How Do Casinos Make Money From Poker – Understanding The Rake
Last Updated: November 8, 2022
It is easy to understand how casinos make money in the games in which the player plays against the house as these games have a predefined percentage of every wager that the house keeps.
But how do casinos make money from poker, a game in which players play against other players?
Well, the house makes money from poker by charging rake, and if you are not familiar with the term you have come to the right place as we will break down everything you need to know about rake in this article.
What Does Rake Mean in Poker?
In poker, the rake represents the amount of money that the host of the game charges the players to cover the cost of organizing the game.
In other words, the rake is a small percentage of winnings that are taken by the casino in each hand as a commission for providing their services.
For example, if Player A and Player B are in a hand and the pot is $100, and Player A wins, he will not win the full $100.
Instead, the casino will take around $2 (or more) as rake and Player A will receive $98.
Now, this is only one example of how casinos take rake, there are also a couple of other methods that we will mention later on.
While the amounts may vary, rake is charged in all traditional and online poker sites, as it represents the only way for casinos to make money from poker.
How Do Casinos Calculate Rake?
When it comes to calculating rake, there are a few different methods the casinos use. In the majority of poker rooms, the rake is calculated based on a fixed percentage. However, depending on where you play you may also encounter other methods.
Fixed Percentage Rake
Whether live or online, in most cash games the casino charges rake by taking a piece of the pot before it is given to the player that won it.
In most establishments that provide poker games, the rake is calculated based on a fixed percentage that is taken from the pot.
The rake percentage can be anywhere from 2% to 10%, but for the most part, it is around 3% to 5%.
Additionally, depending on the specific rules, most casinos have a maximum amount of rake that can be taken from a single pot. The capped structure helps to protect players from paying too much rake when they are playing with deep stacks.
If you have the opportunity to choose between games with capped and uncapped rake, you should always go for the ones with a capped rake, and here is an example of why.
Let's say that you play a game in which the rake is 5% and there is no cap. You win a $1,000 pot and, in this case, the casino will take $40 in rake from the pot.
Now, if you were playing in a game where the rake is 5% and is capped to $10, the casino will take only $10 in rake from the same pot, which is four times less than in the first scenario.
Hourly Rate Rake
The hourly rate rake is a model used exclusively for live casino cash games.
Instead of charging rake from every pot, the casino charges a fixed fee based on how long the player sits at the poker table.
It is hard to determine if this model is better or worse than the fixed rake model because there are many other factors that come into play, such as the quality of the games, how fast the hands are played, etc.
With that said, you should always compare the hourly rate rake of the casino with other casinos that charge the rake, in the same way, to determine which places charge more rake.
Comparing it with casinos that charge a fixed percentage from every pot is a bit complicated, but it can still be done.
In terms of a player’s bottom line, there isn’t a definitive answer to which of these rake methods is better.
Rake Differences Based on the Stakes
One of the many reasons why most poker players are stuck at the small stakes is the rake. This is because the rake is much worse at lower limit tables than in high-stake games.
In small stake games, the rake cap is much higher in relation to the size of the pot, making it harder to reach the rake limit and take advantage of it.
From a business standpoint, the casinos have the same costs for each table the players are using, no matter how big the game is. Likewise, they have to charge more rake in smaller games in order to make up for the fact that the pots are much smaller.
Most casinos will charge around 5% to 6% in micro and small stake games and around 3% in higher stake games.
Rake in Poker Tournaments
Since poker tournaments have a completely different structure and are played under different rules, the casinos also adjust the way in which they charge rake for this poker format.
Poker tournaments are played with chips, and the amount of the chips in the tournament never changes from the start to the end of the tournament.
The chips only change hands, going from one player to another without having a monetary value.
Since it is impossible for the casino to take rake from each pot in a tournament, they charge it before the start through a tournament fee.
To play in a tournament, the players must pay a fixed amount of money referred to as the tournament buy-in. The buy-in consists of two parts: one part goes towards the prize pool, and the other to the casino as rake.
For example, if the tournament buy-in is $110, $100 of this will go to the prize pool and $10 will go to the casino as rake.
Note that because online poker platforms have an easier time hosting poker tournaments and a lot less organizational expenses, tournament rake is much lower than in live tournaments.
Other Ways in Which Traditional Casinos Make Money from Poker
In many cases, rake from poker tournaments does not generate a lot of profit for the casino. However, casinos still go through the trouble of organizing them because there are additional side effects of poker tournaments that make it worth their while.
Firstly, most poker players that play live tournaments eat at the casino. If you take into account that some tournaments last for two or more days, this means that the casino will sell quite a few meals.
Secondly, a lot of poker players do not leave the casino after they finish playing in tournaments. Instead, they go over to the gambling floor to try their hand with games like slots and blackjack.
And finally, poker tournaments with big guarantees are one of the best ways for a casino to promote their brand as this often includes making billboards with big amounts highlighted.
What Is Poker Rakeback?
Rakeback is a term that is used to describe a percentage of the rake that online poker rooms give back to players. It is one of the main ways in which operators promote their poker platform.
Depending on the poker site, rakeback can be anywhere from 10% to 100% and in most cases depends on how many poker hands the player plays in a given period. It can be calculated on a weekly, monthly, or even yearly level.
For example, let’s say a poker player has a 30% rakeback on a site that charges a 5% rake for each pot.
If he wins a $200 pot, the casino will take $10 in rake, and he will get $3 back (30% of $10) when his rakeback period is over.
As you can see from this example, rakeback is quite important if you are an online grinder as it can significantly improve your bottom line. This is why you should always take rakeback into consideration when choosing an online platform on which to play.
Summary: Understanding Rake in Poker
Rake is one of the most overlooked aspects of playing poker, but it can be crucial to your bottom line.
There are a few things that you should always pay attention to regarding rake.
The first and the most obvious is knowing how high the rake is in your poker room, and, more specifically, at the stakes you are playing.
The second thing that you should always know is if your poker room offer rakeback and what you need to do to get a better rakeback deal if this is possible.
Finally, you should always adjust your game plan to the size of the rake. For example, if you are playing in a poker room that has a high rake, you should look to play fewer hands and avoid seeing too many flops.