Author: PokerStars Steve, Source: 2+2
• All rake increases announced in October, except for Spin & Go changes, are cancelled effective immediately.
• VPP multipliers will be reduced within the next few months for players in several additional countries where VAT and/or Gaming Duty are payable. These players will be informed directly in the coming days.
• At some point in the future, we may deploy rake surcharges for countries that charge gaming duty or VAT. We will not do so before July 2015 at the earliest, and we will maintain our policy of passing on no more than half the tax to players and absorbing the rest ourselves.
• Other than this, we will not implement rake increases in 2015.
• The above apply to PokerStars.com and shared liquidity, not for our segregated sites in Italy, Spain, or France.
Rake change rollback
We announced several rake changes on October 29th, 2014. The changes to Spin & Go rake will remain as implemented on November 3rd, 2014. All other rake changes announced in October, including those not yet implemented, are cancelled. As many of you have noticed, the rake rollback has already been fully deployed.
We will not implement any additional increased rake in 2015 other than possibly in jurisdictions where we experience gaming duty or VAT as described below.
VPP multipliers for taxed countries
Within a few months we will reduce the VPP multipliers for some countries that are subject to gaming duty or VAT but that do not have their own software clients. We will deploy the change as soon as we are technically able, likely within the next two months.
These changes will be enacted consistent with our previously communicated policy of sharing up to 50% of taxation with players. VPP multiplier reductions have already been implemented previously in other taxed markets including Denmark and Belgium.
Adjusting rake and rewards due to taxation
For our segregated markets of Spain, Italy, and France we use varied combinations of higher rake and lower rewards as we aim to pass on half of the tax cost to players. For shared liquidity we have thus far only adjusted for tax increases by lowering rewards. The primary reason is the technical challenge in charging different rake or fees for different participants in the same game. As a result, to date we have passed on substantially less than half of the tax.
Reducing rewards by 10%, for example, does not cover half of a 20% tax. Tax is generally calculated based on rake/fees generated, not rewards. Consider a case where a player pays $10 in rake and earns $3 in rewards. If we are taxed 20% of revenue, that is $2. If we pass half on to players, that is $1. In order to reduce rewards by $1 out of $3, we would have to reduce rewards by 33%, all to pass on half of a 20% tax. These numbers are just examples to make a point, not figures from any particular market.
More and more countries are introducing taxation, increasing the impact on our business. As a result, we plan to develop the ability to charge different rake/fees for different players within shared liquidity.
Rake increases will be paired with the existing VIP Reward reductions, so significantly less than half of the tax will be passed on through rake increases. As an example, a player in a country with 20% tax would expect a rake surcharge of significantly less than 10%.
We may not implement such charges this year, but if we do it will be in the second half of the year.