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Derivative of the game "you laugh you lose." In "you laugh, you lose" the object is to do something funny. If someone else laughs, they loose. "I raf, I ruse" is either A: a chinaman stating the fact that he/she laughed and lost, or B: a chinaman, not understanding the concept, repeats the game name replacing "you" with "I".
A:
John- "hey look what I'm doing"
(john does something ridiculous)
Chinaman- (laughs) "(sigh)..i raf, i ruse."

B:
John- "hey let's play you laugh you lose."
Chinaman- (confused) "Waht's that? I raf, I ruse?"
by the_genrl January 16, 2009
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