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Never Underestimate the "Rake" in Poker
Published: 2006-02-05
 By Fred Renzey
5 February 2006
Live poker is the only casino game in which you play against the other players rather than against the house. Poker also involves more skill than any other casino game. These two conditions make live poker a "beatable" game – if you know what you're doing.
That "if" however, is a huge one. The thing that makes it so big is not necessarily your opponents. The "rake" can be an even larger factor in many games. Remember, the house doesn't run poker games out of the goodness of its heart. The casino "rakes" a certain amount of money out of each pot. In my local area, most pots are raked $5 each. So let me give you an idea of just how much that rake can affect your chances to win.
Suppose 10 players sit down at a low stakes $3/$6 Hold'em table and buy in for $100 apiece. That puts $1000 in chips on the table. For the sake of illustration, let's say nobody quits the game for six hours.
Hold'em is a fast game. Even with 10 players, the dealer will crank out about 35 hands per hour. So after six hours of play, how many winners do you think there might be? Answer? There will probably be none!
Why is that? Because $5 per pot x 35 hands per hour x 6 hours is $1050 in rake. If nobody buys more chips and no new blood comes into the game, the house will have raked all the money off the table. Scary, isn't it?
So how can you beat it? There are two basic ways, and you'll need to use both of them.
1) Don't play too small: First, understand that the rake is usually the same in a $3/$6 game as at $20/$40 – often $5 per pot. But to be adequately bankrolled in a $20/$40 game, players need to sit down with around $600. That would put $6000 in chips on the table.
This time, if the house rakes $1050 after six hours, there's still almost $5000 left in the players' chip stacks. The "average" chipholder will have only $495 left, but a few players, probably the better ones, will have more than $600. That's how the impact of the rake diminishes as the stakes go up. It's tough, even for very good players, to beat the low stakes games long term because of the proportionally humongous rake.
2) Play tight: For fundamental reasons, most good players are on the tight side anyway. But the rake gives you an additional reason to play "close to the vest". You see, the more pots you win, the more rake you pay. Yet, the more hands you play, the lower your batting average will be on pots played vs. pots won because you'll be playing a lot of junk.
If you play lots of hands, it's not unreasonable to win five pots per hour. Then you'll be paying the house $25 per hour to play poker -- plus, your batting average will be low. But if you tighten up substantially, you might win only two pots an hour. Then you'll be paying just $10 per hour to play poker. Yet, you'll win a higher percentage of the hands you do play because you'll only be getting in there with premium hands.
Summary: Look at both ends of the spectrum. If you play loose in a $3/$6 game, you win five pots an hour and pay $150 to the house after six hours. You have to beat your opponents out of 25 six-dollar bets just to break even. You'd essentially have to "run over" the game.
If you play tight in a $20/$40 game and win two pots an hour, you pay the house $60 after the same six hours. At these stakes you only need to beat the other players out of 1.5 forty-dollar bets to break even. Anything beyond that and you're a winner. Here, it nearly boils down to just your skill against theirs.
Caution: I'd be remiss if I didn't advise you that there's a caveat in "stepping up" your stakes to minimize the effects of the rake. It's that the $20/$40 players will be a lot tougher than at $3/$6. You're going to have to know what you're doing to survive.
Still and all, I think serious beginners should break themselves in at the $5/$10 tables, then before long, move it up to $10/$20 where the rake won't eat you alive. But remember, play very tight or don't play! A loose player who plays one weekly six-hour session can pay $8000 per year in rake. How you gonna' beat eight grand out of the other players in a $3/$6 or $5/$10 game? And that's just to break even!
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Poker icon's employee subpoenaed
Published: 2006-02-03
 By Jim FuquayStar-Telegram Staff WriterThe Fort Worth office of the Securities and Exchange Commission isn't bluffing when it says it wants to talk to several parties related to the agency's investigation of poker legend Doyle Brunson's July buyout offer for the company that produces television's popular World Poker Tour.
On Wednesday, SEC lawyers asked U.S. District Judge Terry Means to enforce the agency's subpoenas issued to Wallace Nakano. According to the filing, the SEC says Nakano operated Brunson's personal Web site, which publicized the July 8 buyout offer for World Poker Tour Enterprises.
Brunson offered $700 million for WPT, roughly twice the California company's market value at the time. The stock's value shot up in frenzied trading, then quickly slid when the offer expired four days later without further action.
Leonard Sharenow, a Los Angeles lawyer representing Nakano, said Thursday that he is contesting the SEC's subpoena because it wasn't properly served and instead went to the home of Nakano's brother. Sharenow also said "we really don't understand why they think" Nakano has any useful information regarding the case.
The SEC has already asked Means to compel two of Brunson's attorneys to answer more questions about the offer, said Katherine Addleman, head of enforcement at the Fort Worth SEC office. She said a response to that request was due soon.
The SEC's investigation came to light Dec. 14, when the agency sued the two attorneys, David Chesnoff and Chaka Henry, in Fort Worth federal court. Neither could be reached for comment Thursday.
In its suit, the SEC said Brunson's offer "caused WPT's stock price to rise sharply. But, soon after publicizing the offer, Brunson and his attorneys abruptly backed off the offer, refusing even to respond to WPT's requests for more information. This caused WPT's stock to nose-dive, costing investors tens of millions of dollars in lost market value."
"On its face," the suit alleges, "this conduct implicates possible violations of the anti-fraud provisions of the federal securities laws." The lawsuit says the agency will seek to discover why Brunson made the buyout offer and "whether anyone connected to Brunson or the offer improperly traded WPT's stock."
Brunson's offer for WPT (ticker: WPTE), which had gone public in August 2004 at $8 a share, was valued at about $34 a share. The stock jumped from $17.75 on the day before the offer to as high as $29.50 before closing at $26.50 on July 8. It then started sliding, falling below $10 a share by September. Thursday the stock closed at $7.09.
According to the SEC suit, when the agency subpoenaed Brunson's testimony in the matter, "He invoked his Fifth Amendment right against self-incrimination."
Brunson, who now lives in Las Vegas, could not be reached for comment.
Chesnoff and Henry "provided the Commission voluntary sworn testimony on a limited number of topics" in September, the SEC's suit says, but asserted attorney-client privilege in refusing to answer further questions about the buyout offer.
Brunson, 72, is a Sweetwater native and former Fort Worth resident who in a 2004 interview with the Star-Telegram said he learned to play poker in the notorious gambling parlors of Jacksboro Highway in the 1950s and '60s and in the Fort Worth Stockyards. "Texas Dolly," as he is known, became an icon of professional poker.
According to the World Poker Tour Web site, he has won more than $1.3 million on the show.
"On its face, this conduct implicates possible violations of the ... federal securities laws."
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