You Can’t Escape the Poker Rake
Every player knows that the key to profiting at poker is playing well. If you don’t play well, you’re toast long-term. Unfortunately, playing well is not enough. Equally important is understanding how other factors impact your potential profitability. As we have discussed before, there are many ancillary costs of playing poker, and it is important that you make a plan to combat them. Most importantly, however, card rooms don’t survive on good cheer. They take a piece of the action out of every hand. Understanding how your card room takes their piece of the action, the poker rake, is critical in determining how your potential wins, or losses, will be impacted.
Cash Games and Poker Rake
Let’s imagine for a moment that a 10-handed table has started with each player buying in for $200. Our imaginary casino’s poker rake is $1 for every $10 in the pot, up to $5 total (fairly typical). If the median pot is $30, the average hand loses $3 in every pot. Although there is some variation, on average, there are about 30 hands dealt an hour. We’ll also assume that nobody busted and re-bought or left and was replaced by a new player. The overall rake paid is $90 (30*$3) in that hour; thus, the “average” player will lose $9 in poker rake (or 4.5% of his/her stack) per hour.
But hey, some players are winners correct? Yes, let’s imagine 4 different players and what their win rates might be:
Very Good: 10BB/hour. A very good player might win about 10BB per hour on average, before rake. So in a typical hour of $1/$2, they would win $11 ($20-$9 rake).
Solid: 5BB/hour. A better than the average player, winning a bit more than they lose, may average about $10/hour and would win $1 ($10-$9 rake).
Average: 0BB/hour. It may seem odd to see an average player winning nothing per hour. But think about it: it’s a zero-sum game. If some players are up and some down, the average player is steady. But, of course, with the rake, they are not. In a typical hour of $1/$2, they would lose $9 ($0-$9 rake).
Poor: -5BB/hour. Sadly, we move on a sizable part of the low stakes poker world: those losing money. In a typical hour of $1/$2 a below average player will lose $19 (-$10 minus $9 rake).
These numbers make it pretty obvious that you have to be playing well above average to make any money playing $1/$2 cash poker. That’s before considering any other costs such as tipping (see below) or the other attendant costs of playing (e.g., gas, food, beverage). The poker rake is why you are not just playing against other players, but also the casino.
Factors Affecting Cash Poker Rake Paid
There are several factors that affect a player’s actual rake. The key ones are:
The Exact Rake: We used $5 max rake with an average of $3 as an example. The range in most casinos is usually $4-$6, and the average will be slightly higher or lower of course dependent on that range.
The Number of Players: We gave a 10-table example, but many cash games are actually 9-Max. If you are in a 9-Max game, you’d pay slightly more rake per hour. More critically, if a table has a lot of open seats, you are paying even more rake on average. The $90 is coming off that table in 30 hands one way or another, unless everyone is folding most hands. With 5 players seated, each person’s average is $18 instead of $9.
The Number of Hands Played: Active players are paying more into the rake than those playing fewer hands. If I play 10 hands and you only play 5, I’m contributing twice what you are into the rake.
Seat Fee Instead of Rake: Some card rooms substitute a “seat fee” rather than raking each pot. Perhaps you pay $5 for every 30 minutes of play. In our example, this would be a slightly worse deal, leading to a $10 loss per hour.
Not long ago, Bad Beat jackpots were the rage. Usually, $1 would be raked from every pot over weeks, months, and sometimes years to be held in a building fund. Once a bad beat occurred, the “loser” in the hand would take about 30% of the bad beat jackpot, the winner 20%, and the rest of the players at the table would split the remaining 50% among them. Bad Beat jackpots were pretty exciting when they happened, but the payoff window was just so long. Rooms figured out that the bad beat was not enough of a powerful immediate inducement to play.
Today, High Hands have risen to the forefront. With the high hand, there is a payoff for the best hand hit among cash tables in a certain time period, usually ranging from a half hour to two hours. The immediacy of these payouts became a big inducement to play more poker. You’ll see a room’s cash volume balloon on days when favorable high hand bonuses are in place. For most rooms, every cash hand played contributes a dollar to this pool, often whether high hand promotions are in play or not. High Hand money comes fully back to players, so it is not a poker rake, per se. However, the money is raked from the pot, so $30 more is going out each hour from that table – $3 on average from each player.
Bluntly: Tip! Dealers work hard in an often thankless, and sometimes very challenging (given certain players), service job. They risk repetitive stress injuries, and have low base pay. The convention at $1/$2 tables is to tip $1 for hands you win that are more than just taking the blinds. In a very big pot, some players will tip more depending on the size of the pot. So with 30 hands an hour at a 10-handed table, if you win the average number hands, you would tip $3 if you tipped $1 each time. With our examples above, bring down those profit/loss numbers another $3 per hour at minimum.
What Can You Do About Cash Poker Rake?
Unless you are playing in a rake-free home game, you can’t escape the impact of rake. Be aware of the rake at the rooms where you play. All other things equal (e.g. level of competition), play at the room with a $4 max rake rather than the one with a $6 max rake. If you play at a room with High Hand promotions, and they rake pots even when the high hand is not in effect, avoid those hours. And if you don’t know when they rake, ask.
