Don’t Be Down With OPP(Other Peoples’ Personal Finances)

Posted on August 28, 2012 by Jason Schlachter

The other night I was cashing out after a long session, when I saw someone whose friend had been playing in the game I was playing, and we exchanged a few pleasantries .  I had been down a lot, and had worked my way back to winning a bit after a 12 hour session and was excited to go back to my hotel room.

I went downstairs and was debating whether or not I should call a cab or walk, when a cab pulled up.  I asked if he was available and he said he was waiting for someone who had  called and that if that person didn’t show up, he would drive me to my hotel.  After a minute, the gentleman I had spoken to as I was cashing out came downstairs, and I asked him where he was going and if he wanted to share a cab.  He said that he was going to a different hotel and would be happy to drop me off, when the cab driver interjected that he could not take me since it was against the company rules.  As the cab was pulling away, the man said, “sorry,”  then thought a second and added, “it’s ok, you won a lot.  You can afford a cab on your own.”

This struck me as a very judgmental thing to say since we barely knew each other.  Though I had cashed out a lot of money tonight, he had no idea if I was up or down for the day and had made an instant assessment of not only how I had done, but whether that would affect my willingness to pay for a taxi.  For all he knew, the money I won could have been needed to pay the rent or for medical care and perhaps I actually couldn’t afford to pay for a cab.  Maybe I just didn’t want to be reminded that I was still down for the month or that I had lost 10 sessions in a row before this(untrue for me, but certain plausible for many other players) .

It got me to thinking about how frequently these judgements comes up in everyday life.  People assume that if you wear a Rolex, that you have money, that you are willing to spend it frivolously that you subscribe to everything else that goes along with the “Rolex Lifestyle” you purport to lead.  Well, seeing one snapshot of someone’s life does not give you insight into what makes them act the way they do and does not allow you to extrapolate to other aspects of their life.  Perhaps their Grandfather gave them that Rolex or it was a reward they gave themselves for working 4000 hours in a year.  Maybe they spent all their money on that watch and can no longer pay the rent.  The point is that you can never really tell what someone’s motivation is and where their priorities are.  To then try to infer what that means for other aspects of their life is a fools errand.

In poker, it’s important to find out the reason why your opponents take a specific action.  At the poker table in a casino I find that if you ask or are friendly, people will be happy to walk you through their thought process.  The rest of the analysis is up to you.  That doesn’t mean that you can’t use stereotypes to help you initially, but if you don’t remain unbiased, you will cost yourself lots of money in the long run.

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Old Article on the Math of the Lottery

Posted on July 27, 2012 by Jason Schlachter

This article explains why playing the lottery is a bad bet, even when the jackpot is $500 million.

http://www.forbes.com/sites/baldwin/2012/03/29/500-million-jackpot-calculating-your-odds/

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Things That Might Help You When Reading This Blog

Posted on July 27, 2012 by Jason Schlachter

I have been told by several people that they are unfamiliar with the vernacular and shorthand I use in describing certain poker and math concepts.  I hope this page explains a lot of what I have written and I will update it frequently.

Texas Hold’em is a game of poker where the best 5 card hand wins according to the poker hand rankings found here.  Everyone receives two cards and there is a round of betting.  Then 3 cards are dealt in the middle of the table for everyone to use, called the flop, and there is another round of betting.  Another card is dealt, the turn, and there is another round of betting.  Finally, one final card is dealt, known as the river, and there is another round of betting.

No limit Texas Hold’em means that you can bet any amount that you have on the table at any time.  You cannot bet more than that, but you can bet any amount you wish.  If someone has less than the amount you bet, the amount that you bet is reduced to the amount that they have(a term called “effective stacks.”)  What this means is that if I have $1000 on the table and you have $50, the most you can win is $50 and the most I can lose is $50.

The shorthand used to describe the cards is A for ace, k for king, q for queen, j for jack, T for ten, down to 2.  D is for diamonds, h for hearts, c for clubs and s for spades.  So a flop of AhQs4c refers to the ace of heart, queen of spades and the 4 of clubs.  An “s” after a hand that is dealt to an individual person(known as the preflop starting hand) means that it is suited and an “o” after means that it is not suited.  So, AKs means that someone is dealt an ace and a king of the same suit.  Sometimes the description will be more specific as in AhKh or AsKc, but the “o” or “s” is generally used when the suit is not important to the hand.

Variance refers to variation in results.  Because of the luck involved in poker, some once all the cards have been dealt, some situational, there is a lot of fluctuations in results.  It is good for the game, as it lets bad players win frequently, but it can often be difficult for winning players to deal with prolonged losing streaks.

Tilt means that players let their emotions take over and they play less than their best. It is often caused by bad luck, aka variance.

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Life Variance

Posted on July 26, 2012 by Jason Schlachter

Variance is a description of how far numbers in a set are from their average. There is a lot of variance in poker.  Your expected earnings, the amount of money you can expect to make in a time period, can vary wildly from the amount you do make, especially in the short run.  In general, this is a good thing, as it allows amateur players to win frequently, making it more fun for them, and giving them the illusion of having skill.  It can be difficult for winning players to deal with losing several days in a row or even 8 out of 10.  Since I have switched to playing poker in person, I play many fewer hands (about 30 an hour instead of 1000 or more on the internet) and losing streaks that would be over in an hour on the internet(1000 hands) can stretch on for a week(1000 hands) when playing in person.

In practical terms, the more consistent your results are day after day, the less variance you have.  Let me give you a real world example of how variance affects people.  My Mom is a teacher and has an average drive of 20 minutes to the school where she works.  She has to be there on time or she gets written up.  What time should she leave the house to get there on time?

