The PokerStars VIP club awards frequent player points (FPPs) for raked hands and tournaments, and FPPs are redeemable for cash. Thus the VIP player receives compensation for rake payments. The purpose of this writing is to analyze the numbers behind PokerStars rake compensation.
PokerStars VIP Program Value Summary
Players at PokerStars are all included in the VIP Program, which provides a range of benefits that have real tangible value. This report analyzes the value of those benefits within the context of rake payments to determine the total rake compensation that players receive. Tangible benefits of the VIP program consist of:
- Frequent Player Points (FPPs): Players earn FPPs for playing in real money tournaments and cash games. These points can be redeemed for merchandise, tournament buy-ins and cash bonuses in the PokerStars Store. VIPs in the program earn these points at an accelerated rate.
- Freeroll tournaments: On a weekly and monthly basis, PokerStars hosts free tournaments with cash prizes. Tournament entry is based upon a players’ status in the VIP program.
- Supernova Milestone Bonuses: At the top two tiers of the VIP program, Supernova and Supernova Elite, players qualify for a sequence of cash bonuses. Supernova Elites also qualify for entries into land-based tournaments.
Each of these components will be discussed in detail later in this report, including specifics on how the value and rake compensation are calculated. In summary, players will receive a total rake compensation based upon their status in VIP program as shown in Table 2 below.
Table 1. PokerStars VIP Levels
|VIP Levels||VPPs Required|
|SilverStar||1,500 per month|
|GoldStar||4,000 per month|
|PlatinumStar||10,000 per month|
|Supernova||100,000 per year|
|Supernova Elite||1,000,000 per year|
Effective Rake Comparison with other poker networks
- PokerStars: Rakeback contribution is available to all players – new and existing
- PokerStars: Effective rake back varies by VIP level.
- Other networks: Rakeback is only available to new players via an affiliate deal
- Other networks: Rakeback is frequently less than the % advertised as any earnings through freerolls & bonuses are deducted as well as transaction fees.
Table 2. Rake Compensation Summary
|Player Status||10-Max FL ($1/$2)||10-Max FL ($2/$4)||10-Max FL ($5/$10)||9-Max NL ($1/$2)||9-Max NL ($2/$4)|
|Supernova2 200K -299K||71.0%||48.8%||40.3%||40.4%||31.7%|
|Supernova3 300K – 399K||76.1%||52.3%||43.2%||43.3%||33.9%|
|Supernova4 400K – 499K||81.2%||55.8%||46.1%||46.2%||36.2%|
|Supernova5 500K – 599K||86.3%||59.3%||49.0%||49.2%||38.5%|
|Supernova6 600K – 799K||89.6%||61.6%||50.9%||51.1%||40.0%|
|Supernova7 800K – 999K||92.7%||63.7%||52.6%||52.8%||41.4%|
|SN Elite 1 M||150.3%||103.3%||85.4%||85.6%||67.1%|
|Player Status||9-Max NL ($5/$10)||6-Max NL ($1/2)||6-Max NL ($2/$4)||6-Max NL ($5/$10)||Tourn Play|
|Supernova2 200K -299K||34.8%||31.9%||26.8%||28.9%||38.3%|
|Supernova3 300K – 399K||37.3%||34.2%||28.7%||30.9%||40.7%|
|Supernova4 400K – 499K||39.8%||36.5%||30.6%||33.0%||43.2%|
|Supernova5 500K – 599K||42.3%||38.8%||32.6%||35.1%||45.7%|
|Supernova6 600K – 799K||44.0%||40.3%||33.8%||36.4%||47.3%|
|Supernova7 800K – 999K||45.4%||41.7%||35.0%||37.7%||48.8%|
|SN Elite 1 M||73.7%||67.6%||56.7%||61.1%||68.4%|
Ring Game Player (Silver to Platinum): FPP value = $0.015
Ring Game Player (Supernova and Supernova Elite): FPP value = $0.016
Tournament Player: FPP value = $0.016
Freeroll Equity: We add full freeroll equity to tournament players and 50% to ring game players.
The dollar value of an FPP depends on the item that one is purchasing from the VIP store. For instance, the $4,000 Supernova bonus costs 250,000 FPPs. Therefore each FPP is worth $0.016 for the Supernova cash bonus. Cash bonuses for lower VIP levels yield a lower FPP value, whereas many gift certificates and higher-FPP items give much greater value. For example, a $10,000 direct buy-in to the 2008 WSOP costs 590,000 FPPs – or $0.0169 per FPP. Another example is the popular $1M Turbo Takedown which has 5,000 FPP buy-in and 12,000 max players, or $0.0167 per FPP when it reaches maximum entries or more when it doesn’t. The value of FPPs used to purchase most gift certificates, travel vouchers, and electronic goods range between $0.015 and $0.017.
