Poker profits – Where do they come from?

Poker profits

The amount of your poker profits will depend on what edge you have versus your opponents, the stakes (blinds and stack depth in cash games, buy-ins in tournaments) you are playing for, and the volume you put in. You also have to take account of the expenses of playing, e.g. rake and any other expenses (such as the expenses of traveling to a live tournament).

Juggling to produce greater poker profits

If you are looking to try and make the most money in real terms for poker, you have to understand how these factors interact with other. The idea is to find the right balance between the factors involved, which will be a juggling act and one that needs constant thought.

  • Finding a higher stakes game, where your edge is lower, is a no-brainer if you will be making more profits in real terms – many players remain at lower stakes than they should be playing for too long.
  • Having a massive edge, will not make you much profits, if you aren’t putting in the volume – so putting in loads of time studying in an effort to become the perfect player, thus leaving little time play, isn’t going to make you profits.

Poker profits equation

The following summarizes, where poker profits come from:
【Edge ✖ Stakes ✖ Volume】➖ Expenses

Edge

Your poker profits will increase:

  • The more you know compared to your opponents that is relevant to the game you are playing (relevant knowledge gap), AND
  • The better you are at actually implementing that knowledge in game (ability to implement knowledge)

Only relevant knowledge is important. If you have spent thousands of hours analyzing deep cash game situations, but are playing in a shallow stacked tournament with fast blind rises, that knowledge isn’t going to give you an edge in this particular tournament.

Your ability to implement your knowledge, depends on how much you tilt (tilt is any deviation from rational decision making), and your ability to quickly figure out exactly which parts of your knowledge tree are most relevant to the hand in question.

Stakes

  • If you were playing $1/$2 and were winning 10bb/hour on average, you are winning $20/hr. However, if you moved up to $2/5, and were winning 10bb/hour on average, you are winning $50/hr. Of course, moving up in stakes normally reduces your edge (as you will be playing with better players). However, lets say you were only able to win 7bb/hour on average, you are still winning $35/hour at this new level. Let’s now imagine, you moved up to $10/$20. Even if your edge was tiny, and you were only able to win 4bb/hour, this would be $80/hour. Would you rather be making 10bb/hour at $1/2 or 4bb/hour at $10/$20?
  • The stack depths of your opponents is also important. If you have an edge over your opponents at all stack depths, but are only able to play them in shallow stacked games, you will make less than in deep stacked games. Less skilled opponents tend to make bigger mistakes in deeper stacked situations, than shallow stacked situations. Also, rake is usually capped, so if you play bigger pots you should find yourself paying less rake (as a percentage of the pot).
  • The actual stakes and depths you play, will depend your ability to gain an initial bankroll (e.g. non-poker income or savings, backing agreement) and grow this. UnfairPoker.com has a training article all about bankroll management.

Volume

  • For live players volume can only be increased by putting in more hours, as you cannot multitable.
  • For online players volume can be increased in two ways – multitabling, and putting in more hours.
  • Usually multitabling, and putting in more hours will reduce your overall edge – but this is not a problem if you are making more profits overall.

Expenses

Your profits are clearly going to be reduced by the expenses of playing poker. However, it absolutely fine to endure higher expenses, if your overall profits will be higher (e.g. paying more rake in a soft live cash game, than less rake online).

  1. Rake – One of the biggest expenses, is the rake you pay to the cardroom. Live rake can make the certain games unprofitable at the absolute smallest stakes, whilst at higher stakes the rake structure doesn’t impact your profits much. Higher stakes games may even have a time charge (instead of pots being raked), which doesn’t linearly go up as much as the stakes. It is not the cardrooms’ fault that rake makes the smallest games unprofitable – the expenses of providing the game (dealers, floor staff, security, electricity, rent, maintenance) don’t change much whether you are playing the absolute biggest stakes or the absolute smallest stakes. The same is true of live tournaments – the smallest live tournaments can be really unprofitable (on average) due to the rake. Online games (cash games, and tournaments) usually have less rake than live games, but your edge is likely to be less too, so it’s a balancing act.
  2. Don’t ignore other expenses – For example, if you play live tournaments, and have to travel to get to them your travel expenses (e.g. air fare, petrol), accommodation expenses, and food expenses, will reduce the net amount of your winnings. If you are able to play online tournaments, you won’t have these expenses (but your edge may be lower).