Demystifying Poker‘s Rake and Tournament Fees

As an avid poker fan and gaming geek, I wanted to give a thorough explainer on poker‘s rake and tournament fees. These costs are central to how cardrooms, both online and live, operate games professionally while still allowing skilled players to profit.

First, what exactly is "the rake" in poker? As defined by Wikipedia, "It is generally 2.5% to 10% of the pot in each poker hand, up to a predetermined maximum amount." So the cardroom collects a small percentage from each pot to cover overhead costs and make money themselves.

A Brief History of Rake

While the origins are hazy, rake likely started in illegal underground poker games as a way for hosts to benefit without playing. Rake gave an incentive for venues to organize games, even though they couldn‘t win money through betting. Once legalized, rake became the standard compensation model for cardrooms.

How Much is the Typical Rake?

The specific rake percentage and maximums depend on the poker variant, stakes, and venue. According to ThePokerBank, here are some averages:

• Texas Hold‘em – 10% rake, $3-$5 max
• Omaha – 10% rake, $4-$5 max
• 7 Card Stud – 10% rake, $4-$5 max
• 2-7 Triple Draw – 5% rake, $3-$4 max

For context, at 10% rake on a $50 pot size, the rake would be $5. The "max" caps the rake payout per hand, even if 10% would exceed that amount.

Different Types of Rake Formats

While a percentage per pot is standard, cardrooms use other rake methods too:

• Time rake – Fixed amount collected every half hour or hour
• Tournaments – Removed from prize pool based on entries
• Pot-limit rake – Only taken from pots above a set size

Time rake in particular is common for limit poker games where pot sizes don‘t vary as much.

How Rake Impacts Game Strategy

Skilled players have to account for rake in their strategies. As poker coach Jonathan Little explains, "You should tighten up your ranges when the rake is higher compared to the stakes." Opening marginally profitable hands becomes less correct with a 10% rake versus a 5% rake.

Do Pros Think High Rake Kills Games?

In a Reddit AMA, renowned poker pro Daniel Negreanu voiced concerns that excessive online rake "disincentivizes players from playing as many tables or hands as they would otherwise." Other pros like Phil Galfond have also criticized some sites‘ "predatory" high rake. The jury is still out on how much high rake impacts table/game selection.

Online vs Live Rake

Live poker generally has lower rake than online games. According to Poker Industry PRO:

• Live 1/2 or 1/3 NL Holdem – Generally 10% capped at $5
• Online 50NL – Generally 5% capped at $3
• Online 200NL – Generally 5% capped at $10

However, online poker offers rewards like rakeback to offset some of these costs. Rakeback returns around 25% to 40% of rake to players.

Rake/Fee Structure of Live Poker Tournament Series

Popular live tournament series like the World Series of Poker and World Poker Tour rely on larger rake to fund their bigger prizes and operations. According to CardPlayer:

• WSOP – 13% rake on most bracelet events
• WPT – 20%+ rake on Main Tour events
• WPT DeepStacks – 9-12% rake on smaller tourneys

High rake enables these brands to offer millions in prize pools despite 7-figure operational costs.

How Rake Enables Poker‘s "Skill Factor"

Critically for poker, rake helps dispel perceptions of the game as pure gambling. As a licensed cardroom collects rake, players are essentially paying for the privilege of competing. This satisfies a typical requirement for contests of skill, rather than chance. Regulators in various states have recognized poker as predominantly skill-based, aiding its legality.

Minimizing Rake Impact as a Casual Player

For recreational players, choosing games with lower rake is advised to maximize time playing and minimize costs. Seek out promotions, rewards programs, and formats like pot-limit rake to reduce the rake bites. Setting a gambling budget with rake in mind is also prudent advice.

Rake Compared to Other Gambling Games

Poker isn‘t the only gambling game with built-in fees:

• Blackjack – Costs from side bets like insurance
• Craps – Typically a 5% charge on buy bets
• Roulette – House edge gives casino profit margin
• Slots – House edge of 5-15% or more

But most other game wins/losses are chance-based. Poker skill helps overcome rake via long-term edge.

Economic Arguments Around Rake

Some economists view rake as an inefficient "price control" that distorts optimal game conditions. Removing rake should increase the prize pools. But PRIVATE card rooms justify rake to pay for dealer costs and furnish the game for players in the first place. Trade-offs clearly exist.

Changing Rake Structures Over Time

Online poker sites continue to experiment with rake, balancing player enjoyment against profitability. As a trend, rake has gone down on many sites over time. For example, according to PRO, PokerStars rake caps fell 24% on average from 2013 to 2019. Competition puts pressure to reduce fees.

My Take as a Poker Enthusiast

While no player loves paying rake, I think reasonable rake is justified for the venues to profit and sustain games. I do worry about predatory practices at extremes. But the general poker ecosystem suggests the market largely regulates itself, with pros selectively playing rake maximums they feel are beatable. For now, rake remains an inevitable "cost of doing business" that players plan around.

There‘s no denying rake and tournament fees enable today‘s thriving poker scene. For poker to remain an amazing skill game into the future, I hope regulators and sites continue to balance rake structures fairly for all.