Based upon their direct purchasing power, we will start by assigning an average base worth of $0.015 cash value to each FPP for cash game players below Supernova and $0.016 for Supernova.
Tournament players can use their points for direct tournament buy-ins at an average rate of $0.016 and this is the base worth used when calculating returns for these players.
Players also derive value from VIP tournament equity1 . PokerStars holds regular tournaments with free or reduced entry for VIP club members. The tournaments for which a player is eligible, as well as any applicable buy-in cost, depend on VIP level. The equity one receives from playing these freerolls contributes to the overall VIP program value, which can be allocated to the FPP value as described below.
The process of quantifying VIP tournament equity requires assumptions such as: (a) The player earns a mid level of VPPs for his particular VIP level up to GoldStar; (b) The number of entrants is similar to the current average; and (c) The player takes full advantage of VIP tournament equity by playing in each tournament for which they are eligible. This latter assumption is crucial since players only benefit from the freeroll equity component of rake compensation when they actually play in the tournaments. Therefore the numbers presented below are for those players who take advantage of available freeroll equity. While not many players will play in every VIP freeroll there are other additional high value promotions for the VIP players during each year that more than compensate for missing some of the freerolls.
For the methodology used to quantify the tournament equity contribution to FPP value, as well as the calculated numbers for each VIP level, please see the Appendix. Note that only 50% value is applied to ring game players – it is assumed that they do not partake in all freerolls and as such do not receive full equity.
Determining Percentage Rake Compensation
To determine compensation per dollar contributed to rake, we use the formula:
Rake Compensation =
- VPPs/$Rake = Number of VPPs that PokerStars awards for every dollar of rake contributed. This value will depend on the game and stakes played.
- FPPs/VPP = Number of FPPs awarded for each VPP the player earns. Players are awarded more FPPs per VPP in accordance with VIP level.
Table 3: FPPs awarded per VPP
(please see http://www.PokerStars.com/vip/rewards/benefits/)
- Bonus cash value $= Cash value of an FPP.
- Tournament Equity$= Expected value obtained through VIP freerolls
- Rake Compensation = Total Money awarded by PokerStars per dollar paid in house rake
Here is an example of the rake compensation equation. Suppose you earn an average of 7 VPPs per $1 rake contribution. (We will discuss how to determine VPPs earned per dollar rake in the following sections.)
You are a SilverStar and therefore receive 1.5 FPPs per each VPP. The base worth of this player’s FPPs is $0.015. In addition, if you are a ring game player your tournament equity is estimated at (see appendix) $0.002052. This gives a total value for each FPP of $0.017052
Since you receive 10.5 FPPs per $1 raked, your total rake compensation is $0.1791
or 17.9 percent.
Our approach is to calculate VPPs/$Rake and then plug into the equation. We will do this individually for: (a) Tournament Play, (b) 10-Max Cash (FL), (c) 9-Max Cash (NL) and (d) 6-Max Cash (NL).
Note that PlatinumStar, while presented as a separate category than Supernova, leads directly to Supernova benefits without increased playing volume. Those who earn VPPs at the Platinum level will automatically become Supernova some time within a 10 month period.
It is also essential to note that this formula does not take into account the milestone bonuses for Supernova and Supernova Elite which add significantly to rake compensation at those levels. This will be addressed later in this paper.
VPPs/$Rake is 5 (or higher) for tournament play; tournament players who always use their points to buy into tournaments earn $0.016 per FPP. Using the rake compensation equation as done before, we get the following table for tournament rake compensation:
Table 4: Tournament Rake Compensation for each level of the VIP Club
VIP Club Level
By “rake compensation,” we mean total equity given to the player as a percentage of rake paid, not including the value of Supernova and Supernova Elite milestone bonuses. This has the dual components of cash value and VIP tournament equity.
Here is an example of sit ‘n go (SNG) rake compensation. A base Supernova player (one who has earned no milestone bonuses) plays one $55+$5 buyin SNG. PokerStars awards him 25 VPP. He therefore receives 87.5 FPP (5 FPPs per dollar rake times 3.5), each worth $0.020497 ($0.016 cash plus $0.004497 tournament equity, as calculated in the appendix). The total equity compensation he earns is therefore $1.7935, which is 35.9% of his initial $5 rake payment.
Now we will plug these numbers into the rake compensation equation to illustrate this process.
