What is your true cost to play online?

[Synergistic Explosions]

MicroBobs post about how he cleared his 30,000 party points to win the cruise entry has gotten me thinking about the true cost of playing poker online, again.

He stated in the several days he played he estimated paying a total rake of $6800 and finished with a net loss of $100. Which means he won $6700 from other players.

When I first started playing online, before I knew alot, I multi tabled low limits at Party. In the seven months I played this way, without bonuses or rakeback, I paid 8500 in rake while netting 17,500 in profit. I felt this was rather a high cost of doing business. I felt like I was putting in all these hours, taking all the risk, and my co-partner, the poker site, was taking an awful large share of my winnings.

So if the true cost of doing business with the poker sites is 50% or more of your total net profits, how can we justify these costs? It would just seem to me, as the years go by, such a large percentage of the overall player pool of cash gets siphoped away. If growth of new players levels off or diminishes, wouldn't this large outflow of funds to the poker sites in the form of fees eventually make the game as we know it unbeatable to 95% of the players? Eventually, there would be no money left to win.

If Party Poker has lets say 40% of the player pool and make 300 million per year in profits, they must therefore actually take in much more than that from players. If their expenses are only 100 million, that means they rake away 400 million from players per year. Multiplying this out to all sites, then that figure becomes 1 billion per year is siphoned from the existing player funds. I'm just estimating here and in no way could these be the correct numbers I know. But still, we know that the amounts for sure are in the hundreds of millions and at least between 500,000,000 and 1,000,000,000.

So I ask two questions to all. After figuring out your net profit or losses for the prior year, and figuring out how much you paid in rake fees, what do your numbers tell you? What percentage of your net profits are fees? If you lost, how much would you have won without these fees?

So what I would really like to hear are the yearly numbers of what others pay in total rake fees as compared to their overall results. Mine was a whopping 50% plus for my first 7 months a couple years ago before I changed my tactics. Is this 50% plus figure applicable to others of you who are winning players?

If you lost money last year, how much would you have won without these rake fees?

When I think about MicroBob winning $6700 from other players but ending up with a $100 net loss, in four days, it really makes me think long and hard about what actually is going on in online poker. It also makes me realize why so many new sites are scrambling to get into the action. /images/graemlins/smile.gif

[Al P]

It truely shows that zerorake site had the right idea, just not the right marketing strategy.

I agree with you that billions are siphoned away by the poker sites each year - billions that could and should be going into the pockets of winning/break even players. It's amazing when you look at PT stats and see that the rake is nearly as high as your total winnings. In fact I'm running somewhat mediocre right now and my rake paid is more than my winnings over my last 6,000 hands. But I do have rakeback so that helps some.

But I agree with the overall idea of your post. The sites take out huge amounts of money from the overall money pool.

[Al P]

Oh and this was mention in another post RE: party bad beat jackpots. Every time it gets hit that's $100,000 - $500,000 being siphoned out of the poker economy. Although in this case it's going into player's pockets, those players aren't investing that money back into the game.

[URMeowed]

[ QUOTE ]
If growth of new players levels off or diminishes, wouldn't this large outflow of funds to the poker sites in the form of fees eventually make the game as we know it unbeatable to 95% of the players? Eventually, there would be no money left to win.


[/ QUOTE ]

Online poker has been highly profitable way before this recent explosion.

Not trying to be a meowhead or anything but all I worry about is playing well and game selection.

Sick to think but the rake online is comparable and in some cases way better than live games around the world. I remember a few years ago when the Bellagio raised their rake on the 15/30 to $4 and the 30/60 to $6 every 30 minutes.

Sure the rake takes a ton of money out of the poker economy and being a winning player, I also wonder where everyone gets the money to play. Sometimes I will even ask the current donk at the table the same question after he rebuys again. At least before, in the early years, you could use your credit card. But now, you almost have to have the cash in the bank. I'd rather not dwell the negative side of the poker food chain. I just hope whatever illegal things they are doing to get the money, that they don't get caught.

