Thursday, May 31, 2012

What is the best fee structure for poker players?

(Another in my series of posts addressing what I think poker players should want from a card room.)

In Los Angeles, the rake tends to be $1 taken from the pot before the flop and another $5 after the flop, including $1 for the jackpot drop. In Las Vegas, it used to be as low as $4 with the fourth dollar not being taken out until the pot reached $80 or even $120. In higher-limit games (10-20 NL and above or 100-200 limit or above), the players usually pay "time," which means they pay something like $5-$15 to the house every half hour, but the pots are left unadulterated.

Nobody likes paying these fees, but we all acknowledge that the casino needs money to for all sorts of expenses and would like to make a profit on top of that. This does not mean that players should just accept whatever fees are levied and by whatever means the casino pleases. Not all fee structures are equally bad for players, and, whatever the structure, a smaller fee is clearly better. So, what structure is best for casino poker players? Can we do better? How much does the size of the fee really matter? Should we be "comparison shopping" and pressing the casinos to keep their fees low?


First, let's do a comparison of paying rake versus "time."

Effect on winnings: If you are playing in a 9-handed NLHE game, you will likely play about 30 hands per hour and win about 3. If you play tight and take a break once in a while, this is probably closer to 2.5 hands won per hour. Time games cost about $10-$25 per hour plus maybe $3 in tips. In a raked game, it costs $7 per hand won, including tip. Multiplying by 2.5, this gives $17.50 per hour. This corresponds to a $14.50/hour time game (assuming $3 of tipping per hour). This means that if you are a tight player, most time games are slightly more expensive.

Most players do not chop in time games, but most players do chop in raked games. It's probably better for you if your opponents chop because the game will go faster. This probably adds one or two hands per hour. The downside is that you don't get to watch your opponent's heads-up strategy as often if they are chopping, but I think an extra hand or two should be worth more than this extra information.

As I've said before, taking money from a pot rewards and encourages tighter play, which is bad for the game, especially NLHE. Adding money to the pot has the reverse effect. You are effectively playing higher stakes when you pay time instead of rake.

The advantage here really depends on the size of the rake or time fee. Time fees are usually slightly higher, but this is offset by chopping and increased pot sizes.

Effect on social experience: The time games encourage players to stay at the table, lest they waste hands they already paid for. Most players like this, but I find it annoying. I like taking a few leisurely breaks during a session, and I don't mind if the game becomes shorthanded.

Rake games encourage chopping the blinds, which helps the game go faster. On the other hand, if you don't chop, you might have some upset neighbors in a rake game.

Slight advantage to time games.

Effect on game purity: Time fees preserve the purity of the game. Rake fees alter the pot size and encourage chopping. This is especially problematic in low-limit games where the rake is a large percentage of the pot.

Advantage to time games.

Time games often cost a couple extra dollars per hour to play. I think it's worth it for game purity and social experience, but only if it's not too expensive. In higher-limit games, the rake does not disrupt the game too much and I would only pay an extra $3 or so per hour to play a time game. Even this might be too extravagant. That's an extra $3000 per year if you are a pro playing 1000 hours.


How important is the size of the fee?

If you do some comparison shopping, you can likely find a place that takes $1 or $2 less in rake ($2.50 to $7 or so per hour) or charges $5 or so less per hour in time fees. An amateur player might play 100-200 hours a year, which comes to around $500-$1000. A pro might pay an extra $5000-$10,000 per year. I'd say it's a very significant but not overwhelming concern.


What is the ideal fee structure? Well, I identified problems with both rake and time fees. The rake affects the purity of the game and rewards tighter play. The time fees unduly discourage taking breaks. The following idea fixes both problems:

Make the button pay the fee each hand. Like a "hand fee," only it's paid just by the player who has the best position. The one drawback here is that you can't really adjust the fee to the size of the pot like you can with a rake, and if there is no flop it's still only fair to charge the button the full amount. If this results in the game being too expensive, the casinos can start charging $4/hand instead of $5 (for example).

