It doesn’t take much research to figure out that casinos make money hand over fist. Seemingly endless rows of slot machines net millions of dollars per year one penny at a time. Table games constantly take chips from players as sevens are rolled and 18s are beaten. Slots and table games have something in common: players are betting against the house. It’s clear that when the house wins they are taking the player’s money, and when players win they get the casino’s money.
Poker, however, is a game that is not played against the house. Players come together at a table and try to take each other’s money, the casino just facilitates the game by providing the table, chairs, chips, cards, and dealers. Since they aren’t involved in the betting, do casinos make money on poker? Of course they do!
Real estate in a casino is incredibly valuable. That is why you see the most square footage being devoted to slot machines; they make the most money. The casino would never dedicate an entire ballroom-sized piece of property to a game that doesn’t make them money. So how does the house make money on poker?
Casinos make money on poker in two ways, either by taking a part of the pot commonly referred to as “rake” or by having players pay an hourly rate to pay, also known as “timed rake”. It may not sound like there is much difference between the two but there is. Let’s take a closer look at these options and see how casinos make money on poker.
Rake is the most common way casinos take a cut out of poker. At a typical low-stakes casino game the house will take out 10% of the pot up to a certain amount, typically around $5-$6. There can also be an extra dollar or two taken out for promotions. For example, most casinos in the Northeast U.S. will take out 10% up to $5 with an additional $1 being taken out for the bad beat jackpot or high hand depending on which promotion is running. So if a pot is $100, $5 goes to the house and $1 goes to the promotions. If a pot is only $20, then the house gets $2 and $1 to the promotions.
This doesn’t sound too bad on the surface, right? If you are winning pots that are over $50 then it isn’t really even 10% due to the cap. Also, players may like this structure at first because only the winner is paying the casino. It may not be easy to see but especially in low-stakes games rake is taking an absurd amount of money off the table.
When you have a quick dealer you can play roughly 30 hands per hour. Let’s say you are playing $1/$2 at a casino with a 10% rake capped at $5. If the average hand is $40, there is roughly $4 per hand coming off the table. At 30 hands per hour, you are looking at $120 per hour off the table. If 6 players all bought in for $200 and nobody busted or added money in, after about 10 hours there would be no more money on the table. Sounds extreme right?
If that is the case, how do casinos make money on poker when they rake so much? Wouldn’t players decide to go elsewhere or play different games? We can see from the popularity of poker this isn’t the case because most players don’t even notice the money coming off the table.
Players don’t see how much is being taken out of the game because there is typically a list of patrons coming in and joining the cash games. In the above scenario, it is painfully obvious how much money is coming off the table because everyone started with $200 and nobody added more chips. In a casino, however, not only do you have people reloading and re-buying but you have new players entering the game. This makes it a lot easier to miss the fact that anywhere from $80-$120 could be coming off the table every hour in rake.
The extra money taken off for promotions is another thing to look out for. Since this money doesn’t go to the casino, it isn’t technically part of the rake. That money goes back to players in the form of high hands and bad beat jackpots. If you are traveling, you will likely never see any of that money. If you are a regular, that money will eventually make its way back into the games you are playing.
High-hand promotions are better for everyone since they are paid out frequently and are small enough increments that they will make their back to the tables. Bad beat jackpots aren’t as good for the player pool. Of course, winning $50,000 playing $1/$2 would be amazing, but for everyone else, it is a bad thing. You likely won’t find a low-stakes player ready to lose that $50,000 back over the next year, so most likely that is money the player pool will never see again.
Taking a “drop” instead of “rake” isn’t as common, but there are some casinos (mainly in the Los Angeles area) that do this. A drop is very similar to rake since the casino is taking money out of each pot. The big difference is the drop is a set amount per street rather than a percentage of the pot. If a casino is taking $6 per hand in drop for a $2/$3 game, that typically means $1 preflop, $2 on the flop, $2 on the turn, and $1 on the river. Sometimes it could be $1, $2, $3, or even $2, $4. This is significantly worse for the players because small pots will be raked the same as large ones.