- VPPs/$Rake = 5 (constant value for tournaments)
- FPPs/VPP = 3.5 (constant value for Supernova players)
- Bonus Cash Value $= $0.016 (for tournament players)
- Bonus Tournament Equity $= $0.004497 (for Supernova players)
And so in equation form we have:
Cash Game Play
This portion of the report is divided into two subsections, one for low-stakes fixed limit, and another for all other 10-handed cash games.
10-max Fixed Limit $1/$2
The maximum rake at these low stakes is $1, giving 10 players 1 VPP each for their average $0.10 contribution. This suggests a VPP/$Rake of 10. This figure of 10 will be exact for $1 raked pots, those of $20 and higher. However, the exact number of VPPs per dollar rake may vary depending on the size of the pot and number of players in the hand. For instance, table rakes of $0.40 also give 10 players 1 VPP each resulting in a substantial 25 VPP/$Rake. Pots with small rakes under $0.40 are however not awarded any VPPs.
We will use the average of 10.34 VPPs/$Rake (based on more complex calculations and confirmed by the review of a large data bank3), which gives us the following table:
Table 5: 10-man low-stakes limit cash rake compensation for each level of the VIP Club
VIP Club Level
10-max Fixed Limit $2/$4 and $5/$10
Similar calculation (estimate provided by PokerStars) results in the average of 7.11 VPPs/$Rake for $2/$4 10-max limit and 5.87 VPPs/$Rake for $5/$10 limit. That gives 18.2% and 15.0% rake compensations in these limits for SilverStar players.
9-max No-Limit, $2/$4
Pots hitting the maximum $3 rake will give 9 players 2 VPPs each for their $0.33 average contribution, yielding a VPP/$Rake figure of 6. However due to varying rake amounts and seated players the average VPPs per $1 rake equates to 4.61 (estimate provided by PokerStars)
Using the 4.61 VPP/$Rake approximation, we have the following results:
Table 6: 9-man Cash Rake Compensation ($2/$4 NL) for each level of the VIP Club
VIP Club Level
9-max No-Limit $1/$2 and $5/$10
We calculated the average of 5.89 VPPs/$Rake for 9-max $1/$2 NL and 5.07 VPPs/$Rake for $5/$10 NL. That gives 15.1% and 13.0% rake compensations in these limits for SilverStar players.
In 6-max cash games, $2 in table rake offers 6 players 2 VPPs each thus awarding players 6 VPPs/$Rake. Pots with the maximum $3 in table rake drop to 4 VPPs/$Rake, however, and those with rakes under $1 do not qualify for VPPs.
In this rake compensation table, we will use 4.65 VPPs/$Rake which is the average for 6-max $1/$2 No Limit games (again provided by PokerStars).
Table 7: 6-Max Cash Rake Compensation for each level of the VIP Club
VIP Club Level
Calculations show the average of 3.90 VPPs/$Rake for 6-max $2/$4 NL and 4.20 VPPs/$Rake for 6-max $5/$10 NL. That gives 10.0% and 10.7% rake compensations in these limits for SilverStar players. Note that while 6-max games give less compensation players collect VPPs faster in these games and thus reach higher VIP levels faster than in 9-max or 10-max games.
PokerStars VIP Club vs. Conventional Rakeback
Traditional rakeback is a percentage of rake that players have refunded after playing, often around 27% depending on the offer provided to the player. At the majority of rakeback providers, it is customary for rakeback to be reduced by any bonuses that the player earns, including deposit bonuses, and usage of a point currency in the site’s “store”. In addition, they normally take out for money processing fees. Players with existing accounts are usually ineligible to receive rakeback. This penalty is most severe for sites that do not allow the user to create a new account, permanently locking them out of rakeback. A significant benefit to PokerStars’ rake compensation is that all players receive FPPs automatically, and additional benefits/bonuses earned do not count against this rake compensation.
Also, it should be noted in general that higher rakeback is not automatically a benefit if the player pays a higher rake in the first place. Rake that the player does not pay is equivalent to 100% rakeback. For instance, a site that charges $1 rake on $5 tournaments with 40% rakeback is inferior to a $0.50 rake offer with 0% rakeback. For instance, those who pay the 6.7% rake for Stars $15+$1 sit ‘n go tournaments receive above-market value regardless of FPP redemption.
Supernova and Supernova Elite Milestone Bonuses
Supernova and Supernova Elite players are eligible for additional “milestone” bonuses based on VPP accumulation. Supernova players may cash in 50,000 FPP – an amount nominally worth $800 cash – for between $2,000 and $8,000 as they progress toward Supernova Elite. There are six such milestone bonuses for Supernova players. Supernova Elite players are eligible for eight milestone bonuses of higher value ($10,000 and $20,000), and are also awarded buy-ins for two major live events. The complete list of milestone bonuses is shown in Table 8 below.
