What Winning $250k at Poker Taught Me About Money
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I played a ton online before the Black Friday days and did pretty well, and will usually try to play a few big live tournaments a year, but these days I mostly just play cash games as a fun hobby and a way to grind out some extra income. There's less variance and the money is more consistent.
That being said, as brutal as the swings in tournaments are, cash games have nothing like the rush of running deep in a poker tournament. The intensity and increase in stakes/prizes as the blinds move up and more players get knocked out and you inch closer to the big money is almost like chasing a high. So for me, cash games are the way to go if your goal in poker is to make money, but tournaments are a fun way to chase the dragon from time to time. I personally don't think I would have the stomach to play tournaments full time though.
I think it's why people also believe there is "beginners' luck" - there isn't really - the entire game has tons of luck. But when confronted with someone who clearly isn't skilled but wins anyway, poker fans really don't want to face the reality that the game is mostly luck.
Another issue with poker - at least Texas Hold'em - is that the best strategy is folding 90% of the time, which is just boring.
I'm sure there are much better bluffing games.
That’s what keeps the fish around!
Good players generally play around 20% of their hands, but even that vastly changes based on how aggressive the player is. Also, there is much more to factor in than just the hand you are dealt. You might want to play a tighter range (play less percentage of hands) in early position (let's say first or second to act in a betting round), compared to being last to act (where you might want to play a higher percentage of your hands). This is because being last to act in each betting round extremely useful in poker (If you want to know why, there's a lots of great articles on the internet who could explain much better than I [1]).
You don't need to be any cleverer than that until people pay enough attention that they won't call you unless they think that they have you beat. Then you will have to go for a wider range and start to play a better strategy.
Just recently got back playing and am trying to learn to play against real players. I'm down overall after about 50 hours of play, but not very much. Any advice?
It’s geared toward online cash playing, but I ignore most of the HUD stuff and can use all the concepts in my live games.
[1] https://www.amazon.com/Grinders-Manual-Complete-Course-Onlin...
The Mathematics of Poker (Chen and Ankenman)
Applications of No-Limit Poker (Janda)
Expert Heads up No-Limit Hold 'em (Tipton, this one is nice as the author is a Computer Scientist and also has a course on building a solver.)
Professional No Limit-Hold 'em (Flynn, Miller, Mehta)
Finally, you should get a membership to something like Upswing or RIO to help synthesize the information into a useful framework for play. Also, you'll want access to something like PIO or Pokersnowie for analysis of your hands.
Let's take a very simple toy game. You are dealt a 1 to 3 in order of increasing strength. The deck has one of each card, so if you have a 3 your opponent does not. We have one round of play with only a bet or a fold allowed. The goal of our game is simply to maximize the number of mistakes our opponent makes. A mistake would be folding when he has the better hand, or calling when he has a worse hand. We're going to assume we're playing against a good and logical player.
We can analyze this game pretty easily. Our opponent is always going to call when he has a 3 since he can beat anything. And he's never going to call with a 1 since he can't beat anything. So our chance for an edge comes with 2s. We need to get him to call our 3s with his 2s. If we only bet our 3s, this is probably not going to work. He'd suddenly see that everytime you go to showdown, you end up with a 3. And indeed he probably would not even default to calling with 2s because, from his perspective, he only beats a 1 anyhow.
So we need to create a more balanced range that makes it where this decision is not so easy. One idea is to bet our 3s and 2s. But this would be a big mistake for reasons already alluded to. Imagine we have a 2. He has either a 3 or a 1. He's going to be able to play perfectly. No, betting a 2 will never lead to a mistake. So the only other option we have is to bet our 1s! And yeah this is where you start to see the optimal strategy. Now if he folds his 2s when we bet, he's making a mistake 50% of the time! Interestingly enough, if he calls with his 2s he's also making a mistake 50% of the time!
It's only by creating a balanced range did we create a strategy where our opponent is forced to make mistakes. And in regular poker too a general strategy is to aggressively play the top and bottom of your range. The tough decisions of course come in with the middle of your range. But you generally do not want to mix the middle and top of your range for reasons similar to this toy game. You might push your opponent off a '2', but in general you're making it pretty easy for him to play correctly.
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One other aside is that, depending on the current state of the games, it might be literally impossible to win at certain stakes on certain sites. Your max edge is pretty limited in poker. Even if you're playing against horrible players, you can only win for x bets per 100 hands (big blinds per 100 hands is the general measurement of profit - e.g. 8bb/100). When I quit playing, sites were on a sharp upward trajectory of stupidity with rake. If your edge is 15bb/100 and you're paying 20bb/100 in rake (which is not uncommon at small stakes) you're going to lose money, even though you're crushing the other players. It seems silly to worry about $3 in a $200 pot, but that $3 is ultimately going to play a far bigger role in your earn rate than anything else. This only stops being true at midstakes around $3/6 and especially $5/$10. $5/$10 being the blinds, so a normal buyin would be $1000.
