Online Poker: Rake, Variance and the Real Cost

Online poker is the one game on this site where the house does not hold an edge on the deal. There is no wheel, no dealer hand, no random number generator taking a cut on each outcome. The operator takes a commission on pots, called the rake, and the rest of the money moves between players. That single structural difference changes what a session costs, how a bankroll behaves, and why the same 5% figure that looks harmless on a roulette page is not comparable to anything here.

The rake is charged on pots you win, not on hands you are dealt. In a cash game it is usually a percentage of the pot, capped at a fixed amount, with no flop no drop in many rooms. In a tournament it is built into the buy-in as a fee. Both convert a player who wins exactly half of the chips they contest into a player who loses money over time. The size of that conversion is the subject of this page.

The rake, stated exactly

A cash game rake is defined by four numbers: the percentage, the cap, whether it is taken before or after the flop, and whether there is a no-flop-no-drop rule. A typical low-stakes online no-limit hold’em table might be 5% capped at 3.00, taken only when a flop is dealt. At a 0.50/1.00 table, a pot of 60.00 would be raked 5% of 60.00 = 3.00, which is exactly the cap. A pot of 20.00 would be raked 1.00. A pot of 200.00 would still be raked 3.00, because the cap binds.

The cap is what makes the rake regressive. At small pots the percentage is the whole story. At large pots the cap means the effective rate falls. A player who wins many small pots pays a higher proportion of their winnings than a player who wins few large ones. This is why tight, aggressive play is cheaper to run than loose play at the same table: not because it wins more, but because it pays the rake less often.

Tournament rake is simpler. A 20.00 buy-in might be 18.00 to the prize pool and 2.00 to the house, written as 18+2. The 2.00 is 10% of the buy-in, but it is 11.1% of the prize pool. The relevant figure is the fee as a share of the amount that gets paid back to players. In an 18+2, the house takes 2.00 from every 20.00 that enters, so 10% of all money staked is removed before anyone is paid. A cash game at 5% capped at 3.00 might remove 2% to 4% of total money staked over a session, depending on pot sizes.

What the rake does to a break-even player

A player who wins half the chips they contest, before rake, is not a break-even player after rake. The rake is charged on the pots they win, so it comes out of the winning half only. If a player wins 50% of all chips in play and pays rake on those wins, their net is 50% of chips minus rake on the 50% they won.

Worked example. A player plays 200 hands of 0.50/1.00 no-limit hold’em. They win 30 pots. The average pot they win is 12.00. The rake is 5% capped at 3.00, no flop no drop.

Step 1: total won = 30 x 12.00 = 360.00.
Step 2: rake per pot = 5% of 12.00 = 0.60. Under the cap, so 0.60 is charged.
Step 3: total rake paid = 30 x 0.60 = 18.00.
Step 4: net from pots won = 360.00 - 18.00 = 342.00.

Now the other side. To win those 30 pots, the player put money in on hands they lost. Suppose they lost 170 hands at an average of 1.20 per hand. That is 170 x 1.20 = 204.00 lost. Their net for the session is 342.00 - 204.00 = 138.00. That looks like a winning session, and it is, but the rake took 18.00 of it. Without rake the net would be 156.00. The rake is 11.5% of the player’s profit in this example.

If the same player breaks even before rake, meaning their winnings before rake equal their losses, the rake is the entire loss. Suppose they win 30 pots averaging 12.00, total 360.00, and lose 360.00 across other hands. Before rake: net 0.00. After rake: 360.00 - 18.00 - 360.00 = -18.00. The rake has turned a break-even player into a losing one at a rate of 18.00 per 200 hands.

At 200 hands per hour, that is 18.00 per hour at 0.50/1.00. At 1.00/2.00 with the same pot sizes doubled, the rake per pot would be 5% of 24.00 = 1.20, total 36.00, and the hourly cost doubles to 36.00. The percentage is the same. The money is not.

Cash game against tournament

The table shows the condition under which the figure changes. A 5% rake at 0.50/1.00 is not the same cost as a 5% rake at 5.00/10.00, because the cap binds at different pot sizes. A 10% tournament fee is not the same as a 5% cash rake, because one is charged on money staked and the other on pots won. Comparing them requires converting both to money per hour at a stated stake and hand rate.

Why variance in poker dwarfs a casino game

A roulette bet has a known distribution. A single-number bet pays 35 to 1 on 37 pockets, and the outcome is independent of every other spin. The variance is fixed and the house edge is 2.70% on a single-zero wheel. Over 200 spins at 1.00, the expected loss is 200 x 1.00 x 0.0270 = 5.40. The standard deviation is large relative to that, but the mean is stable and the game is memoryless.

