The Effects Of The Rake

Economics, Poker Concepts

April 4, 2008

Something rather silly happened on rec.gambling.poker today. One of the group’s less observant participants claimed that if you play 1/3 NL or bigger in a casino, the effects of the rake and other expenses are minimized. Fact is, that’s far from the truth. You have to play MUCH bigger than 1/3 NL before the rake and your other costs don’t have a major impact. To illustrate the point, I put together what I think is a fairly conservative list of expenses for a 1/3 NL player, and looked at what that did to your win rate.

Rake, tip, and incidental expenses make a huge difference at a game like 1/3 NL. Suppose you’re crushing the game & would beat it for 25 BB per 100 hands on average if it weren’t raked, and the dealers are pretty decent so you get 35 hands/hour on average. Those are both optimistic numbers. Now, that translates to \$75/100hands, and \$26.25 per hour. That’s not a bad rate – it’s about what an average entry level college grad makes.
But wait, you win an average of 3 pots per hour. We’ll say \$3 rake per pot (assuming a \$4 rake that doesn’t always get maxed out) and there’s a jackpot drop of \$1. Now you’re only making \$14.25 an hour. That’s more like vocational school money. But wait, you tip \$1/hand you win. Now you’re making \$11.25 – McDonalds manager money. But wait – you get a drink per hour, and tip the drink girl \$1. Make that \$10.25. And you drive 45 minutes to the card room each way, consuming \$10 in gas. And you tip \$1 to the chip runner at the start of your session, for \$11 in fixed expenses per session – we’ll say it’s a 6 hour session. Now you’re making \$8.42 per hour. Which puts you just slightly ahead of this guy

http://www.theonion.com/content/node/39087

That is until he gets promoted to assistant manager, at which point he’ll probably be out-earning you.

Moral of the story: rake and expenses turn poker into a menial job in a hurry if you play too small, even if you’re an incredible player who can crush the games.