The Business of Poker
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I was sitting in a conference room today learning all about better ways to control costs and predict what effect a new cost would have on a business and I couldn’t help but think how all this information could help me in poker. I slowly started to realize something.
Poker is a business.
When you become a winning player, you start thinking about your game in term of expected earnings. You expect to earn x big blinds per 100 if you’re a cash player and you expect to earn x% ROI if you’re a Sit ‘N Go player. In a sense, you own a small business.
Our poker businesses are remarkably similar to stock traders businesses. We use a lot of the same formulas like Risk of Ruin and we both depend on probabilities of success to make money. But it’s deeper than that.
Take, for example, poker software. Most of us decide whether or not to buy something like Hold’em Manager or SitNgo Wizard based on whether or not we have expendable income at the moment. We see it as a toy - like a Wii or a new TV. But it’s really a cost of doing business. Here’s a scenario that shows how we should look at the investment:
Joe Average is a low stakes grinder. I recently learned how to beat .50/1 for 3.5bb/100 while four tabling. He likes Hold’em Manager and wants to buy it, but only if it pays for itself in two months. How much would the program have to improve Joe’s win rate for Hold’em Manager to pay itself in two months.
Joe Average grinds 300 hands per day every day. That’s roughly 9000 hands per month. Since a big blind is $1, Joe would only have to increase his win rate by 0.5bb/100 to pay for the $80 program in two months (actually it’s a bit less). Joe is losing money by not buying Hold’em Manager.
We can also diversify our poker business. We can stake other players. Chipmeup.com is a great place to get your feet wet in staking. I’d encourage you to start off by staking players who you know and who have a proven track record. I’m starting off by buying shares in my former prop bet adversary @wizardmickey and another player he recommended to me. They may not win today or tomorrow, but their long-term stats tell me that I’ll make money over the long haul.
Obviously these examples are basic, but you can apply almost any finance model or business report to poker and improve your income.
Start thinking about poker as a business. How much are you making an hour? What tools could you buy to increase that hourly rate? How can you diversify your business?
What Are Your Problem Areas?
I’m getting ready to take a trip to Florida for a conference required by my “real job.” But before I go, I wanted to ask something.
What are your biggest challenges in poker?
What is it that you think is keeping you from making the money you want to make at the tables? Your comments will help guide my future articles and videos.
Here are two tests to help you if you’re not sure where your weaknesses are:
I look forward to hearing from you.
The Importance of Review Sessions: Part 1
Reviewing your play is the most important thing you can do to improve your poker game. You know it’s true and still you don’t do it.
You tell yourself all kinds of lies.
- I just need more experience at the tables.
- I don’t make money when I’m reviewing my hands.
- I already know what I did wrong.
- I don’t make mistakes. (If you say that, just kill yourself now.)
You are losing money if you don’t review your play. Of course, there is one valid excuse for not reviewing your play - you don’t know how.
If that’s the case, I’m going to change that.
How to Review Sit ‘N Go Sessions
Sit ‘N Goes are the easiest games to review. There’s no line balancing, no real post-flop play; just value raises and shoves.
There are tons of articles across the net that will tell you what hands you should play during the different stages of a SNG. Despite what I may have said in an earlier article, the right way to play the early stages of a SNG is super tight.
You’re basically waiting for premium hands and that’s it. It’s the late stages of a Sit ‘N Go that get interesting.
In the late stages of a SNG, you’ll shove AJo, K7o, T8o and worse. Whether or not your shove is correct will depend on your position, the action, the stack sizes, the size of the blinds, how loose or tight your opponent is and how many players are left. It’s a lot of information to digest, fortunately there’s a mathematical model that takes all these factors into account: the Independent Chip Model.
