Online cardrooms rake too much for their own good

[Awesemo]

There is a distinct relationship between the change in population of an online site and the amount of rake charged per pot. This is intuitively true considering that as players bust out of the site, they are less likely to buy back in. This has an effect on the overall amount of profit of the site. Is it possible that online poker sites charge too much rake for their own profit? If this was true, the change to compensate would be a benefit to the whole poker community.

The image I have for online poker is put well by Snoop Dogg, "Paid tha cost to be da boss." There is a definite learning curve for playing profitable poker. The higher the rake, the steeper the learning curve. If the rake of online sites was lowered, the population would grow at a much faster rate. This would be great for online poker in general. I think Dutch Boyd is on the right track with his venture Rakefree.com. However, I think that the best step for the poker community would be a currently popular online site lowering its rake. Online poker seems to me like an oligopoly. All of the websites have approximately the same rake structures. If one site lowered theirs, it would cause the other sites to lower as a reaction.

If the rake in poker rooms were lowered, it would benefit everybody. Online poker rooms would have more players and the total rake could be optimized. The overall quality of players at the sites would diminish. Let's push for lowered rake structures in the new year.

[The4Aces]

i dont think the average player pays attention to the rake or even compares the rakes at diffrent sites. They see poker on TV or hear there friends talking about it and then they want to get in on the action. The above average player just fallows where the easiest games are. therefore I think that rake doesnt matter. The only thing that matters is advertiseing and diffrent types of games/tournamnets that the average player wants to play.

[ThePinkBunny]

As many have stated in the past...

" All of the websites have approximately the same rake structures. If one site lowered theirs, it would cause the other sites to lower as a reaction. "

This assertion is false. Most bad players don't choose a site based on rake structure. Most good players choose a site based on where bad players play.

[Uglyowl]

People still buy scratch tickets by the fistful with a rake of
around 50%. Online poker is a bargain!

[lehighguy]

Fishy don't care. He knows he's not an expert when he sits down. He expects to lose money. If he thinks hes some hot shot because he caught some lucky variance then he doesn't care about rake. After all fishy just made $500 in a few hours, who cares about a few bucks. Hes gonna be a millionare in like one year anyway at this rate. Why switch to low rake site x. Party has so many people. He can always find a game there.

[Awesemo]

I don't think that many people are fish in the sense of the word you're using. More than half of people would be winning players if there was no rake at all. If these people were consistantly winning, would they quit? I doubt it. And guess what? We make money off of these people on the margin!

[Awesemo]

The average player is also gonna play longer and more if they don't lose all their money because of the rake. My whole point is that when the average player is drawn to these sites, they are less likely to quit.

[Awesemo]

The implications of your statements are ridiculous. Would a fish be so stupid to play at a site that takes 50% of the pot? Rational people think on the margin. If there is one site that is offering a better deal than the others, they will choose that one. This idea could easily be expressed through advertisements on tv, and I see no reason why a site with a lower rake would not grow at a much faster rate than the already existing sites.

[Awesemo]

I would like the emphasize this fact. POKER SITES MAY NOT BE RUNNING AT OPTIMAL RAKE. The rake percentages should not be an arbitrary value of 5% but rather one that maximizes the total population times the rake. A reduction in this rate could feasibly reduce the amount of money that players pay for a site, but increase their profits.

[The4Aces]

there is probably a threshold that people have. Like they dont care if it is anything below a certian amount. Just like people have thresholds on things they buy. More people would buy something that cost $19.99 than the exact same thing costing $20.05. Same things probably holds true to poker rake

[AngryCola]

Most online poker sites have a significantly LOWER rake than brick and mortar casinos.

You are actually getting a pretty good deal by playing online. No tokes for the dealer, gas, etc. Combine those costs with a higher rake, and online poker starts looking like a pretty good deal at the lower limits.

As for the online sites lowering their rake. It's not happening. If anything, you should be expecting an increase within the next couple of years. They don't care about you, and they know there still will be more than enough action if they raise the max. rake by a dollar.

Think about it...
People gamble in casinos all the time knowing they are playing at a significant disadvantage.
They just don't care.

Example:
Slot Machines

[cnfuzzd]

you would be amazed by the number of poker players who dont know there is a rake.

You would be amazed at the number of low-limit 2+2ers who dont understand how the rake should affect their game.

Sites such as rakefree and champs, along with the "discounted" rake of rakeback deals, are out there. No one, and i mean no one, chooses a site based on its rake. Well, there are probably a few of us who refuse to play somewhere that the rake is such and such. But those are rare.

peace

john nickle

[34TheTruth34]

we missed you Syntax

[UncleDuke]

[ QUOTE ]
More than half of people would be winning players if there was no rake at all.

[/ QUOTE ]

Unless you contend that a relatively small number of deep-pocketed losers would subsidize everyone else, this statement is hard to agree with. At best, one would suspect it would be about an equal split between winners and losers if there were no rake. Obviously, no rake implies there would be an expected (and actual) win/loss of zero for all players taken as a group. My guess is that we'd actually see more losers than winners because winners would tend to play more often than losers, thereby concentrating the winnings into the group of better players while many losers would dabble a bit, conclude they weren't going to be very successful at online poker, and do something else.

