Risk Assessment of Low vs. High Poker Rake

The lowest poker rake isn’t always the best choice.

Wait, what? Did I read that right? Yes, you did. The lowest rake isn’t always the best rake. Sometimes, a higher poker rake is actually better. How could this be? It’s a situational thing, really. It depends greatly on injecting a few variables into the equations, like the stakes, rake size, and most importantly, your actual skill level.

Famed Canadian poker pro Daniel Negreanu tried to explain this a while back to some fellow players. He was misunderstood, severely misquoted, and as a direct result, heavily criticized for it.

Players began booing him for saying a higher rake would be “good for poker”. But that’s not what he said at all. What he said was that a higher rake can be better for some players. You can learn more about that on his blog, or simply keep reading…

Evaluating Profits with High Poker Rake

Let’s say you join an online poker room with the absolute lowest rake available. This seems like a great choice, because the operator will be taking less of your money as you go. You take a seat at a $1/$2 NLHE cash game and begin playing as usual.

Soon enough, you discover that these players are of equal, if not higher, skill than yourself. You’re not fairing too well. Maybe you’re only breaking even, or worse, losing money. That lower rake isn’t helping your ROI one bit, is it?

Now what if you join an online poker room with a higher rake. Maybe this one takes a full 5% of the pot (capped at whatever amount). Let’s say that’s twice the rake charged by the first poker room. You’re not too happy about that. But you give it a go anyway.

Once you join the tables, you find the competition to be relatively soft. Most of the players are less skilled. You’re able to achieve a positive ROI, despite paying twice as much in rake. Suddenly, all is well in your little world.

The difference here is clear. The most skilled and knowledgeable poker players evaluate all of their risk factors, including the price of paying rake. As such, most of them will flock to online poker sites with the lowest rake. They can handle the competition, and still make a profit, because it’s what they’re used to.

Players with less skill look only at the most prominent factors when choosing an online poker site. They observe bonuses, game variety, stakes, etc. They rarely think about things like rake. A lot of recreational players don’t even know what rake is, and those who do aren’t prone to comparing rake rates at different sites.

For these reasons, you’ll find a lot more beginners and casual players at sites with a comparably high poker rake. And as we all know, the more recreational players there are, the softer the games will be. The softer the games, the easier it is for a moderately skilled player to make money, or ‘rake in the profits‘, if you don’t mind the bad pun. So, if you happen to consider yourself a ‘moderately skilled’ poker player, perhaps it’s time to reevaluate what qualities you look for in an online poker room.