How Casinos Make Money on Poker

By Alex Smith Apr 26, 2022

It shouldn’t come as a surprise to learn that land-based casinos and online casinos are in the business of making money. Every game you’ll find in a casino, whether it’s casino table games, live dealer games, or video slots, is there to make the casino money in the long run.

However, when it comes to poker – both online poker rooms and poker rooms in brick and mortar casinos – they also need to make money. This can leave players wondering how exactly they’re able to do so. After all, there’s no house edge when you play poker, and you’re not playing against the dealer, so the casino needs to make their money somewhere.

After all, the casino gives a fair number of resources to run poker cash games and tournaments. For example, they have to supply all of the tables, the chips, the dealers; they have to run the games; and there’s staff working 24 hours a day, 7 days a week to facilitate the games. So, if you’re asking how casinos make money on poker – and how it’s financially feasible for them, read on. We will look at exactly how they manage to do so.

Essentially, it all comes down to the rake – a term you’ll come across a lot when you enter a poker game, whether online or offline. Keep reading to learn all about the rake, how it works, and what it means for you when playing poker in poker rooms.

Rake: Understanding The Basics

In short, the rake is the amount of money a casino takes, regardless of whether you’re playing a tournament or a cash game. However, the amount of money taken as the rake depends on where you’re playing and the type of game. There are also options of paying rake, all of which we will look at in this post.

Poker Room Cash Games: CAP or No-CAP

When you play cash games in a poker room, whether it’s Texas Hold’em or Stud 7, the dealer will take the rake out of the pot at the end of the hand. Once the winner has been announced and the hand is over, the dealer will take a small amount of money from the pot before pushing the casino chips over to the winner.

In the vast majority of land-based casinos, the amount of rake taken from the pot is a fixed percentage. This amount can be anywhere between 2% and 10%, although it’s usually on the lower end of this scale; you can typically expect the casino to take around 3% of each pot. 

That may sound like a lot of money, especially as the poker game spans 24 hours a day, 7 days a week sometimes, but most casinos have a cap on the amount of rake they can take from an individual pot. For example, a casino may cap the maximum amount of rake at $10 per hand, ensuring that everyone isn’t bleeding money on each hand.

However, not all poker games have a capped rake; some venues take a percentage of all pots, regardless of the amount. However, if you find one of these games, you generally want to avoid it, as you’ll pay a lot of money to the casino over the evening.

Hourly Rate

When it comes to cash games in the poker room, virtually all land-based casinos (and online casinos) will take a small percentage of each winning pot. However, some casinos also offer you the chance to pay an hourly rate. You’ll pay the casino and the dealer a set rate for each hour they deal; this is often used with larger stakes.

When an hourly pay structure is used, it simply means that you don’t have any money taken out of the pots you win. Instead, you pay a fee each hour you’re sat at the table. The fee is usually collected once an hour, and you can choose to pay it with your chips on the table or cash.

Stake-Based Rake

Generally speaking, lower limit games are usually worse than the higher ones regarding the amount of money that casinos take as rake. For example, in the low limit games, if the cap is $10, it can add up quite quickly – especially if players are only sitting down a few hundred dollars.

However, if you go to a higher limit table where the players are set with thousands of dollars – then a $10 rake doesn’t seem that bad. While this may seem unfair to some lower-staking players, casinos are in the business to make money. They need to constantly have a dealer at the table and managers and floor staff to monitor everything.

Tournaments

Tournaments are a unique game style in which players battle for chips and try to outlast their opponents to advance to the money round. As a result, chip pots have no monetary value, and casinos cannot collect rake in the same manner they can in cash games.

The tournament rake is instead paid in advance as part of the buy-in. For example, a $200 event will usually have a buy-in of $220 or $240.

This additional $10 or $20 on top of the $100 is a rake, and it does not contribute to the prize pool. The casino keeps this money and uses it to fund the event’s costs.

If you play tournaments and keep track of rake, you’ll notice that online games have significantly lower rake than live games, particularly at lower stakes.

Let’s explain.

Live venues must pay for dealers, hire tournament floor space, tables, and plan everything to have a nice event. This comes at an additional cost to players, but online platforms do not have many extra fees for starting the tournament.

What About Online Poker Rooms?

When it comes to online poker, things are a little bit different. For example, an online poker room doesn’t have to worry about physical floor space, they don’t have to pay dealers, and they can host tournaments and games with thousands of players. For a land-based casino to do the same would be expensive. 

This means that once an online poker site has its software set up, the overheads are minimal; they only pay for its servers and website developers to ensure everything runs smoothly.

This means that rake for an online poker site will be a lot more lucrative for them when compared to conventional land-based casinos. In fact, online poker tables can seat so many more poker players than those in land-based casinos that it can be a great source of money for the company. This is one of the reasons why we’ve seen so many online poker sites setting up shop in the last few years.

However, sometimes a site will pass these savings along to players – and it can even be a very effective marketing tactic to entice new players into joining. For example, some online casinos will even offer new players a period where they don’t have to pay any rake, making the poker games much cheaper, especially if you’re playing at higher stakes!

How Else Does a Casino or Online Poker Room Make Money?

Although rake is the most important source of revenue from poker games, it isn’t the most important for live venues compared to other games. Many casinos are content to break even and profit on the side while hosting a large tournament. While this may not make much sense at first sight, it is entirely reasonable when viewed in context. 

Tournaments frequently function as excellent feeders for cash games, which is good news for casinos with large poker rooms.