[Cardzy]

Party has the highest rake on the net for the lowest limits it has (.50/$1 and $5+$1 sng's, not to mention the new BBJ tables). It doesn't seem to affect their customer base much. /images/graemlins/wink.gif I think your theory is flawed.

[MicroBob]

Agreed.
I would go so far to say that if Party INCREASED their rake they would actually be more profitable because so many players wouldn't care or notice.

Party increased their rake at this time a year ago....and I believe the only people who noticed are us uptight 2+2'ers who have a handle on how much the rake effects the game.
for most people, if you pointed it out to them they would say "ummmm....it's only $0.50. What's the big freaking deal?"


If party lowered their rake by 25% would they get 25% more action (or more players) as a result. I think not. There just aren't that many people out there who say, "I won't play at party because the rake is too high." Yes, there are some.....but not enough to make it worthwhile for party to lower the rake to try to get them back. They have plenty of fish who are more than happy to pay and pay and pay as the rake structure is now (if they actually know they are paying).


BTW - please don't tell party I said any of this.

[Mr_J]

I think bad players lose more to good players than they do in rake.

[Awesemo]

Obviously they draw the most customers on the internet. I contend that it does affect their customer base though. Because of the higher rake, more people bust out, and don't buy back in. If the rake was lower, medicore players would be more successful and not even realize it. This would contribute to the growth of the poker website.

[Awesemo]

Online poker has more than twice as many hands per hour. When you are getting a better deal per hand, I bet that you're paying about the same or more per hour. In addition, you can play multiple tables, which also increase the amount of rake generated. As for your idea of raising the max rake a dollar, I agree that it might not affect their action that much. What I'm talking about is the percentage of the pot that is raked. The less percentage of the pot raked, the more players able to be successful in the games. The population growth on the site will grow, and I don't see why it's not possible for an online site to actually make more money because of a lower rake. Obviously if they charge 0% rake, they will make no money. However, if they charge 50% rake, they will also make no money. This should illustrate my point that there is an optimal amount to rake the pot to lead to highest profits for a website. The websites just choose an arbitrary value of 5%.

[Paul2432]

[ QUOTE ]
I think bad players lose more to good players than they do in rake.

[/ QUOTE ]

At the lower limits this is not true. A typical on-lin 2/4 or 3/6 table probably pays more than $100/hr in rake. A winning player at 3/6 probably makes at most $15/hr. Any one table probably has at most one player winning $15/hr, maybe two or three winning $5-10/hr and the rest break even or losing players.

Paul

[The4Aces]

I could see Party increasing there rake. Will an increase of 50% make them lose 50% of there base? Probably not. I would not be supprised if they tried to find the magic number where people dont seem to care about anything under that.

[Awesemo]

[ QUOTE ]
I could see Party increasing there rake. Will an increase of 50% make them lose 50% of there base? Probably not. I would not be supprised if they tried to find the magic number where people dont seem to care about anything under that.

[/ QUOTE ]

This hypothesis does not have logical sense. If partypoker increased their rake 50%, their population growth would be severely hurt. Only around 25% of players are winning players as it is. With an increase of 50% very few players would be winning players. Losing players would lose their money quicker and be more likely to bust out. Once they bust out they can't play any more until they deposit more money, which they may not even do. Over the long run, the action at party would be severely hurt.

[Uglyowl]

You have a point Awesomo, I see where you are getting at.

Couple points:

1. I think Party is starting to lower their rake a little possibly with bigger deposit bonuses and their new VIP type program, don't know how it will pan out though

2. 40-41% of players are winners.

[UncleDuke]

[ QUOTE ]
2. 40-41% of players are winners.


[/ QUOTE ]

I'm not saying this is wrong, but was there a study done that came up with that result? I'd just be curious to see the details if there is one.

[MicroBob]

Offering a deposit bonus or starting a player-points program is NOT the same as lowering the rake.

The rake has been the same for the past 12 months.

[AncientPC]

[ QUOTE ]
As many have stated in the past...

" All of the websites have approximately the same rake structures. If one site lowered theirs, it would cause the other sites to lower as a reaction. "

This assertion is false. Most bad players don't choose a site based on rake structure. Most good players choose a site based on where bad players play.

[/ QUOTE ]

Ditto on that, 95% of the online poker players probably don't even realise how much they pay in rake.

[Uglyowl]

I have 4,500 players in my pokertracker.. 40.77% are winners. This has been pretty consistent all along through any period tested and what others have came up with.

[Awesemo]

[ QUOTE ]
I have 4,500 players in my pokertracker.. 40.77% are winners. This has been pretty consistent all along through any period tested and what others have came up with.

[/ QUOTE ]

This figure is wrong. I suspect that you do not have enough hands of these players. Consider it like this: 40.77% of sessions are winning sessions. It should be clear that if the average player has 40.77% winning sessions, he should be a longterm winner much less of the time.

[randomchamp]

[ QUOTE ]
I have 4,500 players in my pokertracker.. 40.77% are winners. This has been pretty consistent all along through any period tested and what others have came up with.