Table 8: Supernova and Supernova Elite Milestone Bonuses and their FPP values
|Minimum Yearly VPPs Acquired||Bonus||Cash FPP Value of Bonus|
This represents the value of the land-based tournament packages (such as to the WSOP Main Event, or the EPT Monte Carlo) and WCOOP awarded to players upon achieving Supernova Elite (the range is between $25,200 to $36,700). No FPP need be used for these entries, but for the purpose of calculation we are assuming 1 FPP is exchanged with a cash FPP value of $31,000 (average value).
These bonuses serve to substantially increase rake compensation for the two highest tiers of the VIP club. We may quantify this increase by using weighted averages. Here is an example. A player who earns at least 200,000 VPP in a year is eligible for a $2,000 bonus costing 50,000 FPP. Used to purchase a milestone bonus, these FPPs have a cash value of $0.04/FPP, well above the usual cash value of $0.016/FPP.
A Supernova earning 200,000 VPP will receive 3.5x as many FPP, or 700,000 FPP. 50,000 of these FPP are redeemable at $0.04/FPP, and the remaining 650,000 are redeemable at $0.016/FPP. We weight these two different FPP values by the proportion of FPPs for which the value applies:
Average Cash FPP Value = $0.1771
The $2,000 bonus makes the cash FPP value for this player at exactly 200,000 VPPs increase from $0.016 to an average of $0.1771.
The general formula is:
e.g. SuperNova1 at exactly 200,000 VPPs
200,000 VPPs = 3.5 * 200,000 = 700,000 FPPs
e.g. SuperNova2 at exactly 300,000 VPPs
300,000 VPPs = 3.5 * 300,000 = 1,050,000 FPPs
We will assume that a player reaching one bonus level has actually made it halfway to the bonus level beyond. For instance, a player who earns the $2,000 bonus (and no higher) could earn anywhere from the minimum 200,000 VPP required to hit this bonus, to anywhere below the 300,000 VPP that would get him to the next bonus level. We assume that such players actually make it to the halfway mark between bonuses, or 250,000 VPP in this case.
Notice that all Supernova Elite players receive the Supernova milestone bonuses as well en route to becoming Elite. We did not quantify these milestone bonuses earlier in the report.
e.g. SuperNova2 at exactly 350,000 VPPs
350,000 VPPs = 3.5 * 350,000 = 1,225,000 FPPs
The tournament equity $/FPP also changes due to the modified VPP assumptions, as detailed in the Appendix. As the freeroll equity is a constant value for Supernova and Supernova Elite (approximately $260 per month, or $3,120 per year), regardless of VPPs earned beyond 100,000, the equity $/FPP decreases as players earn more FPP. This effect has been included in Table 2.
Other Financial Benefits for PokerStars VIP Players
The above analysis does not quantify all VIP club benefits.
Such additional benefits include extra tournament equity in conjunction with many of the major live events. Recent examples include 5 EPT seats in February 2008 and 21 WSOP seats for March 2008, in addition to the guaranteed freerolls. Note that 21 WSOP packages corresponds to $262,500 in additional value.
Weekly, monthly, and yearly MTT leader boards offer additional rewards as well, as does the recently-added sit ‘n go leaderboard. These two leaderboards offer more than a combined $300,000 of additional cash bonuses each month.
From time to time PokerStars is also running 2x VPP promotions, when players earn double VPP and double FPPs receiving both more immediate value and progressing faster to the higher VIP levels. A recent promotion with 2x VPP was for a full week in July 2008.
Let us conclude by looking at how the rake compensation in the above tables compares to traditional rakeback of 25-30% (minus the fees discussed above). We continue to assume that the player redeems his FPPs for a cash equivalent, and also takes full advantage of VIP tournament equity if the player is a ‘tournament’ player and a partial advantage if the player is a “ring player”.
Tournament rake compensation is much higher for Supernova and Elite players, on par for Gold and Platinum players, and lower for Silver players.
Rake compensation for fixed limit 10-max cash game play is lower for Silver, on par for Gold, higher for Platinum, and much higher for Supernova. In the $1/$2 limit, the compensation is much higher for all VIP levels.
Rake compensation for no limit 9-max and 6-max cash games varies across levels, with Supernova being either on par or higher, Elite much higher, Platinum slightly lower, and Gold and Silver lower than traditional rakeback.
