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Beating the Rake
Jeff "CodeRedRulez" Lipsey has been an instructor and administrator on Grinderschool.com since 2008. Subscribe today to download and view his over 175 poker strategy videos.
Understanding the total effect of the rake on your win rate is definitely one of the most overlooked but important pieces of information regarding how much you take home at the end of the session. In many games today (both online and live), the rake is not beatable even if you were to play 100% correctly.
Take, for example, the Cryptologic Network Limit Holdem games back in 2006 where you had the option to play with the currency as GBP vs USD. If I were to play the $3/$6 game at a crypto site, the maximum rake would be 3 units of the currency, i.e. $3. If I were to play $5/$10 the same holds true that the maximum rake would be $3. (All of this information can be found here).
However, if I were to play the 3/6 GBP game (where the conversion rate is roughly .50:1 GBP:USD), when converted, that 3/6 game is fairly close to a $6/$12 game, in terms of stakes and risk. The problem is that they again rake 3 units, but that 3 units are NOW 3 GBP, which is almost $6 USD!!! So, for almost the same size bet your rake is double. How does this affect your win rate?
Lets take a look:
Say you play 100 hands and typically you see 25 percent of the flops and of those 25 percent your won money when saw the flop (W$WSF) is 40%. Thus, 10 hands of the 100 you play the rake will affect your win rate (100*.25*.4). At a maximum $3 rake in the $5/$10 you would end up losing $30 to the rake every 100 hands, and you could still win 2-3 Big bets per 100 hands (with 100% correct play) and net around $20-$30 every 100 hands. This is for purely analytical purposes only, as there are many times the rake would not be capped at 3 units as you'll take it down without going to showdown. However, the theory still applies.
Now, take that same player that wins $30 per 100 hands and put him in the 3/6 GBP game with that same rake structure. Again, look at the 10 hands that the rake will affect us, instead of $30 we are now looking at 30 units in GBP, or $60 total. The difference in rake turned a 3 BB/100 winner into a break even player and he has not even sat down to play a hand yet. It is virtually impossible to beat the rake in this game.
This same application is also prevalent in casinos as well. I have seen most casinos rake 10 percent of the pot to cap as high as $4 or $5, even in a $2/$4 limit game. This is not including any $1 mandatory drop to the Bad Beat Jackpot nor the obligatory tip given to the dealer after you win a hand. Take one hour of live play where an excellent win rate is 1 Big Bet per hour, so in a $10/$20 game you are looking at $20 per hour. You are expected to play about 30-40 hands per hour and of those, you will see 8 flops, and win probably three hands. Lets say the max rake taken out is $4 (and it is taken every hand) so if you didn't have to pay the rake you would win $32 per hour, and with no dealer tip you are looking at $35 per hour, .75 BB ((35-20)/20) more than before.
If we go back to the $2/$4 game, the rake is still the same! The casinos do not decrease the rake as the stakes get lower; in fact they decrease the rake as the stakes get higher (ironically). So, now you are paying 4 BB per hour in rake instead of .75 ($15/$4 ~ 4, if you are wondering where my math is coming from). Thus, if you were winning 1.75 BB per hour before the rake in the 10/20 game, you would have to win at least 5 BB per hour before the rake in the $2/$4 game just to make the same 1 BB/hour win rate. It is just as virtually impossible to win at that game as it is the GBP games on the Cryptologic network. Thus, when you play live, do not play anything lower than $5/$10 if you plan on beating the rake in the long term.
One thing you can do to reduce the effect of rake on your win rate is to get rakeback, where you get a percentage of the rake you pay back at the end of the month. Secondly, some of the non-standard poker sites have awful rake structures; if you are unsure if the site has a good or bad rake structure, do some research into exactly what you are paying and compare it to other sites.