Checkmate!

Inside Dan Harrington's penthouse condo, an ornate desk stacked with presentation binders occupies the focal point of a large living room. An antique chess table abuts the glass and chrome window wall, offering panoramic views of Santa Monica's posh Third Street promenade. The large plasma-screen TV tuned into CNBC hustles stock tickers across the screen and bookshelves full of backgammon, chess, business, and real estate titles hint at the raw materials that Harrington has used to build his unique life. The 63-year-old retired lawyer, chess master, and backgammon savant has spent a lifetime transforming his competitive game skills into extraordinary financial success.

The 1995 World Series of Poker champion has amassed more than $6 million in tournament winnings over his 20-year poker career. However, this title meant, and still means, very little to him. Instead, it validated his thesis that games, whether they be poker, chess, backgammon, investing, or real estate, are beatable with a studious and disciplined approach.

Harrington "retired" from poker soon after his World Series championship victory. From 1996 until 2003, he tallied only nine tournament cashes and, instead, focused on building his business, Anchor Loans, into the largest private real estate lending institution in the United States. The business loans money to developers and investors who are unable to secure enough financing via traditional sources for refurbishing residential homes and apartments in dilapidated areas.

Harrington says he returned to the felt only after he started watching poker on TV in 2003. "I said, I remember how to play that no-limit hold'em, and I know how to play it better than they know how to play it," he recalled. "That's what got me out of retirement and got me playing again."

There was no learning curve necessary for "Action" Dan. In 2003, he again made the final table of the WSOP main event, finishing third. Then, in one of the most impressive feats in poker history, he again fought his way back to the final table in 2004. These two performances put another $2 million plus in his pocket.

Harrington then proceeded to shake up the poker publishing world by releasing the three-volume Harrington on Hold'em series. The comprehensive treatise, co-written by Bill Robertie, introduced inflection points, M-Zone calucations, and other salient terms into the common vernacular of all serious tournament students. It was a runaway success, made Dan a ton of money, and angered many tournament veterans. Early next year, he'll unveil his next series, with the kernels of wisdom this time focused on cash-game play.

This year, Dan entered elite company as he became one of only five players to win both a WSOP championship and a World Poker Tour title. In August, he beat 485 players to win The Bicycle Casino's Legends of Poker championship title and the largest payday of his poker career: $1.6 million.

Harrington employs a number of poker players at Anchor Loans. He says that if you can successfully master the equity considerations and problems that poker presents, you should broaden your horizons. "If you have talent at poker, you can make a whole hell of a lot more money in business," he said.

Whether Dan likes it or not, he is one of poker's living legends. Card Player was lucky enough to gather his insights on everything from money management to the most important strategies for furthering your own poker, and financial, success.

Justin Marchand: There are tons of people in poker who could benefit immensely from your business insight. There are lots of players dropping out of college to play poker. Some are making a lot of money and have little to no money-management skills. What advice would you offer this group to assist them in maintaining satisfactory liquidity while also saving and building for the future?

Dan Harrington: The problem with liquidity in an uncertain gambling environment is that the amount of money you need in proportion to what you're betting is much larger than people ever suspect. Conservatively, in regard to limit poker, I would have at least 1,000 big bets for the level you're playing, and I would go up in levels only after I've established the basic level for the next limit.

I think all players should declare taxes on the money they win and learn something about investing. Investing is not rocket science. There are plenty of mutual funds out there that provide 90 percent of the advantage that a professional investor would receive, and that is more than enough to accumulate money at a low risk level.

There are lots of benefits to be derived from declaring winnings. One, if you declare yourself a professional gambler, you then get money deducted for Social Security, which is something you'll need in the future. You'll also pick up the medical benefits associated with Medicare. This also enables you to invest in stocks, bonds, and other items that have a reasonable rate of return.

Players who don't do this bury their money under the mattress. They might think they're beating the game by avoiding paying 25 percent-30 percent in taxes, but this money doesn't roll by itself and they cannot go to legitimate main-street investments because the government will ask, "Where did you get that money?" So, instead, many poker players invest in the underground economy. They invest in other poker players. Usually, when another poker player needs money to play, there is a reason for it; it means that he has been unsuccessful. They invest in their friend's underground venture, which usually remains what it is, an underground venture, and no money is returned. Sure, they took the government for 25 percent-30 percent, but 10 years from now that money is worth much less than when they put it under the mattress, due to poor investments, overspending, and inflation, which is going to eat up 3 percent a year.

JM: Why do you think there is such a vicious cycle of bankroll boom and bust with so many players at every level?