Poker is not memoryless in the same way. The cards are independent, but the money is not. A player’s results depend on the hands they are dealt, the hands their opponents are dealt, the decisions made with those hands, and the rake. The same player can play 10,000 hands and be ahead, and play the next 10,000 and be behind, without any change in skill. The rake is a constant drag, but the variance is large enough that the drag can be invisible for long periods.

A cash game player at 0.50/1.00 might have a standard deviation of 20.00 to 40.00 per 100 hands, depending on style and table. The rake cost in the worked example was 18.00 per 200 hands, or 9.00 per 100 hands. The rake is smaller than one standard deviation of results. That means a player can run above or below their expected outcome for thousands of hands and never see the rake as a separate line item. It is still there. It is taken from every pot that reaches a flop, whether the player notices or not.

Tournament variance is larger still. A multi-table tournament with 1,000 entrants pays the top 10% to 15%. A player who finishes in the money 15% of the time and wins a top-three finish 1% of the time can have a positive expectation before the fee, but the fee is charged on every entry. A 10% fee on a 20.00 buy-in is 2.00 per entry. Over 100 entries that is 200.00 paid in fees. To recover that, the player must win 200.00 more from the prize pool than they would have without the fee. The prize pool is 18.00 per entry, so 100 entries create 1,800.00 in prizes. The player needs to win 200.00 of that just to cover the fee, before any profit.

Hand rankings, as reference

Standard high-hand rankings in poker, from strongest to weakest: royal flush, straight flush, four of a kind, full house, flush, straight, three of a kind, two pair, one pair, high card. In games with wild cards or low-hand variants, the rankings change and the rules must be stated. In no-limit hold’em, the best five-card hand from seven cards wins. In Omaha, the best five-card hand from exactly two hole cards and three community cards wins, which changes the frequency of each ranking.

The ranking matters for the arithmetic because it determines how often a hand wins and therefore how often a pot is raked. A player who plays more hands pays rake more often. A player who plays fewer hands pays rake less often, but may win smaller pots. The trade-off is the subject of strategy, not of this page. The arithmetic is that every pot that reaches a flop and is won by a player is a pot that has been reduced by the rake before it is paid.

What people get wrong about online poker

The most common mistake is treating the rake as a small percentage that does not matter. It is a small percentage of each pot, but it is charged on every pot that reaches a flop, and a player who wins 30 pots in 200 hands pays it 30 times. The cumulative effect is not small. In the worked example, the rake was 18.00 per 200 hands at 0.50/1.00. At 200 hands per hour, that is 18.00 per hour. A player who thinks they are break-even is losing 18.00 per hour.

The mistake is natural because the rake is invisible in the hand history. It is deducted from the pot before the winner is paid, so the winner sees the pot they were awarded, not the pot before rake. The only way to see it is to track it separately or to calculate it from the pot size and the rake structure. Most players do not do this, and the rooms do not display a running total.

The second mistake is comparing online poker to a casino game and concluding that because there is no house edge on the deal, the game is beatable. The rake is the house edge. It is not on the deal, but it is on the money. A player who wins half the chips they contest before rake loses the rake. A player who wins more than half can overcome the rake, but the amount they must win to do so is higher than the amount they would need without it. The rake does not make the game unbeatable. It makes the threshold higher.

The third mistake is treating a losing session as a reason to keep playing to recover the loss. That behaviour, often called chasing losses, is the one that turns a priced entertainment into harm. The rake is a fixed cost. A player who plays more hands to recover a loss pays more rake, and the expected outcome of the additional hands is negative for a break-even player. The correct response to a loss is to stop, not to increase the volume. This is not a strategy recommendation. It is the arithmetic of a negative-expectation activity.

The money, at a stated stake and rate

At 0.50/1.00 no-limit hold’em, 200 hands per hour, 30 pots won per 200 hands, average pot won 12.00, rake 5% capped at 3.00, no flop no drop: the rake cost is 18.00 per hour. At 1.00/2.00 with the same pot sizes doubled, the rake cost is 36.00 per hour. At 2.00/4.00 with pot sizes doubled again, the rake per pot is 5% of 48.00 = 2.40, total 72.00 per hour. The cap may bind at higher stakes, which reduces the effective rate, but the money per hour still rises with the stakes.

For a tournament player, a 20.00 buy-in with a 2.00 fee, 100 entries, is 200.00 in fees. A 100.00 buy-in with a 10.00 fee, 100 entries, is 1,000.00 in fees. The fee is charged whether the player cashes or not. The prize pool is reduced by the fee before any player is paid.

These figures depend on the rake structure, the stakes, the number of hands per hour, the number of pots won, and the average pot size. Change any of those and the money changes. The percentage alone is not a cost. The money per hour at a stated stake and rate is the cost.