I call it stupidity because I think they felt jacking up the rake was an optimal decision business wise. Winning players take money out of the games, whereas when bad players play all money eventually gets taken in rake. But they miss the meta. Many of those bad players are playing because they want to be one of the good players. That good player might take some 6 or 7 figures out of the games, but in turn inspire deposits from bad players that might be many times that. E.g. the reason I got involved in poker was because of a good winning player by the name of CTS. And then at my lower stakes games I found comparable players to aspire to emulate and so on up the stakes.
Like so many industries, optimize to maximize your profit and you very often end up doing the exact opposite! MBA = masters of business annihilation.
Imagine casinos that had cash chess tables or basketball courts. Would you have enough dead money willing to risk playing? I'd wager no. You'd get occasional fish willing to try but they'd get dunked on and go home. Without enough new money, the game would dry up as the best players and the casino accumulate all the rest.
(Skill has a lot bigger edge in Omaha.)
I find a huge co-relation between how poker and wall street is aligned.
Depends how closely matched people are. Last few times I've played games with friends/family who aren't poker players, I literally took all the money and I'm just using poker 101 strategy. The skill is all in getting people to play with you more than once :(
And if you ever watch casino games -- it's just a constant money spigot from fish to sharks.
That's what I always appreciated about professional poker players. Their patience and their emotional regulation. Both of which made me terrible at the game.
Another game I like recommending is Fluxx. It teaches you how to lose. The game is very chaotic and there are things that can happen which cause you to just lose. Or just win. There is some amount of skill involved, but you can be forced in a situation where you cause someone else to win randomly. You learn to divorce your efforts from the immediate results and to accept loss and move on. Partly because the games are pretty quick.
But then as you note the skill cap isn't very high. Once everyone figures out the strategy it goes back to being mostly luck and who has the biggest bank account to ride out the bad times.
A game of poker is not one hand of poker. It is typical in poker games to be all in and have a 70% chance of winning. If you are playing a bad player and you go all in 5 times against this person with a 70% chance of winning is there any luck involved? To me it looks more like printing money.
>Another issue with poker - at least Texas Hold'em - is that the best strategy is folding 90% of the time, which is just boring.
You should not be folding 90% of the time.
As a last hurrah before getting back to startups I traveled to one big live festival..played terrible in the $10k main event due to poor sleep after travel and got 3-outed just before the money after playing great in a satellite to the $25k. It's one thing to miss the money after playing great for ~5 hours in a $500 tournament from the comfort of your own home...consistently walking away -$15k+ in the hole after expenses for days worth of effort? No thanks.
I specialized in small, quick tournaments for this reason. Live players still weren't used to the even faster pace of online play but with rapidly escalating blinds it was critical. They were lulled into indecision and procrastination by the low early blinds, not realizing that they escalated quickly to force stacking out of the small players. I could easily make $1k+ a day clearing Binion's tournaments.
I tried playing in a couple of Venetian Deep Stack events and usually busted out. I finally adapted to the slower play, longer rounds, bigger field and frankly better players to leave after two days of play with the same payout from winning one three hour Binion's tournament. The biggest upside being able to say I got my name published in Card Player magazine. LOL. Since for me it was just entertainment and I could reliably pay for my vacation in the smaller tourneys I went back to small ball.
Now that WSOP's in the summer, online poker is mostly dead in the US, televised poker mania has died down, and I have kids, I don't bother going anymore, but it was definitely fun and modestly lucrative for a while in my 30s.
A cold deck is one that has been rigged to the advantage of one player, and then swapped in after the cut and shuffle (hence its "coldness"). Typically the deck would be stacked to give the victim a fantastically good hand, but the cheater one that's slightly better. The victim would bet a great deal thinking their hand was good only to lose at the end.
Players now use the term to describe the rare occasions when someone loses with a particularly strong hand in a fair game.
If it's not brutal - you're simply on a hot streak, or playing in unbelievably easy games.
Poker at the end of the day, is a matter of who cracks mentally. It is just so tedious. You can see this in live games for small stakes most clearly when someone gets bored after a couple hours of shit cards and does something he/she would never do an hour in. They call it tilt, I call it your inner wisdom letting you know you're wasting your life away.
Variance is a bitch.
Speaking to the variance of the game: "Eventually you will run worse than you ever thought possible"
Poker teaches, contrary to most business literature, to not be results oriented. It is the decision not the result that matters. "You can do everything right and still lose".