Avoid Short Tables with Full Rake
When the tables dwindle to very few players, ask the floor to waive the rake or to cap it at a lower level until the table builds again. They may do so to keep the table active for a short amount of time. If they do not agree, leave the table. We’ve seen entire shorthanded tables just agree to break and disperse into open seats at other tables.
Moving up a level (e.g., from $1/$2 to $2/$5) is a solution that some players attempt. Although the average rake tends to be higher, it allows for higher winnings, assuming equal performance. For example, if our Very Good Player moves to $2/$5 where the average rake is $5 per hand, her share of the rake is now $15/hour. But if her 10BB per hour winning continues, her net profit per hour would be $35 ($50-$15). That’s 3 times what she was winning ($11/hour) at $1/$2. The key here is, can you win at the same rate you were at $1/$2 against better competition at $2/$5? Generally, the answer is no, at least not at first. So you’ll have to balance out the lower win rate with lower rake and see where you fall. When you want to move up, work on your game.
Finally, playing tight may help. If you are in every hand, you’re going to disproportionately contribute to the rake. You’ll also tip less if you win fewer pots (hopefully large ones!). However, even if you don’t play, you’re still losing money sitting at the table. If you fold all 30 hands in $1/$2 game in an hour, you’ll be down $9 because you’ve paid the blinds 3 times. And most recreational players are not there to fold 95% of their hands.
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Tournaments and Poker Rake
Tournaments by their nature are a higher variability game than cash poker. Tournaments typically pay only 10%-15% of the field, so if you go on a bad run, losing 30 tournaments in a row is not out of the question. On top of that, the poker rake on tournaments can vary widely. Rakes vary from the high single digits/low double digits to well into the mid or high 30s. During our whirlwind trip through the South Florida poker rooms early this year, we were stunned by how high tournament poker rakes were. The best players in the world playing against the weakest competition would be hard-pressed to return any profit when 30%-35% of the prize pool is removed.
One rule of thumb that many pros espouse, is don’t play in any tournament with more than 15% rake. However, the pros are generally talking about tournaments with buy-ins of $300 and above. Sadly, tournament rakes (as in cash play) are inversely related to buy-in amounts: the higher the buy-in, the lower the proportional poker rake tends to be. Most tournaments with buy-ins under $150 start at about a 20% rake. So as with cash, the average player who is “breaking even” in results, will be down 20% of their buy-ins over time. If you buy in each week for a $100 tournament with a 20% rake, expect to be down $80 on average each month.
As with cash, our belief is that tipping is a moral prerogative. But know what the standards are in your room, and if there has already been a staff holdout taken from your buy-in. For example, out of your $100 entry fee, sometimes $20 has been taken as the house rake and $5 as a staff fee that will go mainly to the dealers. So basically a 5% tip has already been figured in before you win a penny. If you intend to tip 10% on a $400 win at that room, you could comfortably give $20 (as half of the 10% has already been withheld). At a room where no staff withholding is done, you’d need to give the whole $40 to give a 10% tip.
Opinions about tournament tipping standards vary widely and depend on various factors. The percentage is negatively correlated with the size of the win. While tipping 10% on $200 may not sound crazy, tipping 10% on $100,000 is clearly excessive. So there becomes a bit of a mix between raw dollar amount and percentage. For most tournaments, if you are in the 5% to 10% range you are pretty safe (less for huge payoffs). Some people subtract their buy-in from the base as well. If they win $400 on a $100 buy-in, they tip a percentage based on $300 ($400-$100 buy-in).Understanding the impact of poker rake is key to managing your poker budget.Click To Tweet
Most tournaments don’t have High Hands, but some do. Just check the policy before you enter. While it generally should not impact your play, in some circumstances you may decide to play or continue in a hand, especially early in a tournament, because of its high hand potential.
What Can You Do About Tournament Poker Rake?
The main thing you need to do is confirm the rake is for the tournament you are considering playing. Some card rooms will report this on their website. For rooms that use PokerAtlas, you can look up the tournament poker rake under “Deductions” when you click on a tournament on the calendar page (example). If you can find none of this information online, ask the floor manager at the card room or call ahead. As with cash, all things equal, seek out lower rake tournaments for similar buy-in amounts.
Is the upshot of all this “never play poker again”? Not necessarily. If your budget and experience places you in the range of $1/$2 cash games and lower buy-in tournaments, know that your win rate has to be fairly high to offset the rake you’ll encounter. So is the solution to “play at higher levels”? If you do so, your game better be very strong and your bankroll deep. The swings at higher stakes cash games or tournaments can be enormous. Win rates are typically inversely related to the level of competition. So you have to cover less rake, but you have to win a higher percentage of the time.
Our take is that we treat poker as a recreational pastime that has a cost like any other. Rather than playing golf or skiing or taking a trip to see Hamilton in New York, our recreation fund goes to poker. If you can afford $200/month for your “fun” then that’s your budget. If you can afford $2,000, then you have more flexibility. Just understand that no matter how good you are, the rake will take its bite, and plan accordingly.
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