Poker is a unique casino game where players don't compete against the house but against each other. Given this, many wonder how casinos make money from poker. The answer lies in a small but crucial aspect of the game known as the rake. In this comprehensive guide, we'll explore the different types of rake, how they're calculated, and how they influence the profitability of both casinos and players.
Understanding the Basics of Rake
The rake is a percentage of money that a casino takes from virtually every cash game pot or tournament entry fee, similar to a tax. This fee is what allows casinos to profit from poker games without having a direct stake in the outcome. Rake structures can vary based on the game type, the stakes being played, and the policies of the casino or poker room.
Pot Rake
Pot rake is the most common method used by land-based casinos to make money from poker. With this model, the dealer collects a percentage (usually between 5% and 10%) of the pot after each hand. No-rake policies are often in place for hands that don't reach the flop, meaning that the casino won't take a cut from pre-flop bets.
Dealt Rake
Online casinos typically use a dealt rake model, where all players who are dealt cards must pay a portion of the rake. This system ensures that every player contributes to the house's cut, regardless of their play style or the outcome of the hand.
Contributed Rake
Contributed rake, also known as shared or average contributed rake, is a model where only players who put money into the pot must pay rake. Under this system, the total rake is divided evenly among participating players, regardless of how much they contribute to the pot.
Weighted Contributed Rake
Weighted contributed rake is considered the fairest rake model for online poker. This system takes into account the percentage of the pot that each player is responsible for, ensuring that players pay rake proportionate to their involvement in the hand.
Fixed Fees
Fixed fees are an alternative to percentage-based rake structures, typically used in high-limit games. With this model, the dealer collects a fixed amount of money after each hand, making it easier for them to calculate the house fee and more favorable for high-stakes players who would otherwise pay a significant portion of their winnings to the casino.
Timed Collection
A timed collection is a more sophisticated rake method where the casino charges each player a set fee for a predetermined amount of time spent at the table. This system rewards longer playtimes, as the fee remains constant regardless of the number of hands played or the results of those hands.
Rake in Cash Games
Fixed Percentage Rake
In cash games, such as No-Limit Hold'em or Pot-Limit Omaha, the rake is typically taken out of the pot before it is awarded to the winner. Most casinos use a fixed percentage rake, which ranges from 2% to 10% of the total pot. However, most games will have a rake of 3-5%, with a maximum cap on the amount that can be taken from any individual pot.
Hourly Rate Option
Some casinos offer an hourly fee model for cash games, where players pay a fixed fee to sit at the table instead of having money taken from the pot. This option is neither better nor worse than a percentage-based rake, and players should consider it as an alternative method for paying the house.
Rake Differences Based on Stakes
It's crucial to note that small limit games generally have a higher rake percentage than higher-stakes games. Lower-stakes tables often have a rake of 5% or more and a higher cap, while higher-stakes tables typically feature a 3% rake and a lower cap. This discrepancy exists because casinos must cover the costs of dealers and table space, regardless of the stakes being played.
Rake in Tournaments
In tournaments, the rake is paid upfront as part of the buy-in. For example, a $100 tournament might have a buy-in of $110 or $120, with the extra $10 or $20 going to the casino as an entry fee. This fee covers the costs of organizing the event and does not contribute to the prize pool.
Online vs. Live Tournament Rake
Online poker tournaments generally have a lower rake than live events, especially at lower buy-in levels. This difference is due to the reduced overhead costs associated with running online tournaments, as there are no dealers, physical tables, or venue rental fees to cover.
Beyond Rake: How Else Do Casinos Make Money From Poker?
While rake is the primary source of income from poker games, many casinos also profit from other aspects of the poker experience. For example, large tournaments with guaranteed prize pools can attract significant foot traffic, leading to increased revenue from table games, slots, and other casino amenities. Additionally, food, drinks, and accommodation services can further boost a casino's profits during poker events.
Profit Margins for Online Poker Rooms
Online poker rooms typically have lower operating costs than their live counterparts, allowing them to generate substantial profits from rake alone. With reduced expenses for dealers, tables, and venue space, online poker platforms can earn enough to cover their operating costs and still make a profit, provided they have sufficient player traffic.
Know Your Rake
Understanding the rake in your preferred poker games is essential for maximizing your profits as a player. High-rake games with large caps can be challenging to beat, even for skilled players. By researching the rake structures of various poker rooms and selecting games with lower rakes, you can increase your chances of success at the tables.