In poker, that old saying “the house always wins” doesn’t apply. After all, you don’t play against the house. You play against other players. But with a recent move by the world’s biggest poker site, the old idiom has some truth to it.
If you don’t play online poker or live poker, you’re probably not familiar with rake. In a nutshell, it’s how a poker site makes money. That’s true whether we’re talking about a live poker room or an online poker room.
When you play in a poker cash game (the type of game that you can come and go from), the house takes a piece of the pot. It’s usually a small percentage at many online poker sites, and it’s capped at a few bucks per pot, regardless of how much the pot is.
When you enter a tournament, the buy-in is spelled out as XXX+YY, where XXX goes to the prize pool and YY goes to the house (so in a $200+15 buy-in tournament, $200 goes to the prize pool and $15 goes to the house for hosting the tournament).
Rake is standard. When you play poker, you’re not playing against the house. Instead, you’re playing against other players and the poker site or casino hosting the game needs to make money.
But one major online poker site has made a lot of enemies this week after raising their rake and tournament fees. PokerStars has announced an increase in rake for a lot of their online poker tournaments and cash games.
The increase in rake comes on the heels of an announcement that PokerStars is increasing its currency exchange rates.
So what’s driving all this greed? Some experts, myself included, believe that a lack of real online poker competition is one of the major reasons why PokerStars is doing what they’re doing.
On an international scale, there’s no other poker site as big as PokerStars. They have big money. They have big brand cachet. They’re the real deal. Sure, you have other sites like Party Poker and 888 Poker, but their software is mediocre at best. PokerStars has the traffic and people love to play there (for now).
And they’re known for their high-stakes games. Unfortunately, a raise in rake will put a huge dent in a high-stakes player’s return on investment. Tons of people make a living putting in 10, 12, 14, or even 16-hour days playing online poker, earning points for free tournament tickets and cash, and winning. When the house takes more, these high-stakes players could very well look elsewhere.
While there might not be a lot of “elsewhere” to turn to, the smaller sites could band together and give PokerStars a run for their money. Or they could follow Stars’ lead and get greedy, making online poker less attractive.
Hey, there’s always video poker!