One of the best things about land-based and online poker compared to other games in the casino is that you can consistently win money without being kicked out! As you're playing against other players rather than the house, the casino doesn't care who wins or loses as long as there's a game running so they can take the rake.
Just like in parimutuel betting, the casino makes money simply by organizing and orchestrating cash games and poker tournaments. Players play against each other, and the casino or online poker site takes a tiny fraction of what's at stake.
How Casinos Charge You on Poker Games
Online casinos make money from poker by charging a certain amount of money for hosting the game. This is called the 'rake' and the rake in poker can be taken in different ways depending on the type of game you're playing.
The "pot rake" is one of the most common ways a casino will take the rake in poker and is used for low-stakes cash games. This is where a percentage of each pot is taken after the hand is completed and whenever a flop is seen. The pot rake is usually capped at a certain dollar amount, which is called the rake cap.
The rake is only taken when the hand gets to the flop (unless the casino is very greedy!), so if you raise a hand preflop and everyone folds, the pot will not be raked.
Depending on the casino, you'll find that the percentage of the pot that's taken as rake will be somewhere between 5-10%. Online poker sites will usually be a bit better in terms of rake, mostly being under 5% as there are fewer overhead costs to cover for hosting the game.
In the higher limit cash games instead of "pot rake", they will charge an hourly (or half-hourly in some cases) rate for each player in the cash game. This is also called a "table charge" or a "time collection".
The reason this is used in higher limit games instead of the more common pot rake is that 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.
Instead of clogging up the table with dozens of low denomination chips, they calculate a fee that covers the cost of running the table with a little extra and take that from the players at a set time limit.
The pot rake that we've covered previously is a percentage of each pot with a maximum amount that can be taken (the rake cap). However, some card rooms will charge a fixed fee per hand regardless of the size of the pot.
This is much worse for the players as it means that the smaller pots are raked at an extremely high percentage and if they're small enough could even cost the players money to win!
There isn't even much of an advantage in the larger pots as even though the percentage that's raked is comparatively smaller than the small pots, pot raked games usually have a cap which will be a similar amount to a fixed fee.
We've been covering cash games so far but how do casinos make money from poker tournaments?
A certain amount of the tournament buy-in will go to the casino for hosting the game and the rest will go to the prize pool. The percentage that's taken will vary depending on the casino and the size of the tournament but on average it's 10% for most tournaments whilst smaller ones can be as high as 20%.
As it takes a lot of space to run a tournament in a casino, they need to make sure they can cover the cost of the space and the dealers on top of making a profit. This is why they will charge such a high percentage for low stakes tournaments.
How Do Online Poker Sites Make Money
Online poker rooms make money in very similar ways to brick-and-mortar casinos. They charge a small percentage of what is at stake for a given game. However, as it costs less to run each table, online poker sites are able to charge less rake.
Online Poker Rake
Online poker rake works in much the same way the pot rake works in a regular casino. In a cash game, a percentage of the pot is taken every time a flop is seen. As it costs less to run a virtual poker table than it does a physical one, the rake of the pot that they take as the rake is lower than a brick-and-mortar casino.
Depending on the poker site and the stakes you play rake can be anywhere between 1-5%, and if you're able to make your way up to the nosebleed stakes then you'll basically be paying no rake at all!
Some poker sites offer a different alternative to the traditional rake model. Instead of taking a percentage of each pot that's played, players have to pay a subscription to be able to play on the site. This allows the players to win 100% of the pot as they've already paid their rake upfront.
This works out well for players who play a lot of hands as the rake they've paid is the same no matter how many hands they win, whereas tighter players are at more of a disadvantage.
Online poker sites do not offer a time drop rake structure. Due to 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 hard to find a fair way to charge players without locking them into a time commitment.
Plus without the limitations of physical chips (which is one of the reasons brick and mortar casinos use time drops), there's no reason why every cash game cannot be pot raked rather than time raked.
Similar to brick and mortar casinos, online poker tournaments take a portion of the tournament buy-in as the rake with the rest going to the prize pool. As the cost of running a tournament online is significantly lower than it is in a casino, the rake is often lower: between 4-10% depending on the site and the stake level.
As with cash games, the higher stakes you play the less rake you pay as a percentage of the total buy-in - incentive if you've ever needed it to make your way up the stakes!
Take Advantage of Rakeback
One of the main advantages of playing online poker is rakeback. Given how high rake can be at micro stakes this can be the difference between being a winning or losing player.
Poker rakebacks are promotions offered by most online poker sites that reward you for frequent play by giving you back some of the money they've raked from you.
It's similar to comps in a casino, the more you play at that casino the better comps they'll give you, which in turn incentives you to keep playing at that casino.
Different sites will offer different amounts of rakeback depending on their policy towards it. Some sites don't really care about rakeback and will offer little to no rewards for playing on their site. Others think it's very important to players and can offer anywhere between 20-65% of your rake back in cash.
For some players, the amount of rakeback a site offers is one of the defining factors in where to play. Some sites such as Pokerstars may have the best software, but their attitude to rakeback at the time of writing has led to players going to other sites such as Party Poker who offer a very competitive rakeback deal.
Rake in poker is a necessary evil as this is how casinos and casino sites make money from poker. Poker raking and vig need to exist in order for there to be places to play! However, that doesn't mean you need to get ripped off. Look into the rake structures where you play and see what's best for you.
This article was published on May 22, 2021, and last updated on July 13, 2022.