Discover how land-based casinos and online poker rooms profit from poker. Understand the meanings of rake, fees, and vig.
How Do Poker Casinos Make Money?
One of the advantages of land-based and online poker over other casino games is that you can consistently win money without being kicked out! Because you’re competing against other players rather than the house, the casino doesn’t care if you win or lose as long as there’s a game going on so they can take the rake.
The casino makes money by organizing and orchestrating cash games and poker tournaments, just like in parimutuel betting. Players compete against one another, and the casino or online poker site takes a small percentage of the pot.
How Do Casinos Charge for Poker Games?
Poker is profitable for online casinos because they charge a fee to host the game. This is known as the rake, and it can be interpreted differently depending on the type of game you’re playing.
Rake the Pot
The “pot rake” is one of the most common methods of taking the rake in poker, and it is used for low-stakes cash games. After the hand is completed and whenever a flop is seen, a percentage of each pot is taken. The pot rake is typically capped at a certain dollar amount, known as the rake cap.
The rake is only collected when the hand reaches the flop (unless the casino is extremely greedy! ), so if you raise a hand before the flop and everyone folds, the pot will not be raked.
The percentage of the pot taken as rake will vary depending on the casino, but it will be between 5 and 10%. Rake is usually lower at online poker sites, usually under 5%, because there are fewer overhead costs to cover for hosting the game.
Hourly Pay
Instead of “pot rake,” higher limit cash games will charge an hourly (or half-hourly in some cases) rate for each player in the cash game. This is also referred to as a “table charge” or a “time collection.”
Because low denomination chips are required for the rake (typically a few dollars) to be taken from the pot, and those chips aren’t in use in the actual game, this is used in higher limit games instead of the more common pot rake.
Instead of clogging up the table with dozens of low denomination chips, they calculate a fee that covers the cost of running the table plus a little extra and collect it from the players after a certain amount of time has passed.
Fees that are fixed
The previously discussed pot rake is a percentage of each pot with a maximum amount that can be taken (the rake cap). Some card rooms, on the other hand, charge a flat fee per hand, regardless of the size of the pot.
This is much worse for the players because it means that the smaller pots are raked at a much higher percentage and, if small enough, may even cost the players money to win!
Even in the larger pots, there isn’t much of an advantage because, while the percentage raked is smaller than in the small pots, pot raked games usually have a cap that is similar to a fixed fee.
So far, we’ve focused on cash games, but how do casinos profit from poker tournaments?
Tournament Winnings
The casino will receive a portion of the tournament buy-in, while the remainder will go to the prize pool. The percentage taken varies depending on the casino and the tournament size, but most tournaments take 10% on average, with smaller ones taking up to 20%.
Because running a tournament in a casino requires a lot of space, they must ensure that they can cover the cost of the space and the dealers while also making a profit. This explains why they charge such a high percentage for low-stakes tournaments.
How Do Online Poker Sites Profit?
Online poker rooms make money in the same way that traditional casinos do. They charge a small percentage of the stakes for each game. However, because each table costs less to run, online poker sites can charge a lower rake.
Rake in Online Poker
Rake in online poker works similarly to raking in a traditional casino. When a flop is seen in a cash game, a percentage of the pot is taken. Because running a virtual poker table is less expensive than running a physical one, the rake of the pot that they take as the rake is lower than that of a brick-and-mortar casino.
Rake can range from 1-5% depending on the poker site and stakes you play, and if you can make it up to the nosebleed stakes, you’ll effectively be paying no rake at all!
Fees for Subscriptions
Some poker rooms provide an alternative to the traditional rake model. Instead of taking a percentage of each pot wagered, players must pay a subscription to play on the site. Because they’ve already paid their rake, the players can win the entire pot.
This works well for players who play a lot of hands because the rake is the same regardless of how many hands they win, whereas tighter players are at a disadvantage.
Drop in Time
There is no time drop rake structure available on online poker sites. Because of the “come and go” nature of online poker, where it’s easy to sit down for two or three hands and then leave, it’s difficult to find a fair way to charge players without forcing them to commit to a time commitment.
Furthermore, without the limitations of physical chips (one of the reasons brick-and-mortar casinos use time drops), there’s no reason why every cash game can’t be pot raked rather than time raked.
Fees for Tournaments
Online poker tournaments, like brick and mortar casinos, take a portion of the tournament buy-in as rake, with the remainder going to the prize pool. Because the cost of running a tournament online is significantly lower than in a casino, the rake is frequently lower: 4-10% depending on the site and stake level.
As with cash games, the higher the stakes you play, the less rake you pay as a percentage of the total buy-in you pay – an incentive if you’ve ever needed it to move up the stakes!
Benefit from Rakeback
Rakeback is one of the primary benefits of playing online poker. Given how high the rake can be at micro stakes, this can mean the difference between winning and losing.
Rakebacks are promotions offered by most online poker sites that reward you for frequent play by returning some of the money you’ve raked.
It’s similar to casino comps in that the more you play there, the better the comps you’ll get, which in turn encourages you to keep playing there.
Depending on their rakeback policy, different sites will offer varying amounts of rakeback. Some sites don’t care about rakeback and will give you little to no incentives to play on their site. Others believe it is very important to players and can return anywhere from 20-65% of your rake in cash.
The amount of rakeback offered by a site is one of the deciding factors for some players when deciding where to play. Some sites, such as Pokerstars, may have the best software, but their rakeback policy at the time of writing has led to players switching to other sites, such as Party Poker, which offers a very competitive rakeback deal.
Rake in poker is a necessary evil because it is how casinos and poker sites make money. Raking and vig must exist in order for there to be places to play poker! However, this does not imply that you should be taken advantage of. Examine the rake structures where you play to see what works best for you.
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