# INDUSTRY FORUM

• kickr008

I’ve seen the statement many times that the losers pay the rake. However, it seems to me that it’s the winners paying the rake since they are collecting the pot minus the rake. What am I missing?

• stoptheinsanity

People say stupid things all the time. The reality is when you enter a contest a portion of that money goes to the prize pool and a portion is an entry fee. Everybody pays the rake.

• tvsfrink

If I said “In Soviet Russia, the rake pays you,” would someone tell me to go back to the 80’s or to the late 2000’s?

• stoptheinsanity

@tvsfrink said...

If I said “In Soviet Russia, the rake pays you,” would someone tell me to go back to the 80’s or to the late 2000’s?

In Soviet Russia, the 80’s or late 2000’s come back to you.

• tvsfrink

Damn double Russian Reversals…

• jlenhard

I think the theory is that the winners make profit therefore they aren’t paying anything. The losers only put money into the system, so their money is the money the company is taking.

• stoptheinsanity

@jlenhard said...

I think the theory is that the winners make profit therefore they aren’t paying anything. The losers only put money into the system, so their money is the money the company is taking.

It’s all semantics. But if you really want to understand the value then here is a simple example. Say you enter a \$10 contest with 10% rake. The value of your seat is \$9 and \$1 was the fee you paid to play in that contest. What you ultimately end up winning or not winning has nothing to do with the value of the seat and what you paid to enter.

• sethayates

@kickr008 said...

I’ve seen the statement many times that the losers pay the rake. However, it seems to me that it’s the winners paying the rake since they are collecting the pot minus the rake. What am I missing?

If you play the Millionaire Maker this Sunday and take first place you will collect \$1,000,000. There are 229,000 entries in the pool this week. DraftKings will pay out \$4M in total. That means there is a total rake of \$458,000. If you win first place, they don’t subtract that from your million, they pay you a million.

That’s what people are getting at when they say that loser pays the rake.

• jlenhard

@stoptheinsanity said...

It’s all semantics. But if you really want to understand the value then here is a simple example. Say you enter a \$10 contest with 10% rake. The value of your seat is \$9 and \$1 was the fee you paid to play in that contest. What you ultimately end up winning or not winning has nothing to do with the value of the seat and what you paid to enter.

I agree that your method of thinking is better for understanding the value of the situation. most people just don’t think like that.

• YoungFischer

It’s nonsense meant to distract from DFS being a negative sum game.

You could just as easily say only winners pay the rake as they are the ones actually receiving a smaller prize than what was paid in. It makes no difference to the losers if the prize pool was \$20 on a \$11 buy-in or \$200 as they get nothing regardless.

• NCRick

Actually this statement makes sense in a way. If you look at the worst 10-15% of lineups, they are so bad that they really are just giving their money away. So that covers the rake, then you just have to be above average among the remaining players to be +EV. Of course losers dont always pay the rake according to this way of thinking since they could be better than the bottom 15% but below average among the remaining players. So a better statement is that “fish pay the rake”.

• JonBales

• 527

• x3

• ### 2019 DraftKings FFWC Finalist

I think how much rake you “pay” depends on your equity, with winners actually paying more. Let’s say you play a H2H for \$10 and you are theoretically 100% to win. Your expected value is \$18, while your opponent’s is \$0. In that scenario, you are paying the entire rake of \$2. Chances of winning multiplied by the rake = rake “paid” in this view.

In reality, everyone pays for the rake because everyone has a non-zero win probability.

• zshoom

• ### 2016 Single Entry Series Finalist

The logic would be that the fact that the site profits off every dollar the winner puts in play is offset by the fact that the winner profits off the site.

Think of it like a pool hustler renting a table from the pool hall, then using that table to make money. Someone else rents a table and loses money. The pool hall gets money from both (and doesn’t really care who wins or loses), but the hustler can write off his rental fee as a cost of doing business, while the other guy just adds it to his losses.

• YoungFischer

Ask yourself this—what would happen to your bottom line if rake were cut in half?

The answer to that question is who pays the rake.

• stoptheinsanity

@YoungFischer said...

Ask yourself this—what would happen to your bottom line if rake were cut in half?

The answer to that question is who pays the rake.

Exactly what Bales was saying. Basically unless you never win, or even have a chance to win a game, then you are paying rake. Mystery Solved!!!!!!!!!!!

• TeamTwerk

I take that statement in OP to mean the number of fish entries are enough to cover the rake and that is it. In other words the games are not very beatable. Of course the few that play insanely massive volume and are very skillful make a lot but not much left for everyone else inbetween fish and world class.

• walkoff9

• 796

### RG Overall Ranking

Really makes no sense. It’s not even like sports betting where people will say you only pay the rake when you lose, which technically is true, but doesnt make betting -300 a viable strategy.

• stoptheinsanity

Let’s say you got two guys who want to sell Hot Dogs in the same place. Say this place generates \$1800 in hot dog sales over a set period of time. Both go out and purchase hot dog carts and food for \$900. Next they both have to pay \$100 for their permits. Now say one of those guys managed to get all of the business and grossed \$1800. The other guy failed miserably and ultimately just ate all his hotdogs while crying about being a failure. Now here is the question. Who paid for the permits(the contest fee or rake)? Was it the guy who made the money? Was it the guy who lost all his money? Or was it both of them?

• tvsfrink

I would never call anyone who eats that many hot dogs a failure.

• AtGame7

@walkoff9 said...

Really makes no sense. It’s not even like sports betting where people will say you only pay the rake when you lose, which technically is true, but doesnt make betting -300 a viable strategy.

It’s technically not true. Losers NEVER pay the rake (vig) in sports betting. Winners pay 100% of the vig.

When you bet \$110 to win \$100 on the standard -110 line you RISK \$110 no matter what. When you lose you lose your \$110 that you risk, when you win you only get \$210 back when you would have got \$220 if the wager were truly even money. The winner paid \$10.

That holds true no matter the line. In your -300 example if you want to win \$100 you have to risk \$300. If you lose you lose the \$300, if you win you get \$400 back paying \$200 in vig.

To drag it our further, you don’t have to risk \$110 on a -110 wager. You can still risk \$100, but if you win you only get \$190.91 back. You paid the vig of \$9.09.

• bobbyrogers46

So if only one side pays the rake be it the winner or the loser, then who paid for the other side to have the playing experience? Was the playing experience free for one side and not the other?

• AtGame7

@bobbyrogers46 said...

So if only one side pays the rake be it the winner or the loser, then who paid for the other side to have the playing experience? Was the playing experience free for one side and not the other?

The playing experience was not free for the loser, he paid 100% of his wager. Winner paid rake/vig, loser paid 100% of wager.

• YoungFischer

Sigh.

\$5 rake in a \$100 buy-in game. Loser is down \$105.
\$9 rake in a \$100 buy-in game. Loser is down \$109.
\$20 rake in a \$100 buy-in game. Loser is down \$120.

Keep telling yourselves you aren’t paying any rake losers.

• tvsfrink

If I buy in for \$100, how have I lost more than \$100?

Also, there’s a chicken somewhere laughing with his friend the egg.