How Poker Rooms Make Money?
With the increased availability of poker on the internet over this past decade, the game has exploded to the masses. With over 700+million people around the world taking part in a game each year, it is important to at least beware of where your money is going.
We all know that online poker is not the same as online gambling in some sense. First off, you don’t play against the “house”, you play against other players just like yourself, so technically the odds should be more equal as long as you know what you are doing. Online gambling / casinos games in general are created by high-level professionals that understand the mathematics & statistics to create games that can never be beaten. You may get lucky, but in the long run… you cannot beat Vegas (an annual raking of billions proves this point).
So how do poker rooms generate revenue? They do it in a few ways:
Rake: The rake is a percentage of money collected from most real money game pots. The rake is calculated as a percentage of the pot based on a sliding scale and capped at some maximum fee usually. Each poker room has their own rake structure with most poker rooms at 3-5% rake, undependant of game limit. When playing online it is wise to know what the website rake is before making a deposit.
Entry Fees. Sit-and-go tournaments and pre-scheduled multi-table tournaments are not raked, but an entry fee of around ten percent of the tournament entry fee is added on top of the price of the tournament. The entry fee is not calculated in the winnings as it is taken by the host. You will see this when you register.
Investments: Online poker sites invest the money that players deposit while it sits in their account. Since the sites do not have to pay interest on players’ bankrolls, this method can be a significant source of revenue.
House beneficial side bets: Some online poker sites offer side games like black jack or side bets on poker hands where players play against “the house” for real money. The odds are highly in the house’s favor in these games and therefore producing a profit.
Many traditional brick and mortar casinos argue that the cost of promoting and profiting from poker is a difficult task and that the space reserved in the casino is better off with added slot machines. Online venues however, are dramatically cheaper to operate because of smaller overhead costs and this is why you are able to find low stakes such as 1cent, 2 cent tables and even freeroll tournaments to attract a wider range of players.
I personally don’t understand why poker rooms say don’t make that much “profit” from running poker rooms… it really makes me wonder really how much are they making from those slot machines if they can make statements like that? A simple formula would be to look at the BadBeat jackpots in the poker room. Within a month, you can see jackpots of up to $80,000+ and that is determined by $1/per played hand in the poker room. Assuming that the rake is around 5%, even if we were to assume $5 of every hand goes to the house, that’s already $400,000 in an average room with about 8 tables. I don’t know what it takes to run a casino, but surely that should cover the 1000sq feet of playing space and rent.
Fyi: River Rock Casino in Richmond BC, Poker Room Rake is is 10 percent up to $2 maximum for the $2-$4 limit game, $4 max on the larger limit games and 10 percent up to $5 on the no-limit games.
Edgewater Casino in Downtown Vancouver advertises the lowest rake in the Vancouver area: 10 percent to $3 max on limit games and 10 percent to $4 on all no-limit games.
These rates are estimated to be correct at the time of this article and are subject to change at any time. Please call your local card room for exact numbers.
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