Pokerstars Strike: Waste of Time?
I don’t follow poker news much these days, but recently a post caught my eye: it was Lee Davy’s excellent summary of the “Players’ Strike” on Pokerstars last week. If you don’t know what the Players’ Strike is or what it was about, read about it there first.
I would charitably describe the “Player’s Strike” as doomed to failure, as is the idea of a poker players’ “Union” of any kind. Professional poker players are not employees of online poker providers, they are more akin to suppliers: An operating expense for the site to provide a service to its customers, the recreational players. To continue a theme from Lee’s blog, poker players are never going to be in the position of railway workers negotiating against the government, but more resemble dairy farmers negotiating against supermarkets[1]. Suppliers, unlike employees[2], are in a competitive relationship with each other at all times. As such, “union” is not really the word for any kind of collective action by poker players; the best they can hope to achieve is to form a cartel. However, even as base a dream as this is unattainable for such an amorphous group as poker players. Imagine somehow it happened, that all professional poker players were able to organise a mass boycott of a certain provider for some amount of time. All it would mean is that the next tier of players, the almost breakeven losers, would be promoted into their place. The players have no leverage. They have no way to enforce collaboration/punish misbehaviour, they have no way to even define their membership. The idea of collective action by poker players is a total non-starter. I’m genuinely surprised so many seemingly hyper-intelligent people seem to have fallen for the idea, even in the greater context of an apparent global shift to the left. To call back to my first sentence in this paragraph, if I were being uncharitable, I would describe the idea as childishly naive.
However, I don’t think the situation is hopeless. In my opinion, Pokerstars current “monopoly” will inevitably crumble. They have no structural advantage over their main competitors (last time I checked) BwinParty and 888. Since Pokerstars was sold a couple of years ago, it basically comes down to Canadian public investors versus British public investors, and given the low friction between those markets I doubt there’s going to be anything between them basically. So at the minute it’s all down to Pokerstars’ better existing management, existing software IP, and their liquidity head start. Party and 888 can match their R&D and Marketing investment easily, as soon as there is an opportunity to make inroads into their market share. All that said, barring some outside factor, the path to equilibrium passes through a period of premium prices on Pokerstars whilst they reap the returns on their current competitive advantage.
Winter Is Coming
Which means that, unless something can be done, professional poker players will have to endure years of choosing between playing on sub-par software in small liquidity pools, risking their bankrolls in grey-market sites, or upping their game to beat the higher rake at Pokerstars.
A Tangent
Fortunately, something can be done to speed up the process. First, I will go off on a tangent: Not so long ago, Internet Explorer enjoyed a similarly large monopoly over the web browser market. Apple and Google (among others) put their weight behind a free open-source browser engine (webkit) that would form the foundation of both Safari and Chrome browsers. While this meant they were no longer able to one-up each other in terms of browser features, this sharing reduced a lot of the duplication of effort that would have occurred from them both developing in secret from one another. This allowed them to catch up and surpass IE in market share. This made economic sense because the browser is a *complement* to Apple’s phones and computers, and Google’s search engine, maps, and ultimately their Ads.
Every product in the marketplace has substitutes and complements. A substitute is another product you might buy if the first product is too expensive. Chicken is a substitute for beef. If you’re a chicken farmer and the price of beef goes up, the people will want more chicken, and you will sell more.
A complement is a product that you usually buy together with another product. Gas and cars are complements … For example, if flights to Miami become cheaper, demand for hotel rooms in Miami goes up — All else being equal, demand for a product increases when the prices of its complements decrease.
Paraphrased from this classic blog post: http://www.joelonsoftware.com/articles/StrategyLetterV.html
Apple and Google forewent the opportunity to compete with each other on browser features in order to make their browsers much better value as a complement to their other products[3]. Nobody sells browsers (although it did happen long ago), they’re given away for free, so to make them a better value complement to their other products, Google and Apple had to improve the quality.
Break Over, Back to the Table
Likewise, no online poker provider has ever charged anyone to download their software. The software is given away to get you to play their games, despite taking thousands of expensive programmer hours to produce. Hopefully it is easy to see where I am going with this: By commoditizing online poker software, by ceasing competition and collaborating in the largely invisible mechanics of shuffling virtual cards and coordinating stack sizes, and of synchronizing actions between remote clients, the rest of the field can close the gap to Pokerstars’ superior software much more quickly and differentiate themselves with their marketing, rewards and support. All major poker providers would have software at the leading edge of functionality, and a company with the resources of 888 could, for example, spend the money to hire a real superstar UX team away from a company like Apple to maybe push the boundaries and surpass Pokerstars in usability. It would also lower the barrier to entry for new providers and networks, enabling more competition.
As a side note, open-source poker software would also improve transparency, removing the possibility of Potripper-style superuser scandals and finally condemning the never-ending claims of rigged RNGs firmly to the realm of tinfoil-hat conspiracy-theorists.
A Plan of Action
As Samsung has shown with smartphones, it’s much easier to play catchup, and I think if an open source poker platform gains initial momentum, it could end up snowballing into something big enough to level the playing field with Pokerstars. However, I don’t expect any 2nd-tier online poker providers to immediately jump on board with this idea and start work on a new open source poker platform right away. Party, in particular, had just recently spent presumably a fortune and a *ton* of goodwill rolling out new software when I left the game, and it was fucking awful, a total disaster that I don’t imagine they will want to repeat. I think an implementation will have to already exist, and be at least on a par with 2nd tier providers in terms of functionality, before they’ll even consider it. Therefore, I imagine it starting small, as a community project. If this blog post gets any traction, I will start a kickstarter (or similar) campaign to fund a couple of months’ development of software under an open license such as Apache or MIT, and see where that leads.
tl;dr: Union/strike idea is dumb, pokerstars gonna pokerstars, maybe start an open source poker software client so that 2nd tier rooms can be a little more bearable and actually catch up one day soon.
[1] This analogy does not bode well for poker players <http://www.theguardian.com/business/2015/nov/04/tesco-deal-dairy-farmers-milk-price-protests>
[2] For the most part, employees are nominally in a collaborative relationship working together for the success of the company. Obviously, office politics are a thing and that’s not always how it goes
[3] As well as to free themselves from the possibility of Microsoft using their dominant position as leverage, as they have been wont to do on occasion
