Rent

When I go to a cardroom to play poker, I will usually pick up the poker magazines which are available for free there. I think my favorite read in all of them is Mike Caro’s column for Poker Player, which is always focused and insightful. A recent column, “Rent”, happened to discuss a topic that had been on my mind recently.

The core of the article is how poker rooms make money:

So, how does the cardroom or casino make money? Two ways. One is rake. The dealer, acting on the house’s behalf, takes money from the pots. Usually, this is a percentage – often five or 10 percent up to a ceiling, such as $4. Beyond that, in most public cardrooms, no more rake is taken from large pots. The other is rent. With rent, you’re buying your seat, typically by the hour or half-hour, and nothing is extracted from the pots you win.

He goes on to discuss the ramifications of rake and rent.

I was pleased to see that I had correctly figured out that you want the rake to be low relative to the limits at which you are playing. The rooms around here tend to charge a $4 rake at both the 2/4 and the 3/6 limit tables (less if the table is shorthanded, which is rarely the case). Consequently, I decided to stop playing the 2/4 games because (1) My observation is that the skill level is essentially the same at both levels, and (2) The rake is relatively lower at the 3/6 tables. Of course, it might be that my first observation is wrong, but I don’t think so. And of course I could win or lose more money at the 3/6 table than the 2/4 table, but the difference is not enough to matter to me. (I think if I moved to a 6/12 table – the next highest common limit around here – then I’d both face tougher competition, and risk losing more than I want to.)

So I was happy to see the well-respected “Mad Genius of Poker” agree with me on that point.

(By the way, poker rooms in Las Vegas tend to have a slightly different – and better for the player – rake structure. They tend to charge 10% of the pot up to a maximum, usually the same $4 at the limits I play. So in Vegas for pots under $40 the rake is lower. I only mention this in case any readers are surprised at the flat $4 rake I described above. Yes, it really is different.)

But I’m still puzzling out another point he also makes in the article. First of all, he notes that there is a third class of payment to the casino:

By the way, there is another kind of rent game that most players confuse with a rake game. That’s where the dealer position puts up a certain amount of money each hand, say $4, and that goes to the house in advance of the deal. That may seem like a rake, but it isn’t. It’s just rent by the hand, instead of by the hour or half hour.

The time I played at the Lucky Chances casino, they were using this form of rent: In a 3/6 game there was a $3 big blind, a $1 small blind, and a $3 dealer button payment. The $4 from the button and the small blind went to the house, and the big blind went into the pot. At other casinos, such as Bay 101, there’s only a $3 big blind and a $1 small blind, all of which goes to the house.

My thinking is this: If you never put in any money, and lose every time you check in the big blind, then you are paying $7 per orbit (passing of the dealer button around the table) to sit at the rent-per-hand table, but only $4 per orbit at the rake table. So in that case, the rake table clearly seems preferable. Of course, if you’re playing so badly that you never win a pot, then probably you shouldn’t be playing poker.

But what if you do play hands and win pots? In that case, your cost at the rent-per-hand table is $4 per orbit plus whatever pots you win minus whatever you invest in pots you lose. And at rake tables it’s… $4 per orbit plus whatever pots you win minus whatever you invest in pots you lose. So are they exactly the same, really?

Not quite. At a rent-per-hand table, there is $3 already in the pot before any bidding begins, whereas at a rake table you know that the $4 on the table as the blinds will disappear once the flop is dealt, so it’s not really “in the pot”. The other difference is that at a rent-per-hand table there are three players who get a discount to see the flop (two who already have one full bet in, and one who has $1 in), while at a rake table there are only two such players. This probably encourages a slightly looser table, which in theory should be better for the good poker player. On the other hand, the player with the extra bet in has the most advantageous position (in Hold ‘Em), which doesn’t seem like a good thing for the rest of the table.

So which is the better table for the player? I don’t know.

I suspect that Caro’s rent-per-hand scenario is actually different from what Lucky Chances does. Perhaps he means that the dealer’s payment does not count toward the bet, i.e. it’s not truly a blind bet, but a straight payment to the house. I’m still not sure whether this sort of table is better or worse than a raked table, though.

I do know that I feel like I prefer rake games over rent-per-hand games (I’ve never played a rent-by-time game). However, I do not consider myself a good poker player, so my opinion may not hold for people who are good poker players.

(p.s.: I have heard that Lucky Chances was going to change to a rake system over the summer. But I haven’t been back to see if that happened. I actually liked the place; the only reason I haven’t gone back is that Bay 101 is just flat-out much easier for me to drive to.)