To understand this article we need to discover who is paying the rake and how we can change the formula used to calculate the rake to avoid players getting banned and at the same time reward the losing players more. I also want to ensure operators who bring the majority of the fishes a better business model.  My article is targeted towards Poker Networks such as iPoker & Boss Media, not stand-alone operators like PokerStars.

 

Who Pays the Rake?

Live Poker

In live poker you notice the dealer is taking money from the pot before the winner gets the the pot. In live poker the winning players are technically paying the rake since it is taken from the pots they win. The losing players eventually go bust so wether the money goes to another player or to the house makes no difference for them in the long run.

Some brick and mortar casinos charge by the hour. Those casinos are cheaper for winning players and more expensive for losing players since not only do they get punished for being poor at poker they also have to pay to play. Generally poker rooms tax by taking percentages of the pots.

On the hand there wouldn’t be any rake if there weren’t any losing players to keep the games going. If all players were sharks and nobody had an edge the games would break up and people would go home. It is the gamblers and people who didn’t pay attention in school learning math that makes poker such a thrilling game. That said, everyone can get lucky, glory and fame in the game of poker and that is why it is so popular.

Online Poker

When online poker was introduced most if not all poker rooms operated with a “dealt rake” system. This means if the rake is $3 and there were 6 players getting dealt cards in the game these 6 players would have paid $0.5 in rake each. 

Players who know about this system have less incentive to create action as they still technically contribute to the rake despite folding pre-flop. With rakeback and other reward programs getting more and more common players try and get the best possible value from the rewards systems. Because of this many poker networks changed the rake system so only active players who contribute to the pot also contribute to the rake.

If the same 6 players are dealt cards but only 2 players are active in the hand those two players would contribute $1.5 each. Typical “grinders” are now forced to create action to get value from the reward programs.

 

Background

A new trend has started in Europe where poker networks fine operators with more winning than losing players. How the fines are calculated and distributed differ from each network but the fact is winning players get banned and poker rooms get fined. I won’t get into how the fines work exactly as my article is not about the problem but about the solution.

Because of the fines poker operators are forced to ban and close the accounts of high winning players. Surely all the players who don’t know the gaming industry and the background for this get extremely confused about the message the poker networks are sending to the players: “You won so you are not welcome at our poker room”...

 

What are the Motives?

There are many motives and reasons for networks doing this.

  1. To get rid of licensees (poker rooms) they can’t get rid of immediately because of contracts so they fine the rooms to force them to go elsewhere?
  2. To keep certain partners happy such as large sportsbooks? 
  3. To keep their games fishy? 
  4. To protect the losing players? 
  5. To encourage their licensees to spend more money on marketing hence getting more fish to the network?
  6. Is it to stop the poaching of big raking players from one poker room to another on the same network?
  7. Do they just want to get rid of the “nit” rooms now that they have enough liquidity? 
  8. Are they preventing that their network will end up as Cryptologic? (Article about Cryptologic you will find at a later stage)

Only the networks know the true answer to this so I won’t speculate. It is mostly likely a mix of the reasons mentioned above as well as other factors.

 

New Rake System

My new system would secure that losing players get higher rewards and winning players won't be banned. Winning players should be happy with their winnings and not focus on rakeback or similar reward programs. Even winning players have downswings and naturally in these periods they would benefit from the rewards programs like any player.

The simplest way to explain the system is to use a heads-up game as an example since there are only 2 players involved. Two guys play 1,000 raked hands in a HU match with $2 rake per hand. Notice if there is no flop there is no rake. The total rake is 1,000x$2 = $2,000. Traditionally on any room each player would have paid $1,000 in rake.

One of the players wins $5,000 so we assume he is better than his opponent. Are there other factors we should consider? Yes certainly! The winning player wouldn’t have played and won if the poker room or network didn’t spend a lot of money on marketing which has brought fishy players to the tables. 

In my new way of calculating rake I want to reward the losing players more and winning players less, however they avoid being banned and poker rooms avoid getting fines and getting their business ruined.

Let us pretend the winning player won 80% of all hands. This is an extreme example but proves my point. The losing player lost 800 hands where $2 was paid in rake. In my new system I want to change the rake formula to secure better conditions for those poker rooms that deliver a lot of fish. The poor players lose their money faster hence are worth less in net profit. In my formula it is the losing players who get credited the rake paid.

 

The New Formula

  • The losing player lost 800 hands with $2 paid in rake. 800x$2 = $1,600
  • The winning player lost 200 hands with $2 paid in rake. 200x$2 = $400

Player Rewards

  • Losing player gets 30% rakeback or VIP rewards = $480.
  • Winning player gets 30% rakeback or VIP rewards = $120.

The operator’s profit

  • The Poker Room with the losing player with a 10% profit margin earns $160
  • The Poker Room with the winning player with a 10% profit margin earns $40
  • The Network takes 20% gross of the $2,000 and gets $400 regardless of the rake system.

There are many costs involved running a poker room or a network such as cash bonuses, tournaments with overlay, freerolls, network promotions, exclusive promotions, processing fees, bank fees, staff, license, taxes, marketing etc.

 

Different Poker Rooms and Target Groups

Many losing players don’t know about reward programs or rakeback. They might not even know they are getting crushed by pro players but think they are unlucky or scream “RIGGED” on poker forums because they lost somewhere. Nevertheless the poker rooms that bring the fishy players certainly know how sharks affect their business and cost them money.

The poker rooms that focus on getting winning players encourage players with rakeback offers and tell players “We are on a fishy network. Play with us and get high rewards and almost guaranteed winnings”. These poker rooms spend WAY less money in marketing as they target an incredibly small part of the world population which is already playing poker and winning rather than the broad population via TV campaigns and billboards.

 

The Goal of the Networks

This rake system would encourage and reward poker rooms that have a broader player base because losing players will become worth more in terms of revenues. The losing players will benefit from this as well as they would get better rewards from the poker room hence be able to player longer. Winning players are not going anywhere since players generally don’t leave a poker room where they are successful. The feeling of winning and telling about it is a better story at the local pub than telling some cute bartender “Hey you... I am not a winning poker player but I get a special rakeback deal so I manage to make a living of it...”  

 

Poker is a Sport

Poker is a game of skill and to make the governments around the world aware of this and make them legalize private live poker tournaments as well as online poker we need to convince them that poker is a sport where skill is much more important than luck. What kind of strange message are we sending by excluding players who prove this...?

The gaming industry and poker as a sport need success stories and idols. Without the many online pros and true legends such as Phil Ivey and Doyle Brunson poker wouldn’t have the same amount of credibility and respect. How many people in our society respect and acknowledge the game of Bingo? 

Imagine how far we have come since poker was played by cowboys with guns in the Wild West and remember that everything that happens in the online gaming industry might affect the governments around the world. If we send the message: “The poker industry does not welcome winning players. Therefore winning as well as losing players must be bad for society hence poker should be banned in general.” Let us change this signal and encourage poker as a sport on a global basis – a game with winners and losers just like any other sport.