In conclusion it’s clear that the PokerStars VIP program is designed to encourage players to spend more of their playing time on PokerStars to achieve a higher VIP status, where they receive some of the highest rewards in our industry. But if you are only a medium volume player, your rake compensation is still on par with other leading sites, plus the opportunity to move to the highest level is always available.
Appendix: Quantifying Freeroll Value
As we stated above, the VIP tournament equity contribution to FPP value pertains to all those who elect to take advantage of this form of rake compensation. There are three main VIP tournaments that occur regularly: (a) The $20k weekly, (b) The $50k weekly, and (c) The $100k monthly.
The average number of entrants for each of these tournaments in June (May/June for monthly tournaments), as supplied by PokerStars, is 3662, 961, and 5155, respectively. Thus the $20k weekly gives $5.46 in equity; the $50k weekly gives $52.03 in equity; and the $100k monthly gives $19.40 in equity.
Subtracting the equivalent cash value of FPP buy-in costs, the following table represents net tournament equity gain for each VIP level per month.
Table 9: Freeroll Equity for each VIP Level
|Tournament||Player Type||SilverStar Equity||GoldStar Equity||PlatinumStar Equity||Supernova Equity||Supernova Elite Equity|
|$20K Weekly||Ring Game Player||$3.96||$3.96||$3.96||$3.86||$3.86|
|$50K Weekly||Ring Game Player||$-||$29.53||$38.53||$52.03||$52.03|
|x 4.3 weeks/month||Ring Game Player||$17.03||$144.01||$182.71||$240.33||$240.33|
|$100K Monthly||Ring Game Player||$-0.10||$19.40||$19.40||$19.40||$19.40|
|Monthly||Ring Game Player||$16.93||$163.41||$202.11||$259.73||$259.73|
|% of Equity Taken||Ring Game Player||50%||50%||50%||50%||50%|
|Total Equity||Ring Game Player||$8.47||$81.70||$101.05||$129.86||$129.86|
You will notice that there is varying equity between the difference VIP levels in events excluding the weekly $20k – this is due to the different FPP cost required to satellite into the events. E.g. a Gold satellite awards 1 seat to the $50k weekly per 1,500 FPPs collected whilst 1 seat is awarded per 900 FPPs collected in the Platinum satellites. These FPPs are valued at $0.016 as per the cash bonus value of FPPs for all tournament players and all Supernova players, and $0.015 for Silver to Platinum ring players.
To put these numbers in the form of percentage rake compensation, we make the following assumptions regarding VPPs earned per tournament participant each month (assuming the mid point of the VIP level instead of upper level).
Table 10: Monthly VPP Accumulation Assumptions
|VPPs Earned||Assumed Monthly VPP Accumulation|
|Supernova||100k per year||16,500 per month|
|Elite||1M per year||100,000 per month|
Notice that the more VPPs earned, the less the % rake compensation. This is because a larger number of VPPs will now be purchasing the same amount of freeroll equity.
For Supernova and Supernova Elite, we chose figures such that any higher accumulations for the player would be in a milestone bonus category. So these numbers reflect conservative estimates. For Silver, Gold, and Platinum, we took the mid-point between the minimum possible requirement and the next higher category.
Lastly for the milestone bonus at higher Supernova levels, we simply divided the assumed yearly VPP accumulations by twelve to get a monthly figure.
(The reader should perform his own analysis based on individual VPP accumulation levels, as well as actual number of VIP freerolls played when less than the maximum.)
We then converted VPPs to FPPs to get additional dollar compensation per FPP earned:
Table 11: Freeroll Tournament Equity Dollars per FPP earned
|Extra equity for tournament players||Total equity
For tournament players
|Extra equity for ring players||Total equity
For ring players
For clarity, here are some sample calculations for the SilverStar player.
Ring Game SilverStar
In the calculations in this report, these numbers were added to the cash $/FPP figures to get a net cash total equity value for each FPP.
1 Tournament equity is a player’s “rightful share” of a tournament prize pool, calculated by dividing the total prize pool by the number of entrants. For instance, if 100 players enter a freeroll with a prize pool of $1000, each player’s equity is $10.
2 This is calculated based on a bonus value of $0.016 per FPP and does not include milestone bonuses for Supernova and Supernova Elite players.
3 PokerStars provided us with average numbers of VPPs/$rake for the ring games limits that are used in this paper. These averages are taken over a large number of actual hands played on PokerStars. Note that these averages include all hands in a specific limit and type. So for 10-max $1/$2 Fixed Limit games 10.34 VPPs/$Rake includes all hands that were played on 10-max tables during defined period with 10 players, 9 players, 8 players, and so on.
4 This does not include milestone bonuses for Supernova and Supernova Elite players.