How Casinos Make Money on Poker Rooms, Explained
Despite how much fun they bring, casinos are all businesses. They need to make a profit from their customers (the players) in each area of operations.
Their goal is to make money from each table, machine, and customer in the room. By ensuring there is a house edge in each game on the gaming floor, they do just that – well, in the long run that is what they do.
This is the reason slot machines are set to a specific Return to Player (RTP) percentage, why you see the 0’s on the roulette wheel and why craps just have such terrible odds.
When it comes to poker, there is no house edge because, well, players aren’t against the house, they’re against each other.
You would be forgiven for thinking that casinos offer the tables from the good of their hearts, but that doesn’t quite sound like the establishments that we know and (sometimes) love.
Instead, casinos offer poker and take a small helping of chips in a variety of different ways, be it with the rake, the buy-in or even the food and drink available at the casino.
There is much more than meets the eye when it comes to the casino making money from poker. So let’s take a look and see exactly how a casino might make its money from poker rooms…
The rake is the name given to a fee or charge a casino takes in the game of poker to cover its costs and make a profit from providing the game.
There are a couple of different types of rake common in casinos with ‘pot rake’ and ‘time collection’ forming the basis of the two categories.
The most common method by which a casino makes money from players in a poker room is the pot rake – a scaled commission fee generally taken from the pot of each poker hand.
A pot rake is generally between 2.5 and 10% of the pot, up to a predetermined maximum amount. There are other non-percentage methods used by a casino to take the rake.
Traditionally, this was used in order to cover the costs of the game such as the dealer’s income for the night. More often than not, the dealer’s income is provided by the generosity of the players in the form of tips.
It’s not uncommon for some cardrooms to avoid taking a percentage rake during any community card poker game e.g. Texas Hold’em when a hand in question doesn’t have a flop.
This is poetically known as ‘no flop, no drop’ which rolls off the tongue pretty nicely.
In some of the higher limit games ($10-$20 or above), a pot rake will be disregarded and a time-based collection will be taken.
A time collection rake will usually be collected every half-an-hour during the game and in one of two main ways:
- Player time – A set amount collected from each player
- Time pot – A set amount collected from the first pot over a certain amount
Games should always tell you before you play which form of rake the casino will take. Even if there is not much you’ll be able to do to change the game – it’s always nice to know where your money is going.
I personally prefer a pot rake so the value is always relative and so that I don’t feel like I’m paying for how much time I’m in the seat – but as I say, it’s a personal choice.
Differences between brick-and-mortar and online rake
When it comes to online rake, there are a couple of differences from their brick-and-mortar counterparts with the potential for bonuses, rewards and rake-free sites available.
Rake free poker sites and casinos
Some online poker sites have cottoned on figured out that players don’t much like having a percentage of their pot taken away and have abolished rake entirely.
Instead of charging a percentage, these sites target the hardcore poker players by simply charging a monthly membership or deposit fee.
This isn’t simply a great way for the casino to recruit more players who may find interest in other ‘house-favorable’ games, but it gives the opportunity for serious poker players to get the most out of those games.
However, due to the high costs associated with the operation of an online poker room, numerous companies offering the ‘rake-free’ rooms have since seen bankruptcy.
Despite this, there are now several financially stable online poker rooms offering rake-free games, albeit with some caveats depending on the site chosen.
Always remember to read the small print; you’re not always signing up for what you might think.
Rakeback player rewards
Another option that online poker sites and casinos can offer is a player reward scheme known as ‘rakeback’.
The concept is simple: poker providers will return part of the rake (or tournament entry fees) to the player as an incentive to continue playing at the specific site.
This rewards scheme was launched in 2004. As online poker became more popular, professional players began using rakebacks as a method of increasing profits or cutting losses.
How many hours, how many tables and what stakes a player puts on the line affects the amount that can be raked back.
For those with a serious dedication to the game, this value could be in the thousands of dollars every month.
It didn’t take long for professionals to start using these systems, giving rise to ‘Rakeback pros’ – players using a less intensive losing strategy throughout many tables simultaneously while offsetting losses through rakeback rewards.
Rakeback can be found in some cash games and can be calculated in one of two ways:
- Dealt method – Awarding the same amount of rakeback to each of the players dealt into a hand
- Contributed methods – Awarding players based on their actual contribution to the pot.
