Ever wonder how do casinos make money off of poker?
This isn’t as weird of a question as you might think. If you’ve ever been in a casino, you see plenty of games in which people are playing against the house, and the house usually wins. It makes a kind of simple sense that the house is pulling in money there.
In poker, though, the house doesn’t generally have a stake. Players are playing against one another, and the house isn’t taking anything from them. Poker games don’t seem, at least on their face, like the kind of thing that would make any casino much money.
With that said, poker rooms are a staple of the casino world. They’re in every major casino and in most minor casinos, and they’re certainly not cheap to run. How, then, does the house not only afford to host poker games and poker tournaments but how does it make a profit?
The answer’s simple: The Poker Rake.
The poker rake is a time-honored part of the poker world. It’s built into the poker rules of most casinos and online games, it’s factored into the winnings of most Texas Hold’em poker tournaments in the form of a fee, and it’s something you need to understand if you’re going to afford to play poker.
The poker rake is, in short, the money that the casino takes from players before and during the game. It’s your entrance fee, and understanding it will help you to figure out what tables are actually within your price range.
The Basic Poker Rake
The most common type of poker rake is a fee that’s generally looked at as a commission. You might want to think of it as a tax on the pot, and it runs somewhere between two and ten percent depending on the casino.
You’ll see an awful lot of variants on the poker rakes when you play in Texas Hold’em poker games. After all, this isn’t just how the casino or game room turns its profit – it’s literally the only way it can afford to keep poker games running. It’s paying for everything from rent to dealer salaries, and it’s a vital part of the process.
You also need to think of this as part of your overall poker strategy. You might not be playing the house, but you’re still watching the house take your money. You’ve got to factor that into how you play any given poker hand in a game.
How The Poker Rake Works
So, how is a poker rake actually taken from a game? There’s a few answers.
The most common is, as stated above, a straight percentage taken out of the pot. There’s often a maximum amount of money that can be taken from any given pot, but you’re still working on a percentage basis.
If you’re playing live, the dealer’s probably going to literally take the chips out of the pot while your poker hand is being played. These chips will be put aside in a lockbox and then put into the take later. Online, the software’s just going to take care of this manually automatically, often notifying players as it’s done.
It should be noted that in most Texas Hold’em poker games, there’s not usually a rake if there’s no flop. No flop, no drop games simply revert the blinds back to the winner and the game moves on without the dealer taking any money.
In a few odd situations, you’ll see another type of rake called a deep drop. This happens when a player with the dealer button has to throw in the commission before cards are dealt. Every player will get hit with this, and the house will continue to take a cut as the game goes on.
Poker Rake: Fees
There are some games, though, that don’t have a percentage rake. Instead, these games are going to charge players fee. Many poker games, for example, will have a fee per hand – an amount of money given directly to the house just to play.
If you’re playing in Texas Hold’em poker tournaments, you will probably be hit with a tournament fee. This is an up-front poker rake that gives you the ability to get into the game. You’ll usually see this fee listed in the poker rules for a tournament. Always read the fine print.
Finally, there are online rooms that charge subscriptions. These are fees on your ability to play, not on individual games. This is usually a way for a site to collect a regular income without worrying about percentages.
Poker Rake: Timed Collections
There’s a final online method of grabbing a poker rake called timed collection. These don’t happen often, but they do happen. Think of this as a subscription fee, but you pay by the hour or the half hour. These can be collected by the pot or by the player, but they tend to add up quickly.
Rake Free Poker Games
There are some online games that don’t have a rake, most are subscription based and you pay a monthly or yearly fee. These games, though, also generally raise revenue by other means, like advertising. If you can’t figure out how a company is making money, you can be fairly sure that they’re making money off of you one way or another.
Rake-free games used to be much more common than they are today. It takes a lot of money to run even a simple poker site, and there’s plenty who underestimate the cost and see themselves going under. If you wonder why your favorite site from back in the day is gone, it’s probably because it wasn’t raising enough money to be sustainable.
Poker Rake: Rakeback
This is another one of those strange online phenomena that gets players to play for what they think is a lower fee. In this situation, players will get some of the rake back in order to keep them going to a particular site. You can basically think of this as the online equivalent of getting a comp.