If someone pays his blinds but skips his button, treat it as if he missed a blind -- that is, he must post or wait for the blinds to reach him before he gets another hand. This fixes the problems with both the rake and time fees.

Are any new problems likely to arise with this solution? Any way players will try to "game the system" other than skipping the button, which I already addressed? I can't think of any.


I am considering playing in the WSOP main event this year. (I might look into selling up to fifty 1% shares in my winnings. Is that legal?) It's something that I almost feel I should do; playing the main event would be a great way to cap off my poker career, and it's something that people always ask me about when they hear I played professionally. Considering that I haven't played recently, my EV is surely lower than ever, but my enjoyment would probably be higher than ever.

Still, Noon to 12:30 am for days on end? That is too much poker!


Anonymous said...

First of all, good luck in the main event! I'll be looking for you on tv. As for the button posting the rake, I guess that's fine but seems like only a partial solution to a major problem which is that the rake is typically too large relative to the amount of money in the pot preflop. Having the button post $5 or whatever would help, but better yet, they could have an ante from each player, and letting the button straddle is also a great idea.

Keith said...

In my plan, the button isn't "posting" per se; he's paying $5 to the casino in order to play a round of poker. He still has to call the blinds to stay in the hand.

I don't understand why you are concerned specifically about the small size of the pot pre-flop. This is a problem inherent in NLHE, and some fee structures (pre-flop rake) exacerbate it; mine doesn't affect it at all. I'm not sure you can use a fee structure to fix this problem, but we can at least not worsen it.

I like the idea of antes and straddles, too, but I don't see how this relates to the fee structure.

Anonymous said...

You're not talking about the button's fee counting toward the pot? In that case, I think there would be some problems. I agree that it would solve the purity and tightness problems with the current structure. I'm not sure discouraging breaks is a problem, from the casino's standpoint. I think there would be an added problem, in that the button would not be happy to pay $5 and have it not count toward the pot, and would sort of say "Why me?" The whole thing about the rake is that it is supposed to be really subtly taken out of the pot so that nobody notices it. Your way would totally lose that. If people are paying time, there is a similar issue, but at least there it doesn't happen every hand, so people can pay and then kind of forget about the fact that they're paying.

Keith said...

You're right, the way it's done now is to try to minimize the psychological salience of having to pay a fee. That is, the casino exploits a psychological bias to manipulate players into thinking the fees are not so bad. As things stand, it wouldn't make sense for the casino to change things to make fees more salient, even if it actually made the game better for players.

However, this post series is not about what currently makes sense from the casino's standpoint - it's about what makes sense from the players' standpoint, looking beyond their biases and the casino's manipulations, and about what the players should do to try to influence casino policy to their own advantage. Isn't that what you had in mind when you recommended this series to me in the first place?

As for not being able to take breaks, that is an annoyance I experience when I started playing the 10-20 NL at the Commerce, which was the first "time" fee game that I played regularly. Perhaps most people don't find this to be problematic, but I did.

Anonymous said...

Good point, but I mean, your way would never happen because the casinos would never ever go for it. I just feel like there are some things that aren't happening and I can't quite see why not, other than the fact that most poker players are too conventional and are kind of idiotic. Why not play short-handed, for instance? Why not have a game with antes? Why can't you go to the casino and play in a single table, winner-take-all tournament?

Keith said...

Funny, that was sort of my initial reaction to the whole idea of trying to change the poker culture: not gonna happen.

I actually do think that it's possible for the culture to change, it's just difficult to judge which ideas will catch on. Some idea seem to catch on more with the higher stakes games, and this may be one of them.

Below is a link to my initial reaction to your idea for this series. Two comments down is Craig's opinion about why people generally dislike shorthanded games. I think he's about right.

online poker calculator said...

Nice post!
The majority of poker rooms use a fairly standard rake schedule, the amount of rake we pay at one room to the next can still vary.