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Hollreiser: Reports on Poker’s Demise are Highly Exaggerated
Eric Hollreiser is the Vice President of Corporate Communications for the world's largest poker site, PokerStars, and its owners, Amaya, Inc.
He's been an integral part of PokerStars' internal and external communications since 2011 and played a key role in maintaining its commanding market-leading position in the poker world and beyond.
Lately, though, the impeccable reputation and goodwill among poker players built up by the previous owners, the Rational Group and the Scheinberg family, has seen a few scratches.
Principal among them were the abrupt changes to its rewards program and how they were communicated and the introduction of casino games into the previously poker-exclusive software.
Since, a steady change in philosophy towards recreational players over professionals has kept the heat on the PokerStars executive team from deep in the "poker community."
Are the changes unfair? Has PokerStars taken a direct turn away from the very players who made them into a global powerhouse? Are complaining players exaggerating?
To understand how it got there we need to understand its measures so during the PokerStars Championship Bahamas PokerListings sat down with him to talk about the state of the company.
PokerListings: After you joined PokerStars in May 2011 the company started acting much more publicly. Why did you pick that marketing strategy?
Eric Hollreiser: At the time, the Scheinbergs recognized that PokerStars needed to become more public. Companies needed to become more transparent.
Consumers want to know more about the companies they’re doing business with. One of the hallmarks of PokerStars has always been that we communicate with the players, and always have since day one.
For example we get 12,000 emails per day from players and we answer them in 23 languages usually within an hour.
Likewise the amount of advertising we do is higher than any other company in the world of poker. So it’s not that communication started with me getting in, but the way of communication has changed.
This has to do with the necessity to acquire licences and with regulations in different countries, among other things. It was basically a business rationale.
But PokerStars used to be a private company. Now, as Amaya, we’re a public company with different obligations and different realities.
Arguably, people now know a lot more about how we’re doing because we have to report our numbers to the shareholders on a quarterly basis.
Recent changes that we had to make are based on business realities and on changes in the industry. But I think we’re still holding true to our principles from five or 10 years ago.
PL: There’s a general notion that the number of online players has been going down. Is this a reality?
EH: I wouldn’t say that databases like PokerScout are unreliable, and they’re not purposely misleading, but they only look at a part of the player traffic, which is cash games.
The reality is there is a trend to go away from cash games towards tournaments and faster, quicker games. In absolute numbers we haven’t seen a decline.
Please check our quarterly statements where we give the number of active players. The numbers show us that at least on PokerStars we’re not losing players.
I would generally argue that reports on poker’s demise are highly exaggerated.
PL: One of the reasons cash-game players have quit is tracking software. Should there be a general ban?
EH: We want the games to be as fair as possible. Poker has to be a game played human to human, so when someone gains an edge that isn’t holding true to our belief, it has to be stopped.
However, it’s really hard to say where that line is crossed, which is why it’s so tough to make a general statement about software. It’s difficult to make a rule when you can’t enforce it. In fact, if you can’t enforce it, is it even a rule?
It’s comparable to doping. Doping has been banned from all major sports. Similarly some software is very difficult to ban, and there’ll always be people who find a way around bans.
PL: PokerStars used to be this immaculate poker site. Why would you add casino games?
EH: The fact of the matter is that poker players enjoy casino games -- at least a significant percentage does.
Even though our player base is poker players we have become the largest online casino in the world in terms of unique players.
There has been concern - and some of it very valid - about casino. But PokerStars is still the same, great poker-first poker site.
We introduced casino because we saw that poker players play casino games on other sites. As a commercially driven company, of course we’re looking to gain that dollar rather than have it go to our competitors.
The same applies to sportsbetting but the sentiment is very different because poker players like to bet on sports and to talk about it.
PL: They would probably argue that there’s more skill involved.
EH: Exactly. Yet, the vast majority of live poker is played in casinos so there’s always been a connection between poker and casino.
We handle casino in a very responsible way. If someone doesn’t want casino to be marketed to them, we do everything we can not to show them this or that promotion.
Like every smart business we listen to our customers.
PL: Yet, roughly since the takeover by Amaya, it seems there’ve been a lot of cuts. Offices were closed, people left the company.
EH: I can tell you that under the Scheinbergs PokerStars was always looking for ways to be more efficient and to deliver more value back to the business and the shareholders.
We did that as a private company so things weren’t seen in the same way. But I’ll also tell you that we started casino before the Amaya takeover, so that began under the former ownership.
