Tuesday, February 22, 2011

How Do Online Poker Sites Make Money?

Consulting firms like Christiansen Capital Advisors, DrlKW and Global Betting and Gaming Consultants report about the tremendous growth of online poker games; from $82.7 revenue in 2001, online poker games had grown into $2.4 billion in 2005. One has to use one’s imagination just to estimate how the industry of online poker has grown since then. For online poker players and those who are having the itch to get a sit in those virtual poker tables, the main question is: how do online poker sites make money?

The answer to this question can be stated in three simple methods.

The Rake

A poker room usually takes a percentage of the pot in every hand played. This is called the rake. The rake is determined by the poker site and usually pegged at 5%. If say the pot is $1 and the rake percentage is set at 5%, 5 cent goes to the table while 95 cent goes to the player. The hands played on online poker sites can run from 55 up to 77 hands dealt in an hour. So imagine the amount of money a poker site can generate in just so short a time. The rake has a maximum cap though. Say for the game of $30/$60 limit, the cap for the rake can be $3. But there are high betting poker games, and based from experience there have been pots going up to 250 grand. And think of the percentage the site has just earned from that. Moreover, we are just talking of one table here. With online poker sites having the capability to add more virtual tables, these ‘rake’ can be multiplied by this number.

Fees for Tournament Games

The second method where online sites can get quick money is through tournament fees. This can be described by the simple equation $10+$1 (depending on the arrangement). Ten dollars will go to the pot money while the $1 will go to the site. If these tournaments are successful and have attracted a good number of poker players (which usually happens) then the income going to the poker site is certainly huge.

Investing Players’ Money

Poker sites are no different from any institutions that hold money. These sites have the freedom to invest in any form the money deposited by their clients/poker players. These investments though have been under regulation in some jurisdictions to protect poker players’ money. But considering the fact that  poker sites have no obligation to give interest generated from these investments, even low-risk investment venture can get income coming in for poker sites.

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