For example, in $2/$3 a game that takes a drop, let’s say the BTN and SB players both limp and the BB checks their option. The casino takes $1 out of the $9 preflop. Now on the flop the action checks through and the house takes another $2. The players have already given 33.33% of the pot to the house, more than triple the rate in a raked game. The worst part is, if it folds to the SB and they want to chop, the SB player still has to pay $1 preflop to chop! So they can either call for one more dollar and play the hand, or lose $1 to fold and move on. If you find yourself in L.A. it’s best to just play those blind vs. blind pots than sacrifice your dollar.
Taking a drop instead of a rake is extremely harmful to the player pool and it requires a huge pool or deep-pocketed players to sustain. This is why the casinos in L.A. can get away with it, there are so many poker players in that city so they can sustain the terrible drop.
Paying time, or a timed rake, is another way casinos make money on poker. A timed game has a set dollar amount per hour that each player must pay. Some card rooms like those in Texas clock the time you sit down and when you leave the front desk attendant will calculate your total and collect payment. In Vegas and other areas with timed games, the dealer or floor will come around once per hour or half hour to collect the rake. This is usually lined up with the dealer change, which is every 30 minutes.
Timed rake is the standard in Texas since local laws allow for private clubs that can run poker games if they choose, but don’t allow for raked poker games. You can buy a membership and each time you visit you must pay the hourly rate to play poker.
Timed rake is also a favorite among high-stakes cash game players. Many casinos offer timed rake for $10/$20 no-limit and higher. Some may even offer it for $5/$10 if that is the biggest game in the room. Big mixed games like the $200-$400 limit games in Las Vegas will also be timed. There’s a good reason the high-stakes players prefer the timed rake: less money goes to the house.
Think about our earlier example. When six players sat down playing average pots of $40 at 30 hands per hour, $120 was being taken off the table each hour, so roughly $20 per hour per player. Most popular poker clubs in Texas charge anywhere from $10-$12 per hour, meaning half what the raked game was taking. Not only is it less money in the timed games, but the money stays on the table. If two players go all-in for $200 in Texas, the winner gets a $400 pot. In a raked game, the winner gets $395 or less depending on promotions. By keeping all the money on the table the game can go on for longer and will be deeper stacked.
The only real downside to timed games is when you are losing. In a raked game, if you don’t win any pots you don’t pay the house any money. Of course, it’s no fun playing poker and winning no hands, but it’s even less fun when you have to pony up more cash on your way out the door. In a raked game, when you bust you can high-tail it to the parking lot and get out of there quickly. In a timed game, you have to stop at the door and pay extra after getting stacked. It is not a great feeling, but in the long run you will make more in a timed game than a raked game.
How Does the House Make Money on Poker Tournaments?
Much like cash games, poker tournaments also have a rake or house fee. Casinos don’t rake pots or make you pay time in tournaments though. The chips in play have no monetary value and it wouldn’t make sense to have people who bust the tournament early pay extra for the time they sat. Instead of the two normal methods, casinos will rake the tournament buy-in. For example, in a $150 daily poker tournament, the casino may take $15-$30 depending on the property. In a tournament with a $25 fee, that means $125 goes into the prize pool and the $25 goes to the house.
If you play online poker, you will generally see tournaments listed with their rake involved. For example, a $20 tournament online could be listed like this: $20 ($18+$2). This means $18 goes to the total prize pool and $2 goes to the casino. 10% is very standard for online tournaments, live tournaments will vary based on the casino.
How Important is Rake?
Paying attention to rake is integral to being a successful poker player. A few dollars for each pot may not sound like much, but rake can be the difference between a winning and losing player in the long run. Micro and low-stakes games have high rake so it is important to find the most reasonable rake structure you can. Casinos will post information about their rake, so spend some time and do some digging to find the lowest rake possible.
This isn’t something just for professionals either. If you love poker and want to play as much as you can recreationally you should still hunt for the lowest-raked games. Much like looking for soft games with easy opponents, you should be looking for soft rake structures that can be beaten easily.
Whether you find yourself with many or just a few options available, searching for lower-raked games will help improve your win rate in the long run. We’ve seen a number of ways casinos can make money on poker, so do your best to give them as little as possible and keep that money on the table.