Our ratings are based on the USCF (United States Chess Federation) formula.

First, the basics:

The 400 rule - if the difference between your rating and your opponent's rating is more than 400, the game won't affect either player's ratings. In effect, the game is unrated.

The 50 rule - the result of a single game cannot change a players rating by more than 50 points.

Rating floor - regardless of the number of losses, a rating will never drop below 100.

Initial rating - your initial rating in each game is 1500.

There are two classifications of players in the rating system: provisional and experienced.

Provisional Players
Provisional players are players who have played 20 or fewer matches in a specific game. Your first 20 games in each game use the provisional formula. Here's how the formula works:
Your rating is higher than your opponent's and you win: +30
Your rating is equal to your opponent's and you win: +40
Your rating is lower than your opponent's and you win: +50
Your rating is higher than your opponent's and you lose: -50
Your rating is equal to your opponent's and you lose: -40
Your rating is lower than your opponent's and you lose: -50
Your rating is higher than your opponent's and you tie: -20
Your rating is equal to your opponent's and you tie: 0
Your rating is lower than your opponent's and you tie: +20

Here's an example. Let's say you're playing a game of backgammon.
Your rating is 1400 and your opponent's rating is 1600. If you win the game, your rating would go up by 50 points, making your new rating 1450.

Experienced players
Your 21st and all subsequent games are rated using a much less volatile formula.
Usually your rating will only vary by a few points in a single game.

Ratings for experienced players are based on an expected result.
For example, when an excellent player plays against a mediocre player, the system expects the excellent player to win easily.

Here are the details, for all you game geeks:

where range = the difference between two players' ratings.
The formula for changing the rating is:

K is a constant. For a rating lower than 2099, K=32. For a rating between 2100 and 2399, K=24. For a rating of 2400 or above, K=16.
Result is determined by the outcome of the match.
You win = 1
You tie = .5
You lose = 0