Contemplating the Rake

A horror story you might enjoy:

Poker rake draining money awayOne night eight friends, each about as good as any of the others at poker, decide to spice up their weekly home game and go out on the town.

They head to their local casino for the “real experience”—with professional chips, cards, and a flesh-and-blood dealer. They ask for a dedicated table, just for them. Business is slow this night, so the cardroom manager shrugs and obliges.

The group decides to play fixed-limit Texas holdem. Each player brings $100 (and only $100) to play with, and they decide to make it a marathon—the game ends in 10 hours, and no player can leave until time runs out or he has gone bust, whichever comes first. No rebuying, no new players from outside. Sounds like fun.

The dealers average 30 hands an hour. The players offer tips at a reasonable buck or so per hand. For a time, all is laughs and fun.

Then, sooner than anyone had expected, a couple of players go bust.

Then another, and another.

Less than 8 hours later the game has been reduced to a heads-up battle, and now one player is all-in. He loses the hand.

The last man standing, who the others happen to regard as the best player in their group, looks down at his stack, counts twenty-four $1 chips, frowns in confusion, tosses one to the dealer, and walks away.

Funny Math

There was $800 on the table when these friends sat down to play eight hours before.

The sole survivor, the best player of this brood, not only failed to capture a dime of his opponents’ collective $700, but walked away stuck for most of his own buyin.

Seems bizarre doesn’t it?

Not only should this result be unsurprising, it was, in fact, a mathematical inevitability.

Recall that the cardroom dealt about 30 hands an hour, and we’ll say that they raked $3 from each pot (reduced to $2 once the game got shorthanded). Adding on just $10 per hour in tips (and these guys were actually tipping more than that) would ensure the disappearance of an entire rack of $1 chips from the table every hour—a full buy-in for each of the players in this game!

Make no mistake, regardless of how any one hand or series of hands went down, of who was lucky and who ran bad, of who played the best and who played the worst, the rake outplayed them all.

If this example looks familiar to you, it’s because I adapted it from a similar one in Ashley Adams’ “Winning 7 Card Stud.” I was shocked when I first read it; I thought he had to be wrong. But the math is plain.

What Rake?

Poker rakingAn alarming number of the poker players I encounter never even consider the rake, are dimly aware of it at best, or don’t think it’s a significant issue. After all, what’s $4 or $5 out of those $80 pots you’re dragging, right?

Even among those players who think about rake, there’s a popular cognitive fallacy that goes along these lines: “you only pay rake in the pots you win, and it’s only a small piece of the pot, so it’s impossible to ‘lose’ to the rake.”

Here’s the problem: this theoretical $80 pot was not won in a vacuum. It doesn’t take into account all the bets that you made and lost on your way to winning it, nor of how much of that $80 is money that you personally invested in the pot.

If you lost $60 in earlier hands before winning that pot, and you invested $20 out of the $80 now being pushed toward you, this pot is really a $60 “net win”, and you’ve actually done nothing but break even overall.

But what if the pot hadn’t been raked? What if you’d been shipped $85 instead of $80 for a $65 net win? Now you’d be up $5 overall.

Repeat this sequence of events (invest $60 in losers, then win $65 in a winner) 10 times over and you’d be up $50.

In the raked game, though, where the house is taking that additional $5 from every pot you win, you’d still just be breaking even. Add a dollar to each pot in tips, and you’d actually be stuck $10.

And it will keep adding up.

The human mind is innately poor at recognizing and getting a handle on these sorts of phenomena. The rake feels painless and insignificant, because at any given time it’s overshadowed by the sound and fury of the moment. All we see is the $80 coming toward us.

Imagine a game that was run “on credit”—identical to any other raked game except that you were under a binding contract to cover all at once all the rake from the pots you won, payable at the end of the night (or week, or month, or whatever period you agreed on).

Let’s say you played 1000 hours in this game, and you were an $8,500 winner. You won 2 pots per hour, and owed the house $5 from each pot—a total of $10,000.

You’d have to hand them every dime of your winnings, plus $1,500 more. Congratulations.

If you thought that was painful, imagine what it would be like for the players who were already stuck before rake collection!

Small Winners, Big Losers

Imbalanced scaleA zero-sum game like poker necessitates that, for there to be winner(s), there must be at least one loser.

But rake futher necessitates that, for there to be winner(s), the loser(s) must be further in the red than the winner(s) are in the green.

The more hands that have been played between these players, the wider the chasm between the winners and losers will be, growing indefinitely.

You could have three superior players beating six inferior players at a steady rate, but with each of them only up between (say) $20 and $100. Meanwhile the six losers could be stuck hundreds of dollars each.

