“You said gambling is an honest trade.”
“I said poker is an honest trade.”
Kurt Russel as Wyatt Earp and Val Kilmer as Doc Holliday – Tombstone (2003)
When Mrs. Flops sees me at my computer, she often asks, “are you playing your little gambling games?” I roll my eyes (if she ain’t looking), but I guess she’s technically correct. Poker is gambling. But it’s different from any other gambling game in a casino, even if that game does use the tools of poker. It is much more like one other type of gambling than it is like blackjack or any other casino table game.
Roulette is pure gambling. The greatest roulette player in the world is not one bit better than the worst roulette player in the world. Both are guaranteed by the math to lose in the long run. Playing chess for money is wagering, but not gambling in the sense that luck plays a role. Bobby Fischer’s money would be safer if he played me one chess game for ten thousand dollars than if he bought a treasury bill for that amount.
Poker players know that poker is not a game of chance. Sure, each hand originates from a deck of cards which is nothing more than a mechanical randomization device. But that no more means poker is based on luck than the fact that football teams flip a coin to decide who receives first means that football is a game of chance.
In poker we wager on the outcome of random events, but we focus on understanding the math of the random events better than our opponents do. We also wager based on the psychology of our opponents. We try to induce them to fold when they should call and vice-a-verca. We try not to let them do the same to us.
Both skill and luck play a role in poker. If I sat down with Phil Ivey and got aces the first hand, Phil’s money would be at far greater risk than Bobby’s was. But in a thousand hand session, he would be about as likely to clean me out as Bobby would be to clean me out in a chess match.
Making money in poker is a mathematical way to grow an investment of cash into more cash, which also has mathematically predictable risk of losing all or part of your investment instead. In that sense, it is no more gambling than buying stocks or opening a small business. In fact, the laws of statistics and probabilities are much simpler and more reliable as applied to a deck of 52 playing cards than to investing in the stock market, or buying a coffee shop franchise.
The Math
Odds in a gambling game are the likelihood of losing compared to the likelihood of winning. Correctly calling a coin toss has odds of 1:1. Rolling a six-sided die and guessing a certain number has odds of 5:1 against guessing correctly. Odds are also the ratio of the amount paid for a successful wager compared to how much is wagered. For example on a roulette table, players can bet on red or black, each of which will pay odds of 1:1. They could also bet on a specific number which would pay odds of 35:1.
If a gambling game offers payoff odds that are exactly equal to the odds against winning, that game has fair odds. At a casino game, the payoff odds are always worse than your odds against winning, so the odds are favorable to the house. Those favorable odds are the source of the casino’s profits.
The other way they make money – I believe this is the main way – is the fact that you will often have “winning streaks” and “losing streaks” at a casino table. The Casino has an effectively unlimited amount of money to risk – called its bankroll, and you have a far smaller amount to risk – your bankroll.
If you have a winning streak at the craps table and turn your three hundred dollar bankroll into five hundred, will you quit while you’re ahead? Most gamblers won’t. Most will keep playing until they lose their bankroll. That is most people’s plan when they enter a casino in the first place: I’ll play until I run out of money.
Kid Gamblers
When kids first play gambling games with friends, they instinctively want it to have fair payoff odds compared to odds of winning. Kids are all about the fair. Suppose, as a kid, you were flipping coins and betting on the outcome. Each of you should put up a dime and take turns guessing. If rolling a dice, you could take turns guessing with the guesser putting up a dime and the other putting up five dimes. You could keep playing until one of you has a losing streak and runs out of dimes.
Now, suppose you are flipping coins and it gets boring. Your friend is having fun, so he offers to pay you 2:1 instead of 1:1 if you will keep playing. You definitely should take him up on it if making money is your goal. Or suppose someone not so good at math takes your friend’s place with the dice guessing game. You guess correctly and he pays you six dimes instead of five because he thinks a six-sided die means 6:1 odds against guessing correctly.
If he is willing to do that, you should play as long as he stays willing or runs out of money, which is (almost) inevitable. But remember – even against a player like that, you could still have a losing streak, and run out of money yourself.
