Ways iGaming Companies Earn Money from Poker

It is rather obvious that iGaming companies like casinos are in the business of generating profits. Each casino game, be it blackjack, roulette, slots, poker, or baccarat all have an in-built advantage favoring the house operator. This advantage is often referred to as the house edge.

Poker happens to be one of the most popular casino games and virtually every casino operator offers at least one version of the game. With poker, the house edge is not the only way for gambling companies to generate revenue. This article seeks to discuss ways in which iGaming houses monetize the game of poker.

Tournament Rake

Poker tournaments are one of the major revenue streams for poker houses where players compete for chips and fight to outlast opponents in the event to reach the final money stage.

The World Series of poker is one of the major poker series competitions out there. If you are considering taking part in the tournament as a player, your WSOP odds will depend on your skills and a bit of luck.

Essentially, chips pots do have any monetary value for the iGaming companies and casino operators cannot get a profit from them which is the case with cash games.

The tournament rake is paid upfront by players as part of the buy-in. For instance, a $100 poker tournament can have a buy-in of $120 or whatever figure the organizers set. The extra $20 in this case is a rake which rarely contributes to the prize pool.

This rake is withheld by the casino and often used to cover the expenses that count for organizing the competition. If you pay closer attention to poker tournaments, you will realize that online tournaments have a smaller rake compared to live events. This is because in-person tournaments are more costly to organize than their online equivalent.

Fees

Fees are also exclusive to tournaments and they are part of the tournament fee structure. More often than not, it is 10% of the buy-in amount.

The company organizing the competition sells tickets to the live event directly through their website or in-person at the entrance. As the buy-in goes higher, the fee disproportionately goes lower.

Investing Player’s Funds

It can be argued that this is the largest revenue generation vehicle for poker iGaming companies. The nature and size of the investment will depend on the amount of total deposits the players make with the company.

Players do not always spend their deposits in a single day, and thus a percentage of the fund is intelligently invested elsewhere by the company in question. In turn, the investments generate more income for the organization.

In other terms, players’ deposits serve as a pool of short-term capital resource that the company can use as it deems fit. This way, the iGaming brands can generate capital without sourcing it from outside.

Cover Charge

This is essentially a flat fee paid to admit players into a poker room. To enter the retail poker room or sign up with their website, the player might be required to pay a set amount of fee.

Though this income channel is slowly losing its popularity, it used to be a sustainable source of revenue for iGaming companies. The fee also made sure that only interested and committed players joined the poker rooms.

Cover charges often vary depending on the games and from one brand to the other. However, some operators have foregone the cover charge altogether, which means that new players can sign up with them for free.

Time Drop

Time drop is a direct profit collected by charging flat fees for joining a poker table. This occurs when a new dealer joins the game being charged on the basis of specific intervals. The frequency can be every half hour, a whole hour, or more.

The time drop rate can be as low as $5 or more, especially for high rollers.

Cash Game Rake

For poker cash games, the rake is drawn from the pots before they are handed over to the winners. In most casinos, the rake is a specific percentage ranging from as low as 2% to as high as 10% of the pot.

However, the two extremes are quite rare, with a majority of cash games having a medium rake of 3% to 5%. Normally, there is no maximum cap on the rake to be drawn from any individual pot but is often left to the casino’s house rules.

It is not uncommon for players to sit with extremely deep stacks, and when two such players end in an all-in situation, having no cap on the maximum rake can end up being more expensive for the players.

Some operators have been known to impose a no cap rule, but these games are often shunned by players. Let’s take a quick example:

You’re playing a $1/$2 poker game and end up in an all-in scenario where you put all your $500 preflop against an opponent with a similar stack. If the rake was set at 5% with a $10 cap, then the maximum you are going to pay the casino will be $10 from every pot you win.

Nevertheless, if the casino does not have a maximum cap on the rake and the total pot is $600, you will end up paying $30. That’s three times more than the rake paid in the first scenario.

Merchandising

This is an indirect way to generate revenue. iGaming organizations make a ton of profits selling merchandise. In most cases, it is part of the brand’s marketing strategy.

Merchandising might not always cut the invested amount of money, but the publicity it brings the company is an important and significant return on investment in its own right. These companies understand that effective marketing is one way to drive profits in the long term.

Hourly Rates

Although cash games and tournaments are the most popular way to collect rake, some casinos have a different model. Players might find themselves in a game where they have to pay an hourly fee to sit at the poker table.

This means that no money will be taken from the pot when they win, and instead, you will be paying a fixed hourly fee as long as you still have a spot on the table.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes.