Rake policies of for-profit and non-profit online poker sites: A case study

Abstract

How does governance affect the operative behaviour of gambling sites? We conjecture that differences in governance primarily cause pricing differences among gambling sites. This paper presents an analysis of the purpose and implications of rake policy differences between privately owned for-profit and state-owned non-profit poker web sites. Specifically, the paper comprises a comparative case study analysis of Svenska Spel Poker, owned by the Swedish state, and the commercial site PokerStars. The analysis focuses on the range of different types of single table Sit and Go tournaments offered at each site. We observe two main differences between the sites with respect to rake. First, PokerStars uses a rather complex formula to determine the rake percentage based on variables such as tournament speed, stakes, and size while Svenska Spel uses the same rake percentage for all Sit and Go tournaments regardless of speed and stakes but with a 50 percent discount if the tournament is played heads-up. Second, PokerStars charges less rake than Svenska Spel except for the lowest stakes. We discuss the effects and purpose of these rake policy differences from four different perspectives: 1) the individual player, 2) the player collective, 3) the poker market, and 4) society. The overall conclusion is that these different perspectives cause conflicting opinions on the 'goodness' of the sites. Our study also highlights the difficulties experienced by a state-owned gambling site in balancing social and corporate goals.