It’s just a matter of how long they’ve all been playing together. Eventually any (or all) of our three winners could slip into the red, and again, even while steadily and decisively beating the inferior players on bet-for-bet, decision-for-decision terms.

It’s because of this relentless rake-drain that it’s almost a given that a population of even modest winners can only be supported by a population of significant and rapid losers.

Winners need donators, opponents who are willing to essentially set fire to money that they bring into the poker economy from outside (much of which will go to the rake, and therefore right out of the poker economy again).

This losing set of players must either be willing, expecting, even happy to lose, or in pathological denial that they are losing.

But given a population of players to whom winning is important to each and every player, where they all earnestly and genuinely want or need to make money, things are going to get ugly.

That’s because someone must pay the rake, therefore someone must lose. It’s just a matter of who.

Rake will eliminate all but the very best from the game, and much more aggressively than mere skill inferiority would. When “the very best” are all that’s left, the rake will begin to feed on them too.

What you have in raked poker is a cold, efficient system that viciously punishes and eliminates the weak, even when the “weak” aren’t playing all that badly, perhaps even playing rather well (if there is such a thing in absolute terms).

Without constant infusions of “new money” and or “new blood,” raked poker becomes a cancerous, wholly counterproductive activity.

Negative Sum

Not zero-sumWhen there is a rake, poker is not a pure zero-sum game, and that’s an understatement. It’s not simply a matter of “decisions versus decisions; skill versus skill”, which is the romantic ideal that the poker industry is selling.

There comes a point where any skill gap between a player and his field becomes totally drowned out by rake. This is a problem that goes grossly unacknowledged day after day by many a “good” player.

I was watching a tough limit $3/$6 Omaha 8 game on PokerStars the other day, thinking about what a marvel it was that these people were able to suspend their disbelief.

Each was sitting around a virtual table with other serious players who had risen through the lower stakes, circumvented the restrictions of the UIGEA (ie, jumped through hoops to get their money onto the site), and opened themselves to literally the entire Internet-connected world in terms of competition, and survived that Darwinian contest.

By showing up, each of our heroes was implying that he felt, despite it all, as if his skill edge would be enough to overcome that $1-$3 per hand ($100-$300 per hundred hands), that PokerStars was funneling off of the table as steadily as the clock was ticking.

Rake eats skill for breakfast. (And lunch, and dinner.) Each player can exert massive effort and discipline to secure an edge over the others, but there’s an invisible player in “seat zero” who is gobbling away at those extra bets our hero is making or saving.

If every player in the game achieves anything close to relative parity in skill, all of them must, and will, be losers in the long run.

Even against inferior opponents, a player is in a constant race against the rake. He has to take the money off the table at a faster rate than the rake is.

The existence of a rake elevates winning at poker from being a straightforward matter of consistently making better decisions than one’s opponents to being a much more difficult matter of making significantly, perhaps impossibly, better decisions, even as variance and luck slow the process down.

In a game like poker that so often comes down to fine decisions and tiny edges, is it realistic to expect that you can play that much better than your opponents?

Your “customers” have to carry the burden of the rake, your expenses, and your winrate. Do your opponents seem as if they are willing and able to pay both you and the cardroom for the privilege of being there?

If you play poker to make money, the answer to both of those questions had better be yes. Otherwise, you and your tablemates are all the proverbial “sucker”.

There is absolutely no point in playing in a raked poker game without at least a few card-carrying losers. This, however, is a lesson that a good proportion of players (especially in online poker) have yet to learn.

This is also the danger of players making poker a “lifestyle”, a sport, or a professional pursuit—sometimes there simply aren’t any good spots available. But if one has his life arranged such that he must play, and must put in indiscriminate volume (rather than wait only for good spots), then he has dug a trap for himself and is essentially working for the cardroom.

Rake is a subject that every poker player ought to sit and contemplate from time to time, and in the specific context of the games that he plays in.

Failure to recognize and consider the ways in which the rake is, or may be, affecting the game, the players, and oneself is a critical leak.

Explore posts in the same categories: Uncategorized

3 Comments on “Contemplating the Rake”

  1. Ashley Adams Says:

    What a great poker article. Thank you for it.

    Ashley Adams

    • chrisinsc Says:

      Hi Ashley, thanks for your kind words. I’m a big fan of your poker writing (I am looking at the spine of your “Winning 7 Card Stud” on my bookshelf at this very moment), so it means a lot.

      This blog is “asleep” for now, until online poker returns (if ever), but I am happy to see that people like you are reading it!

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: