Calculating rake

It's a very basic question, but I have never been sure about this:

Let's say we play a $220 (200+20) tourney. Is then the rake 10% (20/200*100%) or 9.1% (20/220*100%)?

Never have given this too much thought, but when discussing this with my friends I found out people got different opinions on it. What's the standard definition in poker?

I'd assume 10% here so it's easily comparable to ROI but I could very well be wrong.

Not sure there is any consensus about that. Wikipedia dont offer an answer for instance. Also some people would only use the term rake for cash games, and call it a tournament fee.

The way I always treat it is that rake is a percent of the initial buyin.

In other words, in a $200 + $20, there's a $20 rake on top of the $200 buyin so the rake is 10%.

every single game can be different (%/cap/etc) - but this is DEF something that needs to be considered before entering a game. If there is any confusion, whoever is collecting the rake should easily be able to answer this question - online/live or cash/mtt

Collin Moshman said:

The way I always treat it is that rake is a percent of the initial buyin.

In other words, in a $200 + $20, there's a $20 rake on top of the $200 buyin so the rake is 10%.

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That was similar to my thoughts. It makes it easy to compare to ROI. Let's say your ROI is 9.5%. This would make it a bad game to play for you, whereas with the different calculation it seems like a good investment.

djasset said:

every single game can be different (%/cap/etc) - but this is DEF something that needs to be considered before entering a game. If there is any confusion, whoever is collecting the rake should easily be able to answer this question - online/live or cash/mtt

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I completely agree that it should be clear for you before you enter any game. Was just wondering if there was any consensus among poker players. Would make it alot easier when discussing what rake is profitable or not among friends.

Nr98 said:

That was similar to my thoughts. It makes it easy to compare to ROI. Let's say your ROI is 9.5%. This would make it a bad game to play for you, whereas with the different calculation it seems like a good investment.

I completely agree that it should be clear for you before you enter any game. Was just wondering if there was any consensus among poker players. Would make it alot easier when discussing what rake is profitable or not among friends.

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Yes for sure, although to clarify ROI would normally be talked about including rake. So if you were playing a $200 + $20 and said you had a 10% ROI playing these tournies, that would mean you made $22 on average.

I agree though that thinking about the rake is very important to playing with a good edge!

Collin Moshman said:

Yes for sure, although to clarify ROI would normally be talked about including rake. So if you were playing a $200 + $20 and said you had a 10% ROI playing these tournies, that would mean you made $22 on average.

I agree though that thinking about the rake is very important to playing with a good edge!

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Yeah indeed, I wasn't thinking right when I made the ROI statement. If you'd want to guess if a new tournament has value or not by comparing it to your ROI of similar tournaments we'd have to account for the rake in the other tourney as well of course (which I forgot for a second).

Makes sense!

This question reminds me when I make a loan. When a person wants to borrow money from me, I charge 1 percent a month. But if they keep money for a year, it comes to 12 percent interest. i.e. When I borrow out $5000, I will go to a bank, withdraw $5000. I keep $50 for me and hand the other $4950 to the borrower expecting a full payment of $5000 in 30 days unless extended.