to be extremely cautious to say the least. That said, as a profitable player, I would likely only need to make a single deposit, so I considered this a risk worth taking. Plus, I heard that WPN was paying fast and I liked Phil Nagy's philosophy of "paying the players above all else". So, I made my first deposit with WPN and started playing my game of choice: Heads-Up No-Limit holdem (HUNL).

A dynamic relationship:

Back then, WPN was not what it is today. Between low traffic and people avoiding playing against profitable players, it was hard for me to find action even at lower stakes. On top of that, people would open an unlimited number of heads-up tables and wait for recreational players to sit across them. But if winning players would sit to play them, they would simply leave the table and open a different one. At that time, there was no limit to how many heads-up tables one could open. Thus, it was not uncommon for each stake to have 20+ heads up tables open, with a single person waiting and no action. This was not only unethical but also highly inefficient. It was then that I suggested they limit the amount of tables for each stake, so that people would be forced to play each other. And to Phil's credit they did!

Change is the only constant:

Fast forward to today and I was recording a video at $10HUNL (that is a $10 max buy-in heads up game) for my students. What happened next was disheartening! Over the course of a single long session, I paid $140 in rake which meant that I would need to defeat 14 opponents just to break even! As a matter of fact, I was only down $90, meaning I was technically up $50 but I was losing money due to the rake. Once again, that is a $140 differential or 14 buy-ins. That was brutal.

Digging a little deeper, I found that over a good sample size, my average rake at 10HUNL was 20bb/100 (that is 20 big blinds per 100 hands). Luckily, I also have very good samples on higher stakes to compare them to. For instance, at 25HUNL, my average rake is 12bb/100. For 50HUNL my rake is 8.7bb/100 and for 100HUNL it is only 5.8bb/100. For more perspective, it would take 500 hands to lose an entire buy-in at 10HUNL whereas more than 1,700 hands for that to happen at 100HUNL. And since these days, win-rates are mid-to-low single digits (1-5bb/100), these discrepancies can make all the difference in the world.  I could no longer in good conscience recommend those stakes to my students.

WPN's reaction:

I brought the matter to Phil's attention, and once again, I was not disappointed! Instead of giving higher rakeback to players (my initial suggestion), he decided that it would be fairer to reduce the rake. That way, no players would have an innate advantage over other players that goes beyond their own skill. That makes a lot of sense and I think it is a great step in the right direction.

Hopefully, by working with players, we can further reduce the rake so that it never exceeds ~8bb/100 regardless of the stakes. That way the recreational players will last longer, the profitable players will not see their profits disappear due to rake, and WPN will get more action. Win-Win-Win.

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