Now, the business imperatives were very real. There were some underlying trends in the business that we identified and they started years ago. Long before Amaya took over.
The changes that you’ve seen had to be made. While it’s convenient – and true – that most of these changes came after Amaya took over, that doesn’t mean they wouldn’t have happened otherwise.
PL: Is PokerStars trying to become a leaner company?
EH: Not necessarily leaner. We have more employees now than we've ever had. The reality is if you go into new games, you need expertise.
Yes, we’ve probably had larger numbers of redundancies than in the past. We tried to move people into areas where we need more and we reduced where it didn’t make sense to keep people -- either because there are things we’re not doing anymore or because we found more efficient ways of doing them.
It’s a fact that some of the changes are not in the best interest of some individual players. But that doesn’t mean from a business imperative perspective that we shouldn’t do it.
It’s also a fact that Doomsday predictions aren’t coming true. The number of poker players is not going down.
It’s true that the amount of money some players are making has gone down. But by the measures that we have and know, the changes put into effect have had positive impacts in our ability to run the site.
PL: Yet, some changes have hurt the reputation of PokerStars. One is the cut of the bonus program, eliminating the Supernova Elite level. Are people correct when they complain that PokerStars is cutting down on the players who produce the most revenue?
EH: There are several things in there. There’s a healthy debate on who’s your most valuable customer. You might think that someone who’s playing high volumes like a Supernova Elite is the most valuable player.
However, that’s not necessarily true. We like all of our players and want them to be as successful as they can in a competitive game, but the VIP rewards were always just that: rewards.
Companies usually reward customers for behaving in a way that benefits the business.
We know that for some time we didn’t bring enough new players into the game. So, even though the total number of players wasn’t going down, the number of VIP players was going up.
That means there are more players getting better and making the games more challenging - which is ok, that’s an organic development - but also receiving more rewards.
As we were effectively rewarding them in cash we were incentivizing them to continue doing something that was ultimately difficult for the business because what we were spending on them we couldn’t spend on bringing new players into the game.
It was also because there were many instances where people were playing just for the rewards. That’s not what the rewards were for.
PL: You’re talking about the grinder who lives on the rakeback.
EH: Right. Now, there will always be people who play high volumes because they figured out a way to get the amount out of poker they want. We’d like to see more people doing this based on winning instead of volume.
We don’t necessarily want new players to play high levels because they would get eaten up quickly, have a bad experience and not come back.
For a healthy environment we’re striving to have a steady influx of players because that will also ensure that there can be people who make a living playing online poker.
PL: It seems that this wasn’t communicated in a way that players understood, based on the response.
EF: I think that’s fair. I won’t give any excuses for something that was poorly communicated, but I will say that we were a new company working in a new environment.
In the past we’ve been great at communicating with the players. We have to now take into consideration the obligations of a public company and how that impacts what and how we communicate.
We’re still learning that and we’re still getting better at it. I would go back and change many things in how we communicated changes, in hindsight, but what we did was what we did and the fundamental reasons for doing it remain the same.
I don’t want to sugarcoat things. There are business imperatives and raising prices is something that companies do every day. Shareholders expect you to grow.
If you look at the things we’ve been doing, we’re not an anomaly. And it’s not like we’re the most expensive place to play. There are players who are understandably upset about it but we’ve been one of the last sites to do some of these things.
PL: Another thing that’s looking a bit odd is the question of the PokerStars ownership. Amaya, David Baazov, Baazov stepping down, then taking part in a bidding war, and then taking back his offer. What’s happening there?
EH: The status right now is this: There was a strategic review process where the Board of Directors looked at the best options for the company going forward that were in the interest of the shareholders.
That was sparked by our single largest shareholder, who also happened to be our CEO, who also wanted to buy the rest of the shares and take the company private.
The board agreed to listen to what he had to say but also said it’s in the shareholders' best interest to see if we can get a better deal than what he was offering, which was $21 dollars per share.
So, as part of good governance, the board launched a strategic review and invited people to look at the company. There were quite a few coming in expressing their interest.
We got into advanced discussions with William Hill, for example, although these were stopped at some point. Eventually, David Baazov said we’re taking the “for sale” sign down again so now we’re not actively searching for offers for the company.
Nevertheless, David came out and said he had people interested in buying the company for $24 a share, and as a publicly traded company you have to listen to a serious offer.
Now that bid has been withdrawn again and we’re again not actively pursuing offers.