The book Antifragile is all about this. His advice for entrepreneurs specifically is to "avoid your risk of ruin". Starting a business is never guaranteed to succeed, and if you stake your entire life savings on one business venture and take out loans, you could just get unlucky regardless of EV. If you, say, kept a part time job and worked on your business in the rest of your time and had infinite runway, you'll eventually succeed if you don't quit.
This idea has strongly impacted the way I face decision making.
Secondly we'll define perfect poker as game theory optimal poker. Game theory optimal poker better known as GTO poker is by definition unexploitable. In the long run, two people playing GTO poker against eachother neither player will win money.
GTO poker is not necessarily the form of poker that will make the most money. Given that 99% of the time you are playing versus amateurs who do not know sound poker strategy you can adjust your play style in order to exploit the mistakes of the other players. When you adjust you are actually exposing yourself to better players. Better players can identify how you are adjusting to take advantage of bad players and in turn adjust themselves to take advantage of the weaknesses you are introducing into your game.
About a 95% favorite.
In poker terms: you can't judge by winning or losing, only by whether your decisions were +EV or -EV.
Let's say you play texas hol'em, you go all-in with AA in the first round and lose. The expected payoff was positive even if you have lost. And if you were given the chance to play again, you should keep playing the same way.
This is the #1 thing I learned from being a serious and competitive Scrabble player.
This one. I'm not sure how many readers I would have if I tried to explain it in a book, but I'm tired (to the point that I don't read the books, just the covers) about how everything will be ok if you just wish.
When you just learn that sometimes people fail even having taking the best possible decision at any point, you get another perspective for your life.
[1] https://www.goodreads.com/book/show/35957157-thinking-in-bet...
https://www.amazon.com/Tao-Poker-Rules-Transform-Your/dp/158...
[0] https://www.cardplayer.com/poker-news/22503-why-does-mainstr...
Super insightful and eye opening when I finally wrapped my head around it. The insightful and valuable corollary / takeaway I get from this is:
"But if you make the right move enough, you will win eventually."
Determination matters, in poker, in business, in whatever hobby you do. I've noticed this laddering Counterstrike and Overwatch. Individual losses are frustrating, especially when you feel you made the right moves. But if you keep making the right moves, you will eventually win more than you lose in the long run. You just need to have the determination and drive to stick with it.
Or run out of money trying.
I remember the saying "You are entitled to your actions, but not the results" somewhere in Indian philosophy. Means you should always do your best but there is still no guarantee for the expected result.
Learning to separate the feeling of results (both highs and lows) from the act of playing was one of poker's toughest lessons.
That is indeed a very valuable lesson!
But the really interesting thing to me was how successful the video learning platform SAAS business was for Poker. These sites started to pop up where high level players would record their sessions and talk through their hands, then you paid per month for access to these videos. I remember when Card Runners[0] just came out.
It was one of those niches that lined up perfect for a SAAS business. No shortage of games, lots of online pros playing with different styles, and some of them were really good at talking through their thought process. All they had to do was play (which they were doing already) and comment on their hands.
It's funny to think back then I was sitting there 4-6 tabling NL10 with a PT HUD thinking I was on the top of the poker world.
How about you?
IMHO poker is about bet optimization and risk management. To take as much as possible with the lower risk possible.
It's a common belief that women are more sensitive to emotional cues than men, but I've never heard it put like this. Interesting perspective.
Edit: I think you can't carry over losses from prior years, so if you lose money one year and make money the next, your taxes on your net earnings can be higher. Rule of thumb for professional poker players: If you don't have a profitable tax year, it is time to quit.
So she's not wrong, but she'd only be hitting those numbers if she won a really big tournament or two.
Edit: I forgot that the self employment tax phases out at ~$120k labor income, so she'd need a lot of investment income (or a high earning spouse) to pay both the top marginal income tax rates and the and 15% employment tax.
Government policy should incentivize constructive industries.
Someone correct me if my figures are wrong, her total tax rate all-in (based on NYC), appears to be closer to 41%.
$1m gets you to ~48%. $10m gets you to ~56%.
I payed 100$ sat down, played a few hands and 20 minutes lateri was done.
I liked the experience and I will not play again in a casino:
- dealer is really quick. It's stress and you can't think - you can see super quick who will lose all at the end of the day and who is here to grab it from the others - they don't like to talk just Don't see the appeal to learn to become so much better so that I might become good. Prefer to just go to work
I got awkward in the beginning, by unintentionally straddle betting and violating all kinds of other table rules that I didn't know. But that irons out quite quickly.
It's a fun experience to feel awkward and realize you're still going to go away with the price.
And every game was like 5$ min to just see the cards. 100/5 20 games later you have to win something.