Well, the answer lies in variance.  Does it take her exactly 20 minutes a day because there is never traffic?  Does it take her 5 minutes 4 days a week and an hour 1 day a week?  How are her driving times distributed?  You don’t have to be a mathematician or use formulas and graphs to figure out what time she should leave for work.  My mom knows that there is a drawbridge that occasionally opens on her way to work(maybe once a week) and that costs her approximately 5 minutes when it opens.  Other than that there is no traffic, so she should leave at 7:35 to ensure that she gets there by 8:00, which is exactly what she does.  Well done Mom!  Note that the variance in times causes her to leave the house 5 minutes a day earlier than she needs to 4 of the 5 days a week and thus “costs” her 5 minutes a day less at home.

What is the cost of variance to poker players?  Aside from obscuring results and making it more difficult to determine who the winners and losers are, it is mental energy.  Most poker players spend a lot of time worrying about their short term results and waste the energy they could be spending improving their poker game.  In addition, frustrations such as “I never win” or “I missed all my flush draws today” can affect the way you play and can make you play hands less than optimally then if you were evaluating them at a different time.

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Why I Rarely Play Tournaments

Posted on July 23, 2012 by Jason Schlachter

Tournaments are great for the game of poker.  They bring together many people who are interested who are able to play without concern of losing a lot of money, and have the chance of winning a big prize at the end.   ESPN’s coverage brings excitement to the game and makes more people want to be a part of it.  The distribution of prizes to 10%-15% allows many people to have a positive experience and keeps them coming back to play in more tournaments.  Some of these players play in the cash games I play in, which creates many more games and is great for me.  This is the reason I usually travel to Atlantic City, Las Vegas and other places for the big tournaments.

I am often asked if I have played or planning to play in the World Series of Poker, and when I respond that I don’t play many tournaments these days, people ask me why.  It is normally to tough to explain in a few sentences,  so here is the complete explanation:

The main reason I don’t play tournaments is because over time, I think I will make more money per hour playing cash games.  I know the rate that I can win at playing in cash games, and roughly the rate I can win at playing tournaments and I prefer to get paid more per hour and to reduce the variance inherent in tournaments.

Tournaments have an incredible amount of volatility build into their structure. The payouts are extremely top heavy, precisely at the time when stacks are shortest and the amount you can do is limited.  These factors lead to a lot THE MOST variance in the results compared to all other forms of poker.

For example, if you play in a $1000 buyin tournament with 1000 players, 1000 times(this would take you ~3 years if playing every single day) with a return on investment of 50%.   After 3 years of playing every day, you would expect to win $1.5 million($500,00 of which is profit).  Not bad, right?  Not exactly, and the problem is that your sample size is not nearly big enough.The total number of times you would be in the top 10, assuming you are 50% better than the field is 15, over the course of 3 years.  Considering prize payouts for the top 5 spots would be $220,000, $132,000, $80,000 $67,000, and $55,000, one time where you come in 5th instead of 1st costs you $165,000.  Now, if you are looking to make on average $167,667 a year($500,000/3 years) that loss of $165,000 really stings!  With a sample size of 15, if you are unlucky a few times in the wrong spots, you can not make any money for several years.  Note that that one 5th instead of a 1st in the tournament drops your return on investment by 1/3 from 50% to 34%.  If you want to know how easy it is to experience variance in a sample size of 15, try flipping a coin 15 times.  Essentially 3 years of playing every day can, and will, come down to how you do in a 15 time sample size where variance is high and playability is low.

After several hundred hours of playing cash games, it is easy to know how I stand relative to the other players skill wise and am able to narrow down my hourly rate to a reasonable confidence interval.  In the above paragraph I showed that after 3 years of playing tournaments, you would still not have any idea of your return on investment. Noah Stephens-Davidowitz has done some excellent using different return on investment and variance among tournament players. http://www.nsdpoker.com/2011/01/mtt-pros/.

The other reason I don’t play tournaments is because of the inflexibility.  I must be at the casino ready to play at the time designated, whether I feel like it or not.  I am going by someone else’s schedule, and the ability to not do that is one of the reasons I enjoy my job so much.  I cannot chose when I stop and start playing which is an important edge that separates me from the competition.  I often play a long time when I am winning and am feared at the table, and stop when I am not doing well and my image is poor.  Most players play a long time when losing and stop quickly when winning, which is the exact opposite of what you want to do.  I play in games when I am feeling well against opponents who generally play worse than I do which is a good recipe for success.

Tournaments do not allow me to apply some of the other skills at which I excel.  In tournaments, your seat and table are assigned and cannot be changed. I cannot leave if my game is not good or move to a more profitable seat or a more profitable table. The ability to change tables and sit in good position relative to bad players is very important to long term profitability and can be a big advantage in cash games if done correctly.

While there are small adjustments that you can make deep into a tournament, many actions, especially when your stack is small, are automatic.  As Tommy Angelo has much more eloquently stated in his discussion of reciprocality, the difference between what you do and what your opponents do is what allows you to make money, and if situations become automatic and there is less room for your skills to become applicable.

I have played single table tournaments, multitable tournaments(like on ESPN) as well as many forms of cash games throughout my poker career and I have determined that the benefits of playing cash games (mostly no limit hold’em, pot limit omaha and omaha eight or better) outweigh that of tournaments.  I still do play tournaments from time to time, either because I have a yearning to play or because one piques my interest.  I think the decision to concentrate on cash games is fairly clear cut for me at the moment but I am always evaluating my options.

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