[/ QUOTE ]
I would be willing to bet that less than 5% of online players cash out $$$ on a monthly basis. Everything I have ever seen with your quoted stat is to small a sample to mean anything. I do know one person with 500,000 hands in his database and only 3% of the people have played 1000 hands against him. This is also true for my database about 1/2 the size of his. All the other players come and go - mostly go. I wish one of the online sites would enlighten us with this stat - what % of players have cashed out more than they have deposited. /images/graemlins/wink.gif

[Uglyowl]

I would be willing to bet any amount of money that if I were to hit 1 million hands in my database that at least 37% of players would be winners. Most people would quote 40% are winners in their pokertracker database. Not saying they are huge winners, but winners none the less.

On $2/$4 games the rake is a little less than $1/hand. Call it $1 hand for simplicity.

@$1/hand. average of say 50 hands/hour, the average person is raked $5/hour. Not bad for entertainment.

[Rudbaeck]

[ QUOTE ]
I have 4,500 players in my pokertracker.. 40.77% are winners. This has been pretty consistent all along through any period tested and what others have came up with.

[/ QUOTE ]

That means that less than 10% of your players are long term winners. There are about a million posts explaining why on these forums.

[randomchamp]

[ QUOTE ]
I would be willing to bet any amount of money that if I were to hit 1 million hands in my database that at least 37% of players would be winners. Most people would quote 40% are winners in their pokertracker database. Not saying they are huge winners, but winners none the less.

On $2/$4 games the rake is a little less than $1/hand. Call it $1 hand for simplicity.

@$1/hand. average of say 50 hands/hour, the average person is raked $5/hour. Not bad for entertainment.

[/ QUOTE ]

PT data is bad for many reasons on this point - I'll let others explain why. I'll bet you $1000 that less than 37% of the people who have ever played at Party poker cashed out more than they deposited. Too bad they won't up the info though..... If you can get them to send it to you and it proves your point - I'll send you the grand. What % of players do you think deposit 100-500 dollars, lose it, and never come back? 10%? 40%? 80%? 95%?

[MicroBob]

Indeed....think of it like blackjack.


Hypothetical example:
If you have a huge casino with 1000 full-tables of 7 players each who are all flat-betting and just play general correct basic-strategy (not card-counting) then they are all at roughly a 1% disadvantage.

On each table:
after 10 hands each table has 4 players who are up a little bit and 3 players who are down. The players are off to a good start. The casino is still not sweating it though.

after 100 hands each table has 3 players who are ahead and 4 players who are down. This is roughly the same as having 40% of your poker-tracker players be ahead in the sample you might have on them.

after 400 hands each table has 2 players who are ahead and 5 players who are behind.

after 1200 hands each table has 1 player who is ahead and 6 players who are behind.

after 15k hands almost all players are behind because the 1% disadvantage just grinded them down too much.



I believe this example is appropriate to the discussion but others may find flaws in this comparison.

[mbpoker]

Average rake on 2/4 tables is closer to 50 cents. Just pick up some 2/4 table and watch for 30 minutes.

[flafishy]

You're insane.

I doubt very seriously that the rake on most online poker rooms is going to make or break any player.

[Awesemo]

Well the rake certainly isn't going to make any player. As for breaking players, if a player is a longterm loser because of the rake, they are in essence being broken by the rake.

[Homer]

[ QUOTE ]
I doubt very seriously that the rake on most online poker rooms is going to make or break any player.

[/ QUOTE ]

Wrong.

[Synergistic Explosions]

Rake is cancer.

[Michael Davis]

"You're insane.

I doubt very seriously that the rake on most online poker rooms is going to make or break any player."

See Homer's reply. You're insane.

-Michael

[lefty rosen]

If you want to see what online cardrooms think about the average player look at what Party did in the last year. They layed off their props, they stopped the 10 percent to loyal old timers, they increased their small stakes rake and added short table NL thus destroying their juicy full games because short stakes causes more hands played and more rake. They added bad beat jackpots and double rake them. I can go on. They aren't alone Pokerroom gave a small rake back to players plus had the frequent player daily bonuses those are gone and Pokerroom increased their rake max on micros to 1.50. Also they added true micro tables to their site therby making their 1/2 full tables rock gardens when they used to be the best 1/2 games online..... /images/graemlins/confused.gif

[Derek in NYC]

Or think about rake differently. Party Poker is rumored to have grossed $500M last year. Let's suppose that in the course of a year, Party Poker has 600,000 active players.

This seems like a reasonable estimate since at any given time, let's say the average number of players on party poker is 25,000. If the average player plays 1 time per day, and the average poker session is 1 hour long, in order to maintain a constant 25,000 players online, you'd need a pool of 600,000 active players, each cycling through for 1 hour per day.

If you assume there are 600,000 players total paying $500M in rake annually, each player on average will pay about $833 per year in rake.

How many of you would happily pay $833 without having it having a material impact on your performance? I probably gross 10-15k annually from poker, so 833 is a real hit on my results.

Now add to this the fact that I am a winning player, but the losers must not only pay the rake, but also pay out in losses to winning players who multitable.

Online poker has the real potential for overfishing.