DH: One thing that makes a poker player very successful is the ability to, under moments of stress, disregard the value of money. If you start thinking of that bet as being a nice automobile, you might not want to bet and possibly lose an automobile. But, if you have the ability to disregard it and just think of it as chips and numbers, you can be successful. The problem with that ability is that the people who have it usually cannot turn it off. When the game is over, the money is still worthless to them; they just don't understand the value of money.

JM: You're talking about cash games here, right?

DH: Yes. Tournaments are a different creature. The volatility in tournaments is out of sight. I don't think you can consider playing tournaments for a living. I think that is impossible. Even if you are a world-class player, the expenses are just too high. My expenses are about $180,000 a year for about 10 events a year, and I play a third of the events that my compatriots play. If you're going to play poker and focus on tournaments, you better be wealthy, and if you're wealthy, why are you playing poker tournaments? Sure, you see some names repeating as winners. They are truly great players. But the problem is, there are lots of other truly great players you haven't seen at all. And it's not because they are playing badly. It's the variance. You need to be extremely lucky. I'm one of the more successful tournament players, and I feel like I do nothing but lose!

The reality in poker is that only one or two in every 100 players will make any real money at it.

JM: From everything I've read about you, it's business first, poker second. Was there ever a time in your life when poker was your primary focus?

DH: Twenty-five years ago, I considered poker a lot more important in my life. But the number of times that I played poker all night probably could be counted on one hand. The adrenaline was really never there for me to do it. Like all good endeavors, I learned the game in college. I made decent money, not great money, but I worked a couple of jobs that supplemented my income.

JM: How did you improve into becoming a consistently winning player? You didn't have Harrington on Hold'em as your tutor back then.

DH: I read every book out there. There weren't many, but I read them all. One thing I got from all of the books was that playing tight was right. But that was all they preached in those days. They didn't talk about ways to deviate from that strategy, but that was enough to get me through my initial years. Later, there were books out there that broadened my horizons. In the 1970s, David Sklansky wrote the Theory of Poker, and it was excellent. He also wrote a book on limit hold'em that graded the hands and talked about position as a factor.

When playing, I basically learned by statistically sampling. I would determine who were the best players I was playing against, and then I just copied their styles.

JM: So, who were the most successful players you encountered back then? Was it the impressive group from the Mayfair Club?

DH: Yes, and I also played the game at the World Series when I went to Vegas in the early 1980s. Bobby Hoff was one of the most successful. In fact, I'm devoting about 50 pages in my new cash-game book to Bobby as a player and his theories on poker. He is considered one of the foremost cash-game players in the world. Steve Lott and Ray Zee are two other great players. Ray had a real good take on the whole aspect of poker - not just the technical play, but a holistic approach to poker that was probably the most grounded I've seen.

JM: Looking back, you have to find it pretty amazing that the crew that frequented the Mayfair Club has won 20 World Series of Poker bracelets and a number of World Poker Tour titles.

DH: Ray Zee, back in the 1980s, said to me, "Dan, you wait and see. That group of guys you're playing with are going to revolutionize poker. You are going to see all the leading players coming out of that group." He called it back in the '80s that those players would be the leading edge of a new boom.

JM: What was it about this group that has led to such success in not only poker, but many other games and competitive pursuits?

DH: This group was the distillation of all the best game players in the New York metro area. Hardly any of them came from poker. They came from backgammon, chess, whatever. They were just the sharpest guys, and they all ended up in poker. You had the likes of Jason Lester, Erik Seidel, Howard Lederer, Steve Zolotow, Paul Magriel, and Jay Heimowitz, who, actually, was a pure poker player.

JM: What skills and capacities from games such as chess, backgammon, and poker are relevant to business?

DH: These games teach you equity considerations, especially backgammon. They teach you how to weigh the probabilities and exactly what your chances of success are, given a set of circumstances. Chess teaches you the patience and the discipline to sit there and try to resolve the problems that are in front of you. And poker is a combination of all of these disciplines. It presents equity considerations and problems simultaneously, and it translates very well to business

JM: You are a former chess master. Chess has been an organized sport with structured national and international tournaments for decades. With all the money in poker, do you see the game needing uniform regulation and structure similar to chess?

DH: Absolutely. IMG, the big agents who handle tennis and golf, approached us. They saw that poker had lots of promise. They said something really smart. They said, if you guys don't organize poker into some sort of league or championship series that is recognized by everyone in poker, you are going to be in danger of the sport dwindling away, because it won't have any standards of quality.

The problem with poker is, many players are very individualistic. While it is good for the long-term health of the sport, they think, "I'm making all of this money; why do I need some damn league?"

