Can YOU overcome B&M’s higher costs?

Hi Everybody,

An earlier version of this blog was posted on the internet forum at twoplustwo.com. It was put into the thread I began on May 3 titled “Can online players beat B&M games?”

In about a week over 3,800 people viewed that thread, and 63 replied to it. Nearly everyone said, “Of course, online players can easily beat B&M games.” A few even indicated that it was a stupid question because the answer was so obvious.

Some of them are denying reality. Of course, online players are much better – on average – than B&M players. I have even stated in articles and books that the best online players know more about poker than Moss, Straus, and other Hall of Famers.

But you shouldn’t believe that YOU are so superior that can just walk in, sit down, and crush the B&M games.

There are many differences between online and B&M games, but I’ll discuss only one that is rarely discussed, B&M’s MUCH higher costs.

THE EFFECTS OF HIGHER COSTS

A few days after Black Friday I had lunch with some poker players who trade stocks and options. We compared poker and trading. Until a few years ago commissions and spreads were so large that you couldn’t make money day-trading. With today’s much smaller commissions and spreads many traders make lots of money.

In our book, DUCY?¸David Sklansky and I asked, “Have the stock markets become too liquid?” (pages 166-68) David argued that reducing the transaction costs so much had an undesirable effect: It caused people who could make significant social contributions to become traders. The same point could be made about poker players, but I won’t discuss that issue.

Now my sole concern is to help you to understand the ENORMOUS effects of B&M’s higher costs. They are more than twice as large for cash games and even higher for small tournaments. These costs can easily switch you from winning to losing.

For example, Stoxtrader Grudzien and Zobags Herzog wrote an excellent book, Winning In Tough Hold’em Games. It reported the results of three online pros. For several hundred thousand hands their win-rates were .73, .55, and .04 BB/100 hands.

I asked Stox on my radio show, “Why are you reporting the results of a breakeven player?” (the one winning .04 BB/100)

He replied that with rakeback that player was winning over $100k per year.

There is no rakeback in live games, and the rake is much higher; you also have several other costs, including jackpot drop, gas, and food. Subtract those costs, and that professional’s profits become a substantial loss. Those costs would also wipe out much (or all) of the other two pros’ profits.

Many online players have not seriously considered the effects of these higher costs. Every smart sports bettor understands and adjusts to the “juice.” If a bet is just slightly better than 50/50, they won’t make it.

The rake plus JP drop and dealers’ tips in B&M games cost much more than the juice for sports bets. If you make a play that gives you a 55/45 edge in some live games, it will be negative EV.

A SIMPLIFIED EXAMPLE

Let’s take a cash game hand at Las Vegas’ Rio Casino, the home of the WSOP. You get all in for $25 each, heads up, and are a 55/45 favorite. Do it 100 times.

You win 55 times at $18 ($25 minus $5 rake, $1 jackpot drop, and $1 dealer tip) = +$990.

You lose $25 45 times = -$1,125.

Your net is – $135, -$1.35 per hand, 5.4% of your investment.

The numbers are better in some other Las Vegas casinos, significantly worse in many California ones. And I haven’t included other costs such as food and gas.

WHAT SHOULD YOU DO?

You obviously have to make strategic adjustments, but I’m not qualified to say what they are.

As I’ve often said, I’m just a psychologist, not a poker expert. I don’t give strategic advice because many others can do it better. So I’m working with three pros: Chris Wallace, Adam Stemple, and Jan Siroky.

We are conducting webinars and seminars to help online players to make the transition to B&M games. The first webinar was free, and 65 people attended it on May 6. You can see a free video of it at http://propokerseminars.com. The second webinar will be on May 24 at 9 PM EDT. The first seminar will be at The Golden Nugget in Las Vegas June 27-29. For more information go to our website, http://propokerseminars.com.

I hope to see you at one of our programs.

Al