The Independent Chip Model is too complicated to figure out using a pen and paper. Fortunately, Sit ‘N Go grinders can just import their tournaments to SitNGo Wizard and easily find their mistakes (there’s a 30-day free trial too. This software is REQUIRED for all serious SNG players). Once you import your tournaments, SNGwiz will tell you which shove/fold situations you got right and which ones you botched. There’s even a simulator for you to get a feel for when to shove.
Of course, there are situations that SNGwiz can’t figure out. For example, if you want to know if you made the right move raising with the intention of folding to a shove, you’ll have to do a little more work.
Let’s say you have a $3000 stack with 5 players left and the blinds are 60/120. It folds around to you in the small blind. Your opponent is a very tight-aggressive regular with 1800 chips. You think he’ll shove over your raise with 20% of his hands. Should you raise to steal?
If you raise to $360, you’re risking 300 chips to win 180. In 100 trials, you’ll win 180 chips 80 times (180*80=14400) and you’ll lose 300 chips 20 times (300*20=6000) which means that your steal has a positive expected value of 84 chips. (14400-6000=8400/100=84).
Next you can use an ICM calculator to see how that chip gain will affect your equity.
Now you have no excuse not to review your Sit ‘N Go sessions. Not only did I tell you how to do it, I gave you a link to a free 30-day trial of the best Sit ‘N Go software on the market.
In the next part of this series, I’ll talk about reviewing your cash games.
Great Poker Comic
I was surfing around the net and found a great poker comic strip called +EV. If you want to see more of them, go to http://plusev.keenspot.com.
The strip below is one of my favorites. Looks just like my laptop.
If I Had To Do It Again
Building my bankroll from $100 to a little over $4,000 has been a lot of fun, but there were frustrating moments too. My aggressive growth goals meant that I had to play a range of different games and play buy-ins that violated traditional bankroll management rules. Through it all I learned a lot about what games were good for bankroll building and which ones were a little too risky. Here’s what I’d do if I had to do it all over again.
Start With Low Buy-in SNGs
Playing low buy-in Sit ‘N Goes is like printing money - very, very small amounts of money. The players in these games have no idea what the Independent Chip Model is or what it means to adjust to rising blind levels. Come to think of it, I’m not even sure they know they’re playing poker.
All you have to do in low buy-in SNGs is play super tight. You only play JJ+ and AK in the early stages and when you’re stack is about 10 to 13 blinds deep, you use the ICM to make +EV shoves. That’s all there is to it.
Move to Low and Mid Buy-in Turbos
These turbos are similar to the regular SNGs except there’s even less post-flop play involved. In fact, if you’re playing post-flop poker after the early stages of a turbo Sit ‘N Go, you’re probably making a mistake.
Turbos are all about knowing when to shove.
Add Some Multi-Table Tournaments
Once your bankroll can handle the swings, some multi-table tournaments will give your bankroll a serious boost. Multi-table tournaments offer winning players an excellent return on invest and going deep in a few tournaments will make your bankroll soar.
I prefer tournaments with less than 300 players. You’ll usually have to go to fringe sites like Bodog or Cake to get decent tournaments without a field of several thousand players, but it’s worth moving your money. Moreover, the skills you learned while playing SNGs will help you crush final tables.
Bum Hunt in Cash
Start low at first. Maybe $50 NL or so. Go to PokerTableRatings.com and find the worst players on your site and set up email alerts (it helps if you have an iPhone or Blackberry so you can be instantly notified). When your fish are playing, just grab a seat in position.
This method can be a little high variance, but it’s profitable in the long run.
Get Rakeback
I’ve earned hundreds of dollars in rakeback over the course of my bankroll building challenge. I’d have a lot less money if I didn’t sign up for rakeback right away. If you’re playing without rakeback, go here. All you have to do is enter your info in the ‘Existing Account’ field and these guys can get you set up. It doesn’t work with Full Tilt, but it usually works with everything else.
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I truly believe that anyone can make money playing poker. There’s too much information out there (and on this site) for lack of knowledge to be an issue. Good luck and let me know if you have any question. I’d love to help!