Strange as it may seem, situations in which you are offered 2:1 payoff odds for 1:1 odds of winning (or better) happen very often in poker. So do situations such as having 5:1 odds against winning and payoff odds of 6:1, or 2:1 against winning with payoff odds of 3:1. You make money in poker by recognizing and creating those situations. A less skilled opponent will not know when he is on the wrong side of the winning odds vs. payoff odds dynamic. In that way, you are like a one-person casino.
The bad news is that you are still on the wrong side of the big vs. small bankroll. You are not playing against the cash-rich casino; you are playing against your fellow players. But those players will come and go with new ones bringing in fresh money. Your poker life is one long game against all the players you will ever sit down with. Combined, your opponents have an effectively unlimited bankroll and they can ride out your “winning streaks” as long as you have the energy to keep playing.
Casino poker rooms and dedicated card houses don’t make money by you losing at poker. Casinos make money from their poker games by taking either a rake or a seat charge (sometimes both). The rake is a percent of each pot up to a set amount taken from every pot. So operating a poker table is not gambling for the casino, it is a service for fees.
That’s good news for you. One of the reasons that poker is winnable is you don’t have math nerds from the UNLV Center for Gaming Research constantly calculating ways to grind you out of your money.
You will be the math nerd grinding your fellow players out of their money.
Being a for-profit poker player is somewhere in-between casino gambling and kid-type lets-keep-fair friendly betting.
In the example of flipping coins until one of the gambling kids loses his bankroll, the busted one may throw himself on the floor and scream and cry. If so, he will learn the lesson that when you act like a jerk if you lose, no one will want to play with you anymore. So he will either give up gambling or learn to keep it friendly.
Online, you don’t have to worry about keeping it friendly. People are there to either play for fun or make money or some mix of both. The rules are enforced by the software and any hard feelings can be expressed in the chat that a for-profit player will often have off anyhow.
If you have home games with your friends, you want to keep it friendly by not letting them know that you intend to earn income by playing against them. Good way not to get invited back. Plays that earn you money from strangers, such as check-raising and bluffy looking all-ins might take the fun out of the game by revealing you to be more interested in making money than in socializing around a deck of cards.
Or who knows? Your friends may be hyper-competitive types who losing will only make want to keep coming back to get even or who will take it out on you by beating you at basketball or golf. These’re good friends for a poker player to have.
At the casino, you can make it obvious you are there to win. Check-raise, trap them, whatever it takes to grow your stack short of cheating or angle-shooting.
But it’s still a good idea to keep it friendly other than your trying to get all the money in everyone’s stack into yours. A compliment on a hand your opponent “almost won,” or congratulations when he does win could make the difference later in the session in whether he re-buys and keeps losing.
I guess all that’s just between us poker players. Civilians won’t get it so I don’t argue with them.
The gambling game that is most like poker in my opinion is horse racing. That’s right, horse racing. The track makes money by their version of a rake. They adjust the odds on the horses as people bet on them so that each horse pays slightly worse payoff odds than they should if the odds was fair. They end up paying out a percentage less than they took in wagers and that’s their profits.
Horse handicappers make money by betting on horses more wisely than people who just come to the track to have fun. Think of the each horse you can bet on as like a hand of poker.
At the track, the handicapper can pick any horse he wants. But if the track just randomly picked him a horse to bet on or don’t bet on, he still could make money by picking smartly. He would look at the horse’s track record, look at the payoff odds and decide whether it’s a good bet. If it is, he will place his bet. If not he won’t. He’ll “fold” that horse so to speak and wait for the next race.
The best thing about that would be that whatever they call the fish of the horse racing world wouldn’t be too discouraged about having a horse assigned instead of pickin’ the one with the cutest name. Maybe they’d grumble at first, but if they’re in the mood to gamble, they’re gonna gamble.
One thing you may notice if you decide to follow The Plan is that poker doesn’t seem like a fun gambling game any more. I used to say to myself, “Yeah, I’m making money, but I miss playing poker.” To put the fun back in you may want to drop to the lowest stakes and play a very loose-aggressive full stacked game for a couple of buy-ins. Or you could play low buy-in tournaments as suggested in this article.
Either way, keep in mind that once you decide to play poker for profit, you are running a little business so don’t be too shocked that it feels like work.