This quote in particular gave me an interesting thought:
>> Trust everyone, and people will take advantage of you.
>> Distrust too much? That’s just as bad — you’re going to be the one calling every hand, thinking everyone’s always bluffing you, out to get you.
>> You need to figure out when to distrust and when to trust.
That last line is interesting, especially when compared to mutual funds. I wonder how comparable poker outcomes at a tournament (or many tournaments over time) compare to an active fund manager?
And then that leads me to wonder what a simple ETF comparison would be in poker - someone who always calls?
It would be interesting to see how that "ETF" poker player would compare the the rest of the people in a tournament.
Obviously a top poker player will not fail out early very frequently, so that's one difference, but on average, what does the "average" poker player at a tournament look like number wise?
It is well known how they respectively fare in tournaments - the ETF players make it into the money at a somewhat higher rate, but will typically have a middling to low stack with little hope of making a deep run, so they have a lot of low but positive ROI results - a mincash will typically be around 50-100% ROI. However they still may not eke out enough cashes over the long run to be +ROI. The Hedge Fund players on the other hand tend to bust out earlier but when they do run well will amass a huge stack and be well positioned to make a run at winning the whole thing - most of their results will be losses, but because of the super steep payout structures of tournaments, a single big-field victory can be well over 10000% ROI, so a single "bink" can overcome dozens of losses.
Seriously, though - thanks for the insight. Hadn't thought of comparing to a hedge fund, and after reading your description, it seems obvious.
To add some color to an ETF analogy, an ETF in the financial markets is basically just following an index, which is often created by a firm like S&P (and there are over a thousand of those indices). So, one index may just be "buy all the companies that have dividends", or "buy all companies that have a price to earnings ratio greater than average", or "buy all companies listed on the US stock market".
I guess in poker it could be "call on everything", or "fold unless you have at least a three-of-a-kind". Basically, it would be mechanical. Of course, you can have reasonably complex ETF algorithms that have multi-pass filters (such as P/E ratios, Debt/Equity ratios, Dividend minimums, etc.) all in some combination. So maybe there could be something complicated like "bet 1% of your holdings whenever you had a pair, and bet 2% if at least one player folds." This is just a made-up example, but the rules could probably get intricate based on the math and different situations.
And of course on the other side of the story, a lot of effort goes into finding and banning bot accounts, proving that collusion is happening etc.
The game is over when both players decide it is over (skipping a turn). Its usually not worth it to try to kill opponents: the winning strategy is to typically capture territory. There's always more territory (especially in the early game) rather than aiming for conflict.
You've got to know when to fight battles, you've got to know when to sacrifice pieces. The entire opening is basically tradition and still has no unifying theory (there's 3-4 opening and a Joseki for how professionals seem to play, but there's no hard proof that this is the optimal strategy). So its still a very open-ended game with a lot of unknowns.
Because in my many hours frittered away in card rooms, I never once thought "these people have it all figured out."
I wouldn't say she won that money, I'd say she earned it. Lottery one wins at and is pure luck. Poker is some luck but mostly skill and persistance.
FWIW, she refers to it as earnings and income in the quotes in the article.
In response, I give you this snippet from "The Drunkard's Walk" by Leonard Mlodinow:
> ...if one team is good enough to warrant beating another in 55% of its games, the weaker team will nevertheless win a 7-game series about 4 times out of 10. And if the superior team could beat its opponent, on average, 2 out of 3 times they meet, the inferior team will still win a 7-game series about once every 5 match-ups. There is really no way for a sports league to change this. In the lopsided 2/3-probability case, for example, you’d have to play a series consisting of at minimum the best of 23 games to determine the winner with what is called statistical significance, meaning the weaker team would be crowned champion 5 percent or less of the time. And in the case of one team’s having only a 55-45 edge, the shortest significant “world series” would be the best of 269 games... (p. 70-71)
And that's the case of repeated games which would lower the effect of variance on the outcome. The saying "that's why they play the game" applies. You can get around it by defining the better team as the winner of the game but then "the better team wins the game" is tautological.
Where I live there's a commercial for online Casino ("Mr Green") where a woman hit a 2,5 million approx. USD jackpot, and 2 years later she won 5 million USD.
The commercial was reported for fraud by someone of the public because it was unbelievable, but the casino showed for the investigators that the winnings were real.
However, guessing that the woman probably played for a lot of her winnings, a second jackpot is not that improbable. And I guess she didn't stop there either ...
That was a game of pure luck though, and Poker seems to be somewhat equal that off golf in skill vs luck at top level.
https://pdfs.semanticscholar.org/9469/72de84cd72f5f7edbcedf4...
Powerful