As for my numbers on the year, I've been off to a hot start at Party. In the 15/30 games, I am up $12,302.76 while only paying $1,252.50 in rake. That puts the number at around 10%. However, I have run quite bad at .50/1. I'm stuck $65.63 and averaging -46.55BB/100 hands. Granted I was raising every hand and jamming on all streets but come on now. I think .50/1 Party is rigged. Stay away. Obviously, donking away works better at 15/30. Meow.

[HesseJam]

I wonder how long it will take that stiffer competition forces them to lower the rake.

At the moment, I feel Party could even increase the rake in the low limits without loosing too many customers. Once the competition among sites increases, Party has enough room to come down with the rates. But I guess from a marketing point of view boni are still better than lower rake.

Thinking players use the boni and non-thinking players do not care about the rake.

[solucky]

In my first year i have won 11 000 (8000 rakes 3000 net), had no idea about Bonus , rakeback. For this year it seems i make around 14000 (8000 rakes 6000 net). And most new players that i know dont play for fun they will win, so i am sure in 1-2 years it will be hard to make a single $ for me.

[playersare]

clearly a decent portion of the rake at high limits (minus rakeback) is used to mete out bonii to lower limit players and attract and maintain mainstream business. the average whore is getting 10-20 cents of bonus back for every raked hand generating as low as 2-5 cents of MGR, so perhaps one could calculate the ratio of high limit tables to low limit tables and see how it trickles down.

in a perfect world, players moving up to higher limits and rakes will assumedly make enough BB/100 in actual play to justify their fixed costs, just like a growing business has to invest in more employees, bigger rent space and more equipment, yet still be profitable in the long run. I'm certainly not going to complain about ignorant fish (rich or poor) who don't get the most out of their action if I indirectly benefit from it. and of course, an iglobalmedia IPO would be the greatest rakeback of all.

microbob's cruise quest is not necessarily the best example for argument, since raw cash profit was not the primary goal of his efforts.

[Synergistic Explosions]

[ QUOTE ]
Sick to think but the rake online is comparable and in some cases way better than live games around the world. I remember a few years ago when the Bellagio raised their rake on the 15/30 to $4 and the 30/60 to $6 every 30 minutes.

[/ QUOTE ]

I thought about this also. But I'm thinking since we are usually multi-tabling several games at a time, plus the games go so much faster. Therefore, even though the rakes are comparable or less than at B&M's, we pay 4-10 times more in total rakes per hour on average playing online. So the money actually gets skimmed away from the player pool online way faster than at B&M's.

[Zetack]

[ QUOTE ]
clearly a decent portion of the rake at high limits (minus rakeback) is used to mete out bonii to lower limit players and attract and maintain mainstream business. the average whore is getting 10-20 cents of bonus back for every raked hand generating as low as 2-5 cents of MGR, so perhaps one could calculate the ratio of high limit tables to low limit tables and see how it trickles down.

in a perfect world, players moving up to higher limits and rakes will assumedly make enough BB/100 in actual play to justify their fixed costs, just like a growing business has to invest in more employees, bigger rent space and more equipment, yet still be profitable in the long run. I'm certainly not going to complain about ignorant fish (rich or poor) who don't get the most out of their action if I indirectly benefit from it. and of course, an iglobalmedia IPO would be the greatest rakeback of all.

[/ QUOTE ]


I think clearly they make money on the vast majority of players who are getting bonus not just the high limit guys. At 3/6 to clear the empire 150 dollar bonus, for example, it looks like Empire will generate a little over 250 dollars for my MGR. So my play is worth 250 some dollars to them and they pay me 150 dollars.

Without trying to figure out the actual numbers then, it looks likely that when paying bonus they make mone on the 2/4 players, maybe break even on the 1/2 players and lose 30-50 bucks on the .5/1/00 players. And of course make money on all the higher limits.