Casinos make a ton of money from cash games because a prolonged cash session may net them a lot without exposing them to any risk. It’s a fantastic method to supplement your household income.

Aside from that, large tournaments with substantial guarantees are a particular method to get many people in the door. Many people who come to the casino aren’t only interested in playing poker.

After the event, they’re likely to gravitate toward table games and slots, resulting in the casino amassing a large sum of money from these participants over a few days.

Of course, some of the bigger operations provide other services such as food, beverages, and lodging, which are likely to produce money when many individuals register to participate in a tournament. So everything comes together to form a good bottom line.

Summary

Now that you understand why and how casinos make money from poker, you probably better understand why poker is offered at so many online gambling sites and land-based casinos.

Poker may be a very realistic resource to increase their bottom line, especially with a rake in place and all the additional cash flowing from people trying various forms of gambling.

You should not be terrified of rake. Even if you’ve never heard of rake, casinos profiting from poker games should be no surprise. 

You should get familiar with rake in the activities you often play since it may significantly impact earnings. Even if you’re an excellent player, games with absurdly high rates of rake and very large caps (or even no cap whatsoever) might be extremely tough to beat.

If you have a choice, a game with a lesser rake may be worth considering. Unless there is a big disparity in the skill levels of the players, you will make substantially more cash when the rake is smaller.

FAQs

What is rake? Is it how casinos make money from poker?

Every time you play a hand in a real money game, the poker room will take a small amount of the winning pot, known as the rake. It’s how casinos make money from poker games. While the exact amount of money that casinos make from a poker hand depends on the percentage in the rules of that specific casino, most poker rooms take around 5%.

If you enter a tournament, you’ll pay a small entry fee that doesn’t go into the prize pool but, instead, goes to the casino. Every poker rake is different – but it’s something that you’ll find used in every poker room. Thankfully, most sites charge the same amount of rake.

How is poker rake calculated?

ThePokerBank does a great job of explaining this, and here’s a snippet from their website: “As a general rule, in cash games, the poker room will take 5% of every final pot as rake. So if the final pot is $10, the poker room will take 50c and the winning player will get the remaining $9.50. However, the majority of poker rooms will not take rake from hands where there has been no flop.

Tournament rake is a lot clearer in that you are able to see the amount of rake you are paying to the room for each tournament in the lobby. As a general rule, poker rooms charge 10% rake for every tournament you play. So in a $20 tournament, you should expect to pay $2 to the house ($20+$2).”

What is rakeback?

Sometimes when you play at online poker sites, you’ll notice rakeback, a percentage of the money the site takes as rake given back to you as a balance credit. It’s kind of like a cashback program. However, many bigger poker sites offer lifetime rakeback, which can be lucrative, especially for those playing at higher stakes.

When is the rake taken?

In most land-based casinos and online casinos, the rake is taken at the end of the hand. For example, if you’re playing a cash game, the rake will be taken from the cash game pot. The cash game pot is tallied up at the end of the hand and dished out to the winning player.

In a land-based casino, the dealer physically calculates the rake and removes the relevant number of chips before handing the rest of the chips to the player. When you’re playing online, however, it’s all done automatically. You can see how much rake is taken before the pot is shifted to you and credited to your balance.

What about hourly rake?

Hourly rake is a rarer type of option. It’s not something that you’ll see offered in all land-based casinos, as it’s typically reserved for players playing at much higher stakes. While regular rake isn’t much of an issue for those playing are regular stakes, it’s too much money for the casino to command a rake from professionals playing for hundreds of thousands of dollars.

That’s why most land-based casinos that host big games give players the chance to pay an hourly rate instead; you pay the casino and the dealer for every hour you’re playing. If you watch any of the high-stakes poker players on TV, you’ll notice that there’s no rake taken because all players pay an hourly fee depending on the location of the land-based casino and the stakes.

How else do casinos make money on poker?

When it comes to how casinos make money, rest assured that they have a lot of tricks up their sleeves; poker isn’t the only way they make money. One of the other key methods used is casino table games and video slots. For example, head to any poker site online. You’ll see that alongside poker, you can play various casino games from a vast selection of software providers and game developers.

Many poker sites even allow you to play video slots alongside the poker tables – and this is one of the key ways that casinos make money. Most poker players like to have the occasional flutter on other casino games like video slots and casino table games. This is a pretty major moneymaker for both online casinos and land-based casinos.

Who are some well-known poker players?

Today, there are thousands of well-known poker players – although the best-known poker player is probably Phil Ivey or Doyle Brunson. The latter is widely considered the founder of modern-day Texas Hold’em. He’s written some of the most influential poker books in history – books that many hardcore poker players and professionals today cite as their primary source for learning about the game.

Phil Ivey is considered the best all-around poker player in the world. His dominance at the poker table – both at cash game tables and in poker tournaments – has earned him tens of millions of dollars and a fierce reputation; he’s feared by virtually every player in the world.

Are there any rake free poker sites?

Yes – although most sites opt to operate a rakeback promotion instead. Unfortunately, completely rake-free sites are still relatively rare. Those that do exist are pretty small, so there’s not a huge number of players.

Does poker have a house edge?

No; unlike casino table games, live dealer games, and video slots, poker is not played against the house. Instead, you play against other people in real-time. There’s no house edge to the game, and the land-based casinos and online casinos don’t make money directly from the game as a result of a house edge. They take a rake to make their profit instead. 

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