Why You Can’t Beat Low-Limit Games — Part II

Part I said many frustrated players blame their losses on “idiotic” opponents, but the main reason is often not correctly evaluating costs (rake, jackpot drop, tips). Decisions which are plus expected value (EV) in low cost games are often minus EV in high cost games.

They blame “idiots” because bad beats are so dramatic, but they rarely occur. Because the rake and other costs are a few dollars here and there, they hardly notice them, even though they cost thousands of dollars per year and can destroy your results.
You Need A Big Edge.

Mike Caro once wrote about a 10 percent rake: “On a final-round bet into a lone opponent (assuming no cap on the rake), you’d need a 5-to-4 edge just to break even – assuming you’d always be called and there were no possibility of a raise.” In some low-limit games, the costs on that final bet are more than double 10 percent, and you need a much bigger edge than 5-to-4.

Why is there such a dramatic difference? The house doesn’t take 10 percent of dollars in the pot; it takes $1 whenever pots reach certain sizes. Las Vegas rooms generally take $1 at $10, $20, $30, and $40. A few take another dollar at $50. Many take a jackpot drop of $1 at $10, and a few take a second dollar at $20, $30, or $40.

Let’s say you’re playing $2-$4 in a Las Vegas room with a standard rake of $1 at $10, $20, $30, and $40 and a jackpot drop of $1 at $10 and $ $30. You open-raise with A K, and only the blinds call. You bet the flop of A 7 2 and they both call. You bet the turn of 6, and only one calls. The river is the Q, so no flush or straight is possible. If you bet and get called, what odds are you laying that your hand is best?

You’re laying 2-to-1. You may not believe me, so let’s do the math.

• Preflop the pot was $12 (3 x $4). They took $2 for the rake and jackpot drop (R&JPD)
• On the flop it became $18 (add 3 x $2).
• On the turn it became $26 (add 2 x $4). They raked another dollar.
• On the river, if you bet $4 and got called, the total pot became $34, so two more dollars went for R&JPD. You risked $4, but can win only $2.

Since he’ll fold his weakest hands, would you offer 2:1? Perhaps you would, but you should know that you’re offering 2:1.

Here’s another question: Can adding money to the pot make it smaller?

Yes, and it happens frequently when the blinds are $1 and $2 (in limit or no-limit hold’em). If three players limp, and the SB folds, the pot is $9, and nothing is taken. If the SB completes, the pot becomes $10, the house takes $2 for the R&JD, and the pot becomes $8. So the pot is smaller and you must beat one more opponent.

The Smaller The Stakes, The Bigger Your Edge Must Be.

In “Understanding Edge, Part I” (Card Player, 1/8/14) Roy Cooke wrote: “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… 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-medium size games.”

Roy was too tactful. He played low-limit many years ago when his game’s maximum rake was only $2, and he didn’t play in jackpot games. Now, because poker rooms’ costs have greatly increased and many low-limit players like jackpots, the maximum rake is much higher, and another dollar or two goes for jackpots. Those increases make it much harder to break even, and it’s almost impossible to win significantly.

Low-limit players pay an enormously higher rake proportionally than middle-limit players. Let’s compare $4-$8 at a room with a typical rake and a jackpot drop of $1 at $10 and $30 to a large Las Vegas room’s $10-$20 game. The rake and JPD’s percentage is much lower for $10-$20, and most $10-$20 and bigger games don’t have jackpots.

$4-$8 $10-$20
Total pot Rake JPD Total Percentage Total pot Rake Percentage
$10 $1 $1 $2 20% $20 $1 5%
$20 $2 $3 15% $50 $2 4%
$30 $3 $2 $5 16.67% $80 $3 3.75%
$40 $4 $6 15% $130 $4 3.1%

That jackpot money is mostly returned to the players, but many pay far more than they get back. Future articles will describe ways to get better value from your jackpot contributions.

And I haven’t included tips, which obviously increase your costs.

The Smaller The Pot, The Bigger Your Edge Must Be.

The R&JPD take a much higher percentage from small pots than large ones. From a $100 pot in that $4-$8 game the house takes $6 (6 percent). From a $40 pot, it takes the same $6 (15 percent). From a $10 pot, it takes $2 (20 percent).

If you’re heads-up and have 6 percent costs, you need more than 53/47 to break even. With 15 percent, you need more than 57/43. With 20 percent, you need more than 60/40. Let’s do the math:

• $100-6=94. You invest $50 and get back .53 x $94 = $49.82.
• $40-6=34. You invest $20 and get back .57 x $34 = $19.38.
• $10-2=8. You invest $5 and get back .6 x $8 = $4.80

Don’t Deny Reality.

Part I said most low-limit players don’t think seriously about costs for three reasons: First, some play for fun and don’t care about costs. Second, they don’t understand how important costs are. They think, ‘What’s another dollar or two?’ … That dollar or two comes out of every pot they win, which dramatically affects their edge, and edge, “is the most important concept in poker… small differences in edge add up dramatically over time… you must emphasize edge, including the small edges, in all your poker decisions.” (Roy Cooke, “Understanding Edge In Poker, Part II,” Card Player, 1/22/14)

You should now realize that those few dollars from every winning pot massively affect your results. If you still think costs are unimportant, you’re denying reality.

Denial is extremely common: Without denial, the entire gambling industry would collapse. Despite countless warnings that craps, roulette, and most other games are unbeatable, millions of people lose billions playing them. Unless they’re playing just for fun, they’re denying that painful reality.

As you walk past the craps and roulette games, you may look down at those “stupid gamblers” who play unbeatable games. But, if you deny reality about your games’ costs, you’re not much smarter than they are. You’re blaming idiots for your disappointing results because it’s intellectually and emotionally easier than accepting the responsibility to accept, analyze, and adjust to reality.

Even if you accept reality, the third factor is still a problem: It’s very hard work to analyze and adjust to your game’s high costs, and you can’t get much help from the books. That’s why my future articles will tell you how to do it. ♠

“Dr. Al” ([email protected]) coaches only on psychology issues. For information about seminars and webinars, go to propokerseminars.com. He is David Sklansky’s co-author of DUCY? and the sole author of four poker psychology books.