Forex spreads on gaming sites

aroominyork

I posted this on the Gaming board but since it is a financial issue I'm not sure it'll get replies there. Given the knowledge of people on this, my usual board, I am trying here.

I play poker on PokerStars. Sometimes I win and withdraw funds, sometimes I lose and top up my account. Games are played in USD so my Sterling is converted into USD when I deposit or is converted from USD to Sterling when I withdraw. I worked out yesterday's forex rates and saw that when depositing they convert from GBP to USD at 1.18 but when withdrawing they convert USD to GBP at 1.25. That means a 5-6% spread is being levied. Is this a cost to PokerStars which they are passing on to us, or are they sneakily taking an extra profit?

MarkCarnage

They are taking an egregious and excessive turn on your money. I wouldn't accept that spread cost. They will be able to transact at way within that spread. Use an alternative provider or walk away would be my advice.Well actually walk away....but I don't play poker for money! And certainly not to be taxed on wins and losses in that manner! 

JezR

Their terms & conditions / FAQs contain the following:

"We are not a bureau de change (currency exchange). We are not responsible for any loss due to changes in exchange rate."

"Our exchange rates are updated throughout each day and it is the User's responsibility to check the applicable rates in our cashier before proceeding with transactions involving an exchange of currency. For deposits and withdrawals in most currencies, we will add a margin to the mid-market exchange rate provided by XE."

I guess you need to determine if there is a method available for UK customers to do depositing and withdrawing in USD.

DiggerUK

So, your gambling and getting back "less than you initially invested" Now your  8itching about how much the exchange rate is?!?!
Were is the face palm emoji when you need it

bowlhead99

DiggerUK said:

So, your gambling and getting back "less than you initially invested" Now your  8itching about how much the exchange rate is?!?!
Were is the face palm emoji when you need it

It seems entirely rational to query the exchange rates used to buy and sell dollars, whether they are being bought to participate in games internationally with people from other countries or to buy investments or other goods and services. 

Poker is a popular pastime. There are a large number of poor players who, over time, lose to the good players and suffer the house rake, but come back because they enjoy doing it. There are intermediate players who, over time, win money from the poor players and lose that money (and some of their own money) to the good players and the house rake, but enjoy themselves while doing it. There are some good players who win enough from the poor and intermediate players over time to reliably cover the house rake, but may not actually enjoy it so much as it is probably a chore grinding and folding for hour after hour while hoping your knowledge of player psychology and statistics will bear fruition without too much adverse 'luck'.

I don't know why any of those players should be entirely unconcerned about the high round-trip fees for buying and selling the dollar chips - surely no facepalm needed. The site will make a spread above the mid - market rates, some of which will be passed onto them by their bank/financial institution / currency broker (because businesses can't exchange money at mid market rates) and some of which will be a profit margin.

From the business's perspective it makes sense to discourage people from withdrawing (e.g. if it is likely they are going to be depositing again in the near future); giving back 80p for a dollar but charging 85p to buy a dollar is one way of doing it; it will obviously be cheaper to keep the dollars in your account with them until the next weekend you want to play, and in the meantime they hope you will be tempted to use those funds to pass the time during the week because you won't need to get your debit card out to do it. And having you play more is better for them because there are more live games available for other customers to join, and more house rake for them.  So, don't expect it to change. 

You would avoid the round trip fees if you didn't withdraw funds when you won, and then you wouldn't need to top up the account so often when you lose. But with larger balances more self-control is needed and money management / bankroll management is a key success factor for professional gamblers and traders alike. So being able to 'take money off the table' and a long way away from the table (e.g. to an external account) is important. If you have a dollar debit card or bank account it would obviously be better than suffering the fx fees. Or simply withdraw to, and pay from, an online wallet denominated in dollars (e.g. Neteller) though such accounts are not entirely free of fees (including fx fees) and risks.  

DiggerUK

Gambling is irrational. All it satisfies is a flirtatious fantasy that you may get back more than you invest. A very populist nonsense..._

bowlhead99

DiggerUK said:

Gambling is irrational. All it satisfies is a flirtatious fantasy that you may get back more than you invest. A very populist nonsense..._

I suppose reading stories or watching movies are similarly irrational as they cost you time or money while providing some escapism, and hobbies such and playing football or racing go-karts are to be avoided because although you hope to win you might lose - and the adrenaline rushes, though enjoyable, may be bad for your health. Most kinds of popular recreation would similarly be 'populist nonsense' in your world.  

I guess it's just the case that some people like to sit in their palace of gold with their mortgage paid off and hope they create offspring that can do likewise, while others spend their time and money doing things they might enjoy

DiggerUK

Stop waffling, I'm trying to check my lottery ticket..._

Rudyson

Why not use a site that lets you play in GBP?

coyrls

Rudyson said:

Why not use a site that lets you play in GBP?

I've been told that it's easier to win money off Americans because there are more "casual" players there.

aroominyork

coyrls said:

Rudyson said:

Why not use a site that lets you play in GBP?

I've been told that it's easier to win money off Americans because there are more "casual" players there.

I might look for other sites but I like PokerStars for reasons I won't bore you with. Re Americans, coyrls, that might been true once (and I know people who would log on when it was late night in the US to play against drunk and loose Americans) but the US banned online poker during Obama's time. I think it was because they could not tax foreign operators so a clause somehow got tacked onto some legislation about shipping.

Bowlhead's excellent post got to the nub of my problem - it's about bankroll management. I play $15 max Sit & Go games and tend to withdraw when I have about $150 in my account. That suits me well. I want to avoid the temptation to play more loosely or for higher stakes just because I have a deeper bankroll.