When it comes to tournaments, fees are a little different from the usual poker room inside any traditional casino.
The rake for a typical tournament is usually collected as an entrance fee rather than a percentage of the pot.
Players will usually see the tournament buy-in displayed as $100+$20 in which the smaller value would go to the house.
Other times the buy-in will be shown as $100 alongside the percentage to be taken for the house expenses.
By now you will have worked out that the poker room is one of the least profitable rooms in any casino.
With such small takings and contribution to revenue when compared to blackjack or slots – it’s a wonder there are poker tables at all.
The problem is that when we look at all the statistics and the data surrounding the ways a casino makes money, it is inevitable that we stare directly at the takings created as a direct result of the game.
There is a great deal more than meets the eye when heading into a casino – the games are not the only places where casinos make money…
When you’re heading to any of the big casinos for a well-deserved vacation, where is the first place you consider staying?
1You could get a cheap deal at a motel, maybe head to a stand-alone hotel, or you could stay at the very place you are coming to visit. I’m guessing the latter option appeals to the majority and it makes sense for the casinos to charge accordingly.
Whether it’s a group of friends flying out for a weekend away or a wedding party celebrating with a little poker – all the rooms work to increase the resort’s bottom line.
That’s just with friendly parties. As soon as you consider the huge amount of money that comes when thousands of poker players visit for up to a week at a time for big tournaments, you’ve got yourself a hotel full of high-rollers.
There are definitely worse people who could be occupying the rooms.
If you and a couple of friends are heading out to the casino to play a little poker, what are the odds that you are only going to play a few rounds and head back home? Pretty slim right?
You might come for the poker, but with so many other games at which to try your hand, there is bound to be something that takes your fancy and makes you stick around.
Although casinos won’t make a huge difference to their bottom line by providing the poker tables, they will with the slots, blackjack, and roulette you will soon find yourself playing.
We’ve all been there (if you’re a poker player that is). You fly into town for a big tournament, get eliminated a little earlier than you were expecting and have a day or two to kill before heading back.
Where is the first place you go? Right back through to try your hand at something else. It’s not every day you are in one of the big casinos; you might as well make the most of it.
You’re having fun at a game that is a bit different from the one you were expecting and the casino keeps its house edge and eventually profits from you. Win-win.
Entertainment and shows
It doesn’t matter if you’re Phil Hellmuth, Doyle Brunson or Daniel Negreanu, everyone needs a break from the cards every now and then.
Casino resorts know this. They also know there’s no business like show business.
No matter what time of year customers are planning to visit the world’s most popular casinos, there are always plenty of great acts and entertainment to choose from and watch.
From the biggest bands and funniest comedians to the most talented magicians and circus performers, everything you could hope for can be found – providing you’ve opted for a good casino that is.
Although the acts will account for the lion’s share of the takings, it’s no surprise that the casino will take a small commission, too.
You might come for the poker, but you can bet your bottom dollar you’ll end up at a show!
Food and drink
Food and drink are huge money makers in the casino business, even if your venue of choice is keen to offer free drinks for your time at the table.
Pick any casino-based resort and you’ll be given plenty of cuisine choices to pander to the special taste you might fancy on any given night.
The drinks might be free while you’re playing but, depending on where you’re eating, you might be paying a little more on the luxury side for your food.
Depending on the agreement, the casino will benefit from this via a percentage of the amount customers spend in the restaurant or by renting out the space to the eateries.
There’s much to be said about the food in the casino, but I bet you never thought that the poker room would lead you there…
Last but not least come tips. Although they don’t exactly make the casino money from the poker room, they do help pay for the staff and that’s good enough for me.
It’s common for the assorted staff members around the poker room in a casino to be tipped frequently by the players.
It’s not uncommon for some to tip pretty generously, too. Maybe someone is in a good mood or having a good run, whatever the reason, staff are usually more than happy.
Tips tend to form the bulk of the pay-packet for the staff on the poker room floor, so it’s hardly surprising that they don’t tend to be paid so handsomely by the casino.
With not-so-great wages, we’re seeing another way casinos make money on the poker room and that’s by keeping it in their own pockets.
Keep all this in mind the next time your dealer gives you a couple of great hands.