Understanding Edge in Poker: Part I

Wanna beat poker? It ain’t easy! You have to have an edge, and a significant one at that. Winning at poker transcends just playing better than your opponents; you’ve got to overcome the playing expenses too. If you’re a break even player versus your opponents edgewise, you’re going to be a loser over time. To win you need an edge sizeable enough to overcome the rake, tokes, food, drinks, and massages that all add up. Plus, you want to take some of that loot home with you, don’t you?

Exactly what do I mean by edge? It’s is a simple mathematical concept. Edge is how casinos build those grandiose buildings, pay their employees, and make the big bucks they do. A simple example: If you wager $110 on an even money proposition laying 11-10 odds, your expectation or edge is negative $5. In 100 trials, with luck being a neutral factor, you will win $100 50 times for a gain of $5,000, and lose $110 50 times for loss of $5,500. Subtract the $5,500 loss from the $5,000 gain and you have a net loss of $500 after 100 trials. It makes for a five percent negative expectation, or $5 per trial. Trust me, all sports book operators and shrewd sports bettors thoroughly understand this equation.

Conceptually, as I’ve often written before, “the recurring sum of volume times edge equals expectation” (Volume * Edge) equals EV. Volume is the amount of money wagered. Edge is the positive or negative percentage of expectation on the individual bet and EV is the nominal expectation amount you should win or lose on the given bet. If you add the individual EV of a series of bets into a “recurring field,” eventually the sum of the field and your actual earn will become virtually identical as luck becomes a neutral factor over voluminous trials. Thus, more precisely, the recurring sum of volume times net edge equals expectation which over multiple trials will equal nominal earn. Got all that? Great!

So how do you apply all that great information to improve your poker play? The concept has so many applications to poker and understanding that will open your mind to perspectives you’ve never considered before.

For instance, in low limit, you traditionally play softer opponents than in the bigger games. Unfortunately, the rake, tokes, and other expenses are so high in relation to the amount wagered that it’s extremely difficult to have a large enough overall edge to make a profit. It’s challenging, though not always impossible.

In medium-to-large stakes games, the overhead is smaller in relation to the amount wagered, and the playing expenses don’t look like much to overcome. However, quantified in expectation terms, as all gambling equations should be, it’s quite considerable. Generally speaking, as the games get larger the competition gets tougher, and your edge shrinks.

For example, doing some “rough justice,” let’s say you play $20-$40 limit hold’em. Your rake/time, tokes, food, massages, etcetera all add up to average $20/hr. It’s the price we pay to the casinos for providing us with a safe, comfortable environment with a quality game to play. Blending some averages for simplicity sake, say you bet $1,000/hr on average in the $20-$40 game. You need a blended positive two percent edge on your bets to break even ($1,000 * two percent equals $20, your playing costs). Want to average $40/hr? You’ll need a six percent blended edge over your opponents, two percent to cover expenses and four percent to average $40/hr profit. Think that’s easy? To put those numbers in context, the house advantage at blackjack is only around .5 percent, and blackjack pros look to gain a one percent edge.

Adjusting to a $10-$20 game, say you bet an average of $650/hr. That’s greater than one-half of the $20-$40 average because a quality player should be able to unearth more opportunities to wager money profitably in a $10-$20 against the softer competition generally found there. Assuming the same $20/hr costs, you need to have just over a three percent blended average overlay on your bets in order to break even.

So, while smaller games are generally softer, your overall edge must be greater in order to win. This concept is applicable to most games. Smaller games generally have easier competition, but the playing costs relative to the amount bet are significantly higher, requiring a larger edge to break even. Conceptually, you need a very wide spread in abilities between yourself and your opponents in order to make any sort of substantial sum if you’re playing in small-to-medium size games.

Or, if you’re playing high limit, you can make significant money by betting a large volume of money with a smaller edge. That said, you better be sure that small edge is authentic and you’re mentally and financially prepared to take larger swings. The lower your edge, the greater the fluctuations and the larger relative bankroll required. Think of how radically a single river card in $1,000 $20-$40 pot can affect your nominal results when your expectation is only one percent. It’s equal to 100 hours of earn. So if you want to play with the “big boys,” substantially increase your bankroll requirements. You need much more than twice as large a bankroll for $20-$40 than for $10-$20.

Of course your edge in poker is not constant. Even if you always play the same game in the same casino, the situation often changes dramatically. Players come and go, and both your opponents and your own play vary, not just from day to day, but from minute to minute. Every change affects your edge. And edge is the most important consideration in choosing which games to play!

In the next edition of CardPlayer I’ll show you additional techniques in which you can apply the edge concept into your poker decisions. ♠

Roy Cooke played poker professionally for 16 years prior to becoming a successful Las Vegas Real Estate Broker/Salesman in 1989. Should you wish to any information about Real Estate matters-including purchase, sale or mortgage his office number is 702-396-6575 or Roy’s e-mail is [email protected]. His website is www.roycooke.com. You can also find him on Facebook or Twitter @RealRoyCooke