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How Rakeback is Calculated

February 25, 2009

In order to make the most of any Rakeback Strategy, it is important to understand exactly how your Rakeback is calculated and how much you’ll be getting back in rake. In this article, we’ll detail exactly how Rakeback is calculated, giving you the necessary fundamentals to make a profit from Rakeback offers.

Before we begin, we’re assuming you already have a good idea of what Rakeback is. If you are not certain what Rakeback offers are, and why they are so incredibly profitable, please refer to our previous Rakeback guides.

All online poker rooms calculate Rakeback in the same manner. The percentage may vary, the max rake taken from a pot may vary, but the calculations are always the same. Most online poker rooms refer to the Rakeback calculation as Monthly Gross Rake (MGR).

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The MGR is the exact amount you contributed in rake for the entire month. To reach this number, the online poker room takes the full amount of rake taken from all hands you participated in, divided by the number of players participating in each hand, and becomes forms your MGR.

For example, you play in 5 raked hands…

1st Hand: 10 players, $2 raked – your rake is $.20
(Divide the rake by the players and you get your contributed rake – $2.00/10=$.20)
2nd Hand: 8 players, $1.20 raked – your rake $.15
3rd Hand: 9 players, $3 raked – your rake $.33
4th Hand: 4 players, $2 raked – your rake $.50
5th Hand: 6 players, $3 raked – your rake $.50

Now add up ‘Your Rake’ (.20+.15+.33+.50+.50) and you get your MGR of $1.68

Of course you’ll probably play in a lot more than 5 hands if you’re an avid online poker player, but we’re keeping it simple for the sake of learning how Rakeback is calculated.

The next step is to decide what percentage of this total MGR you will be getting in Rakeback. That depends on the Rakeback offer you selected. The average is 30%, so that is the example we’ll use.

Divide your MGR by 30%, and that is exactly what you’ll be receiving in Rakeback.

$1.68 / 30% = $0.50 (.504 rounded down to $0.50)

If dividing by percentages isn’t your cup of tea, here’s another formula you may prefer.

$1.68 x 0.30 = $0.50

0.30 and 30% are the same thing if you multiply, rather than divide.

Another type of Rakeback you may be earning is Tournament Rakeback. Not all Rakeback deals include a Rakeback on tournament fees, so be sure to check the terms and conditions of your Rakeback deal.

Calculating tournament Rakeback is even easier, because you simply add up all of your tournament fees (not to be confused with buy-ins), then find the percentage of that exact amount. The number of players competing is not factored in.

Note that the buy-in is the larger amount, and the fee is generally 10% of the buy-in. For example, in a $10+$1 tournament, the $10 is the buy-in, while the $1 is the fee that earns Rakeback.

So, if you play these 5 tournaments…

1st Tournament: $10+$1
2nd Tournament: $50+$5
3rd Tournament: $200+$20
4th Tournament: $5+$.50
5th Tournament: $80+$8

Then add up the tournament fees – 1+5+20+.50+8 = $34.50
Now you need to find the percentage of Rakeback you’ll get from your total fees. Again, we’ll use the average 30% Rakeback.

$34.50 / 30% = $10.35
Or
$34.50 x .30 = $10.35

With full knowledge of how Rakeback is calculated, you should be able to determine what type of Rakeback offers would best suit your style of cash game and/or tournament play.

Written by Rob · Filed Under Rakeback Guides 

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