Except they probably don't lose even on the .5/1.00 between the players who don't make their raked hands and the players who continue playing after the bonus is cleared who otherwise wouldn't play.

Cheap marketing, that actually makes them money on most players.

As far as the effect of rake, it looks like it could be as high as 2.5 BB's per hundred out of my pocket.

But is the rake gonna kill poker because so much money goes to the sites not the players? I dunno, all the edge is with the casino's in other forms of gambling and I still seem em building new ones that cost 100's of millions of dollars without worrying that the stream of money is gonna be choked off because its not spread back out to the players.

--Zetack

[Synergistic Explosions]

[ QUOTE ]
clearly a decent portion of the rake at high limits (minus rakeback) is used to mete out bonii to lower limit players and attract and maintain mainstream business. the average whore is getting 10-20 cents of bonus back for every raked hand generating as low as 2-5 cents of MGR, so perhaps one could calculate the ratio of high limit tables to low limit tables and see how it trickles down.

in a perfect world, players moving up to higher limits and rakes will assumedly make enough BB/100 in actual play to justify their fixed costs, just like a growing business has to invest in more employees, bigger rent space and more equipment, yet still be profitable in the long run. I'm certainly not going to complain about ignorant fish (rich or poor) who don't get the most out of their action if I indirectly benefit from it. and of course, an iglobalmedia IPO would be the greatest rakeback of all.

microbob's cruise quest is not necessarily the best example for argument, since raw cash profit was not the primary goal of his efforts.

[/ QUOTE ]

I'm not sure how much they pay out in bonuses in regards to how much they take in through rakes. But I do know that I have now become a player online who only plays ring games while working off bonuses, or qualifying for a point buy in free roll or special promotion from a site. I feel this is the only way I can mitigate the affects of the total amount of rake fees I would pay a site.

Also, yes, I realize that MicroBobs recent example isn't reflective as a whole. Of course not, or how would anyone actually turn a profit online? However, realizing what I paid in rake for that period I mentioned, the total fees compared to net income may actually turn out to be 50% or more. When I say 50% I mean that for every 2 dollars won we pay 1 dollar in rake fees to achieve it. That's the number I'm trying to get an idea of. From the few replies with stats on this I see so far here, it seems so.

[MikeyObviously]

Since 11.1.04
Last 15k 2/4 and 5k 3/6
WON: 4,391
RAKE: 2065

I am about exactly at the 50 percent mark. Those 20k hands I have run well too, as they are @ 4.67BB/100 hands.

In the same amount of time however, I have whored about 1,500 worth of bonus. Since 11.1.04 I have gotten 350 in reloads from empire, 600 in reloads from party, pokernow and multi depo bonuses, some cryptos and absolute.

So the last three months I have paid 2k on 4.3k winnings, but have gotten about a 75 percent rakeback by playing under bonus most of the time

[Belok]

The poker sites dont intend for the players to use them as a means to live. It is for entertainment. The rake is their fee for the service.

They wont lower their rake until the market requires them to. And with party/stars basically controlling the market, they wont need to.

[Synergistic Explosions]

I wonder what percentage of the player pool are the players who are net winners of other players money but net losers after rake fees. Wouldn't this number be around 25%? Then if 50% of the players are net losers even without rakes, that would mean 3 out of 4 players online have to be net losers.

Then considering that of the 25% who are actually turning a net profit, 10 or 15% of these must only be making a small amount of profit. Therefore, really only 10-15% of the online players could possibly be making good profits making it worth continuing on to play.

So this must mean turnover in players is amazingly high. I occassionaly check my buddy list at Party that I made two years ago. I don't see more than one out of twenty still playing regularly. This isn't scientific by any means, but I'm thinking 9 out of 10 people leave the player pool each year, at least those who at one time played regularly.

Anyone else think this may be accurate? These are low limit players on my buddy list though. I have no clue what the drop out rate would be in the 10-20 or 15-30 group of players. But I'd imagine it may be even higher?