The Master Plan, Part 1 of 2--How Poker Works

I realize that a lot of my readers, including my new readers from Eye Care One in Muskegon, might be puzzled by some of my blog posts.  It must seem odd that I've been playing for quite a few years, but now I'm writing about the low-level tournaments that I play.  After all, I play a lot of  $1 tournaments.

To explain that, which I will do in part 2, I first have to explain how poker tournaments work, and how difficult it is to make a profit.  In part two I will explain what I've been doing since 1/1/2017 to increase my profits.  I will explain how I turned $40 into $900 while investing nothing on top of the starting $40.  That process is called "building a bankroll."

It's hard to make money playing poker.  A small number of players make a living at it. A very few become the millionaires that you see on televised poker shows.  Most players, including some touring pros, make little or nothing.

I've only played online lately, but I hope to get back to playing some live poker soon.  In either case, it works the same way.  I will use a $10 tournament as an example, but the numbers work the same way whether it's a $1 or $1,000 tournament.

Usually about 15% of the field will cash, so for a $10 tournament with 100 entrants, 85 players won't cash.  In fact, since each player has to pay a 10% fee to enter the tournament, most will actually lose $11, the $10 entry fee (which goes into the prize pool) plus the 10% rake that goes to the poker room or online site.  For online tournaments, this would be listed as a "$10 + $1" tournament.

The good news for the top 15 finishers is that 100 players each put $10 into the $1,000 prize pool for the remaining players to divide up.

  

This is the bad news:  It pays to finish near the top, but if you just sneak into the last cashing spot, you haven't accomplished much.  There is a poker saying that goes like this:

Most of the money is at the final table.  Most of the money at the final table is in the top three spots.

First place usually wins 20-25% of the prize pool, so let's say that first place cashes for $240 and second place gets $115.  The amounts go down quickly from there.  If you finish 15th you might win something like $12, barely enough to cover what it cost to enter the tournament.  Congratulations, you played for five hours, your profit was $1 and you made 20¢ per hour!

The point here is that it's hard to make money playing poker.  If you think that you can win because "I can read people" or "I read a poker book" or "I watch poker on TV all the time" it's not going to happen.

If you want to make real money playing poker, you have to understand the math.  Poker is a math based game:  expected value, combinatorics, game theory, optimal vs. exploitive play, and more.  You have to put in the hours, both studying and playing.

Phil Ivey, considered by many to be the best player in the world, won a high school math competition.  One player studies computer vs. computer poker tournaments to better understand Game Theory Optimal situations. 

You have to keep good records.  If you live in the United States, the IRS might want to see those records.   You can't "wing it."  You need to have a plan.  Part two will explain my plan.

As always, I welcome your comments or  questions (see box below.)  This is a "there are no dumb questions" space. 

Internet Problems

Playing online poker should be an easy thing to do.  I sit down to play, and if I'm good enough, I make a profit over a statistically significant sample size.  I wish that it was that simple.

Americas Cardroom is a disaster, as mentioned in earlier posts.  That knocks out one of my two options for playing online.  This month we had a big problem with our internet services.  It's been a problem for a while, especially when I'm playing or trying to study online around 0230.  Everything was so slow that I would type a few words, then wait for the letters to appear on the screen.

Until a few days ago poker had not been affected, but not only was poker affected, it was so bad that I would be unable to play for five or ten minutes at a time.  Every player knows what to do in a tournament when someone loses a connection or stops playing--you play faster.

When someone stops playing (in poker it's called "sitting out") players still have to post the blinds and antes once each orbit.  The faster that everyone plays, the more quickly you can grind down the stack of a player who is sitting out.  Other players get those chips, building their stacks while yours is shrinking.  That happened to me when the internet went down for several minutes at a time.  It cost me a couple tournaments and I skipped a few.

I talked to the people at Comcast, and things have been fine for a couple days.  It seems to be just a touch slow as I'm typing this, but maybe I'm paranoid.

I played last night, I didn't cash, and that one hurt.  I was playing a tournament that paid 12 players and I went out in 13th place.  It's never fun to be close to the money and miss, but that was especially true this time, because I was in the first place for a while.  Well, on to the next tournament.

Withdrawal is on Hold

I had no idea that it has been so long since I posted.  I apologize and I will do better in the future.  I'll do my best to put up something new at least every other day.

I decided about a month ago that it was time to take out some of my online poker bankroll.  The situation has changed and I'm not going to do that yet.  This has not been a good month.  I will say more about that when I post my July results.

Unless something miraculous happens in the next three days, July is going to be my first negative month this year.   There is nothing usual about that.  Short-term variance happens.*  In 2017 I had three negative months and still made a profit.  The problem is that I took a hit at about the same time I was ready to withdraw.

I'm in a position where I'm down over $100 this month, the withdrawal amount was going to be $300 and there is a $50 fee for withdrawing.  Again, I'll talk more about this in an early August post, but the gist is that the timing is bad.  I don't want to blow up my bankroll.

August should be a better month for a lot of reasons which will be explained in future posts.  I'll take another look at the situation in early September.  I hope to withdraw then.

A always, your questions and comments are welcome (see box below.)