The Legality of the Poker Rake
Even if a rake is posted up in the poker rules, that doesn’t make it legal. Rakes are incredibly well-regulated, states of course want their taxes and you have to have the relevant gaming license or gaming permit to take a poker rake. This allows people to play poker for money at home, but not to take a house cut.
Why This Matters
We’re generally talking about how casinos and websites make money here, which isn’t always relevant to how you play poker. What is relevant, though, is that rakes cost you money. Many new players find themselves busting out not because they played poorly, but because they forgot to include the cost of playing poker. You must include the poker rake fees as part of your overall poker strategy.
You absolutely need to understand some basic business concepts if you ever want poker to be more than a fun little side hobby. The biggest one you need to know is the idea of an ROI – a return on investment.
Simply put, your ROI is how much money you make from the money you’ve spent. In poker, this is how much money you make off the game compared to how much you’ve spent on things like travel, buy-ins, and (finally) rakes and fees.
Poker Rake: In Tournament Play
Let’s not pretend like poker is actually all that profitable for the average amateur. If you’re playing in a normal tournament and you win, you’re going to be lucky to walk away with about fifty percent of the pot. That’s great, but you also need to subtract the money that you spent on the poker rake from that number.
That sounds great if you win, but what if you lose? If you’re like most players, you are going to go out before the money rounds in your first few tournaments. You’re going to be lucky to sneak into that top ten percent, and you’re going to walk away with about ten percent of the pot.
That ten percent is important, because that’s about equal to the money you paid in tournament fees or in the rake. That means at best, you’re going to end up breaking even. Far more likely, though, is the possibility that you’re going to lose money.
The bad news is that there’s no real strategy for avoiding the poker rake. You’re going to learn how to grin and bear it, and you’re going to have to learn how to play in those events that you’re more likely to win. Pay attention to the amount of money in the rake so you can figure out if your ROI is one that makes sense for you.
Do your math before you enter any tournament. If the rake is higher than the payout of your most likely ending position, stay home. You’ll actually come out ahead after all of your costs are calculated and you won’t waste an entire day while losing money.
Poker Rake: In Cash Play
There’s not a fee for most cash games, but let’s not pretend like the poker rakes there don’t get big as well. If the rake is coming off each hand, you can absolutely expect to be throwing away the equivalent of about six big blinds an hour in what should be a ‘cheap’ game.
That doesn’t sound so bad until, again, you do the math. Do you know how many big blinds per hour that top-tier pros actually pull in? They pull in about twelve. That means that even the best in the world are probably throwing out half their money an hour in rakes, and that you’re probably not anywhere close to their level quite yet.
There is, however, a way for you to make the rakes hurt less, and it’s a little counter intuitive. You actually need to move up to somewhat more expensive games.
No, you don’t need to jump into high-stakes games. If you’re just playing at a five dollar big blind, a good player can expect to spend fifteen dollars an hour and win up to sixty – and forty-five dollars an hour isn’t a bad take for anyone.
What do you need to take out of all of this? If nothing else, that you need to pay more attention to how much money you’re spending when you choose to play poker. That poker rake is going to eat your stacks just as heavily as the blinds, and if you’re not aware then you’re going to go broke before you can win anything.
If you’re going to look at poker as anything other than an expensive hobby, you’ve got to start looking at things like your return on investment (ROI) when you play. Don’t sit down for a hand or at a tournament if you have no chance of making money. Know the numbers, do some math, and figure out which poker games are right for you.
Don’t get scared off by rakes, though. Acknowledge that they exist, then start making the smart choices you need to make in order to turn a profit. In time, this will just become another part of your poker strategy. See you at the WSOP!
Poker Rake – FAQs
A: In most cash games, they take 10% from every pot with a $5 max. In poker tournaments, they charge a fee that doesn’t go in the prize pool; that fee goes to the house.
A: Basically it means you’re paying the casino to play poker. The rake isn’t the big win for the casino, though. The big win for the casino is when poker players play the slots and table games. Not recommended.
A: No. Home games are legal as long as you don’t charge a rake. Once you start charging a rake, you begin taking a risk.
A: Because it then becomes a gambling operation. Legal casinos pay revenue/taxes to the state. You would then be competing against those operations. The state wants those players at the casinos for more revenue.
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