So, so far, all of the efforts to organize have gone for naught. We had a chance. We were organizing the PPL. Mike Minor and Chip Reese were the big pushers of this, and they were going to get all the top players together to form a league. I thought they had the best combination of ideas so far, and it's a shame it didn't get off the ground. The problem was the government regulation. That put the kibosh on it. Money that was being put up to front this league disappeared.

JM: Let's switch to a topic that just about everyone in poker is familiar with, your books. In the intro to your first, it says no-limit hold'em is "a big and complicated game," and that you couldn't squeeze all the info into one book. Of all the strategies, concepts, and tips you cover in the Harrington on Hold'em series, which are the most important for long-term success?

DH: One of the most important things is to stay within yourself. I've seen poor game players be successful at the game because they know their limitations and they stay within them. You don't have to be the best player in the game. You only have to play against players weaker than you. Ultimately, you just have to understand yourself and do well at the level you're at.

JM: In writing the series, were any aspects of your own game improved?

DH: Oh, 100 percent. My game improved considerably in doing the book. Lots of players told me that I didn't say anything that was revolutionary. The good players understand what all of these maneuvers are. But, the book helps to prioritize them. When you've been playing for a while, you forget that position counts more than the strength of your hand. The book really laid it out for me again regarding how to prioritize when playing.

I knew that the way that poker books had presented information needed updating. This is where chess really came in. Chess was 600-700 years old in presenting information, and they learned how to do it. Poker was in its infancy, and they did not know how. True, there were some good poker players who wrote interesting books, but, quite frankly, they did not present the information in a palatable form. Lots of them would say, "I knew this person would fold when I made this bet." Well, that is very nice. But, as a reader, how do you know that person is going to fold? What went into the decision-making process? I knew from chess that that is what people wanted, and they wanted it laid out in a case format.

JM: What sorts of criticism, if any, did you encounter from fellow players after the series was released?

DH: Oh, I got that a lot. In fact, a famous incident happened with Erik Seidel. Erik took a review off Amazon, sent it to me, and said, "F--- you, Harrrington!" And a few days later, he took another good review off Amazon, sent it to me, and said, "F---- you again, Harrington!" Then, one time he came up to me and said, "I hope you're happy with that $50,000 you made off these books."

I said, "Erik, I want to make you feel a lot better … I made a hell of a lot more than $50,000 off the book, so I hope you feel much better now (laughing)."

JM: Tell me about the next series, no-limit hold'em cash play. When can we expect it to be on the shelves?

DH: It will be out in roughly March 2008. It will be two books that will come out very closely together, probably within a month of one another. The emphasis will be a distillation of the theories on cash games and poker in general.

JM: Loose-aggressive seems to be the preferred style of many players who are putting up impressive results lately. What do you think of this approach to the game?

DH: I think most styles work, depending on the person who employs them. No matter what style you have, you have to realize that you cannot constantly have the same style, because it provides your opponent too much of an advantage. If you are going to be aggressive against me all the time, you are making it very easy for me to play. Because I know that your standard of hands is much weaker and I have a standard of hand that will be much higher - well, guess what's going to happen. I'm going to counter, and if I find out that you throw away your hand every time I counter, I'll think, "OK, good, I can counter with weaker hands until I find an equilibrium point." Embracing one style at either extreme, loose or tight, is wrong. The only reason I'm not more aggressive is because it takes a lot of work. You have to be young to keep that energy up (laughing).

JM: The last time that Card Player profiled you in the magazine, back in 2004, you said, "I'm there for the money, you can keep the glory." Do you still feel that way?

DH: Yes, but I have to admit that money loses its importance if you have enough of it. But, you know, glory is so transitory. I won that tournament at the Bike and $1.6 million, and I was the player of the the week. That type of win used to make you the player of the decade or at least the player of the year.

JM: You placed yourself in elite company this year, becoming one of only five players to win the WSOP main event and a WPT title. Is there anything else you hope to accomplish in poker?

DH: Yes. I want to win $12 million at the World Series (laughing)! I don't care how I win it. You can give it to me in a lottery and that will be fine. No, really, it's all just too much of a joke now.

JM: How so? You've now been participating in the WSOP for more than 20 years.

DH: It used to be a group who knew each other very well. It was a nice, friendly, cordial get-together. Now, it's a teeming mass of humanity. ESPN asked me, the year Jamie Gold won, "What do you think of your chances of winning?"

I said, "You see this entire room? You have to beat four rooms this size." I just wanted to turn around and go home.

JM: So, what is on the horizon for Dan Harrington? What do you hope to accomplish in the next five to 10 years?

DH: I would say that my long-term goal is to be alive (laughing).