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*If you want to read a long (34 pages) and nerdy explantion of statistical variance in poker, read this:

https://web.wpi.edu/Pubs/E-project/Available/E-project-102710-152357/unrestricted/DITULLIO.pdf


If you want to keep it shorter and less nerdy read this:

http://www.thepokerbank.com/strategy/other/variance/

Michigan Players Win Millions at the World Series of Poker

This was posted on Facebook 7/16/2018.

I, along with the rest of the Michigan poker community, am in mourning today. After getting through a field of more than 7,000 players from 62 countries in the World Series of Poker Main Event in Las Vegas. we did not get a winner from Michigan. The final table of nine players included two players from Michigan

Both were knocked out yesterday. Here is the Detroit News story:

https://www.detroitnews.com/story/sports/2018/07/14/nic-manion-joe-cada-each-top-2-m-after-busting-out-wsop-main-event/785352002/

World Series of Poker Main Event

Doing this is definitely on my bucket list.  I drop almost everything and watch this for hours every day for more than week.  The article is about a day behind.  Manion (second place) and Cada are still in.  It will be on ESPN tonight (7/13) and tomorrow night at 2200.

https://www.mlive.com/news/index.ssf/2018/07/2_michigan_men_make_final_tabl.html

Withdrawal Considerations

First, the good news: After I make my first withdrawal I will no longer be subject to a complicated set of rules stating what I need to do to withdraw.  After the first one, I can withdraw as often as once a week, with a minimum withdrawal of $100.  That's different than the first withdrawal, which has a $250 minimum amount.

The bad news: There is a $50 fee for every withdrawal, which was a nasty surprise.  $100 plus a $50 fee doesn't make any sense and I will never do that.  I'll wait until I can cash out enough that the fee isn't such a big percentage of what I withdraw.

My original plan for withdrawals was to take out $300 the first time and split it three ways:

1. Open a bank account for poker expenses.
2. Owners capital, money that I can take out for personal use.
3. A starter bankroll for live tournaments.

I was going to divide the $300 equally, $100 for each category, but as I thought about it I decided that $100 really isn't enough to get any of those areas going.

Another issue is that I'm on a downswing so my bankroll is down.  I'm -$112.70 so far this month.  That's not as big a deal as it sounds.  I've said many times that winning in tournaments usually means a lot of tournaments with no cashes or a very small cash, but a few very large cashes that make up for all of the small losses. For example, in June I failed to cash more often than not, but my biggest cash was $162.  That and a couple other decent cashes drove the month.

I can do some things to tighten up my game a little, but I won't make radical changes.  I trust the process.

Given all of the above I decided the following:

1. I will only take out the first-time minimum withdrawal of $250.  That plus the $50 fee will take a big enough chunk out of my bankroll.

2. $250 is not nearly enough to split three ways.   The poker bank account will have to wait.  I'm going to split the money, probably $100 for owners capital and $150 for live tournaments.

If I play the cheapest live tournaments available in the area, which are $25 or $30, that would give me several shots to start building a live bankroll.  $150 would buy me into five $25 tournaments with a some money left for dealer tips.  Of course I could easily play five tournaments without cashing, but with Americas Cardroom no longer an option, I need to start working on my live game again and I have to start somewhere.  If it doesn't work out, I'll use money from a future withdrawal and try again.

A lot of people think that success in poker involves being smart and getting lucky, but it's not that simple.  I'm running a business and I have to make good decisions, not only at the poker table but also in managing the business.

As always, your comments and questions are welcome (see box below.)

It's Time to Pull the Trigger

Since 1/1/2017 I've spent most of time building up a bankroll, starting with $40 on Juicy Stakes Poker.  It's time to take some of that money out so that I can, as cash game millionaire Dusty Schmidt says in the title of his book, Run Your Poker Like a Business.

The minimum withdrawal is $250 but after a lot of thought I decided to make it $300, even if my online bankroll will be a little smaller than I would like.  It will be apportioned as follows:

1. $100 for owners capital.*

2. $100 for a poker bank account.

3. $100 to start a live bankroll.

A few words about each of the above:


1. For most of the past 1.5 years I've had money in a poker account but none in my pocket.  That was my choice because I didn't want to take any more than I had to out of the family budget.  Still, it gets old not having walking-around money.  I hope that now or in the very near future that money will come only from poker.

2. The reason for a business bank account is to make recordkeeping easier.  If I buy a poker book or something for my office it will be with a debit card tied to my poker account.  Every expense will wind up on one bank statement so that I will know exactly what I spent, and so that I can prove that to the IRS if necessary.

3. I need more than one place to play.  I might be awake at almost any time of the day and night (this will be posted a little after midnight) but that doesn't mean that there will be something good to play when I want to open Juicy Stakes Poker.


Another consideration is that most good players make more money playing live tournaments than playing online, because there are more really bad players live than online.  An average player in a $10 online tournament is a much better player than an average player in a $50 live tournament.

I had to make some tough choices. I really wanted to get into Jonathan Little's Poker class** but that will have to wait until my second or third withdrawal.  My starting balance for poker expenses will only be $100.  If I take $37 a month out of that account, those numbers don't work.

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*"Owners capital" is an accounting term for money that the owner takes out of a business.
** See 6/12 post, paragraph 4.