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Pokernomics

by Ed Miller |  Published: Aug 30, 2017

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My wife and I have been going on vacation to the same place every year for over a decade now. Since we go so often, she suggested that we might want to buy a vacation home there. That sounded like a lot of work and upkeep to me, so initially I dragged my feet on the idea. But then she made an interesting argument about why it might be a good investment.

It’s an under-the-radar tourist destination. They have a few hotels, a few motels, and some other tourist infrastructure. But the economy and feel of the place isn’t dominated by tourism.

At least not yet. But the last few years we’ve noticed a lot of outside investment in the place. First, the city has been developing a large park with numerous public facilities—beyond what you’d normally see in most towns of similar size. Furthermore, we’ve noticed a few national hotel chains building brand new properties in the city.

All the while, these outside investments haven’t really affected the price of homes in the area. My wife argued that if we bought a home near all these improvements, we could benefit from them without having to be the one actually paying for them.
I don’t know if we’ll buy that home or not, but the idea is sound. Some of the best gambling opportunities arise because of a large infusion of outside money into the system.

For example, the poker boom of the beginning of the last decade occurred because of two major developments in the poker world. First, televised poker became a surprise hit and exposed millions of people to the modern game. Second, online poker made the game easily accessible to this huge new audience.

These two developments encouraged a lot of outside money to enter the system. First, the money that producers spent to bring poker to television. Second, the money that advertisers spent on those shows. Third, the deposit bonuses and affiliate commissions that online sites paid to bring new deposits onto sites. And finally, all the money that new players brought to both the live and online games.

The reason some players made so much money during that time wasn’t because the games were so much softer with no video sites. Of course the games were much softer, but everyone was much worse at the game—the top players in 2003 would get destroyed by the top players in 2017. The reason some people made so much is because there was so much extra money to be made. Every dollar spent on marketing translated into $X of new online deposit or $Y extra brought to the cardroom. And some percentage of these $X and $Y would find their way to the stacks of the best players of the time.

Absent these cash infusions, poker is a negative-sum game. As the worst players eventually quit due to losses and the other players all get slowly better, the prospects for making a lot of money in the game dwindle.

Now this isn’t to say that most people won at poker during this time or any. That’s impossible obviously. But the extra money coming into the game made it easier for a dedicated player to win, and made it much more profitable for an elite player.

This principle—identify industries backed by heavy investment and/or marketing that also permit individual participation—is a pretty good formula for finding profitable opportunities. By the time DraftKings and Fanduel had purchased every ad spot on every channel in September 2015, there was a very lucrative opportunity available for elite players. Cryptocurrency today offers a similar opportunity—a frenzy of outside investment and plenty of players with a wide range of skill levels. (If you don’t plan to become an elite player, don’t get involved at all.)

Back to poker. While the poker boom is over and likely won’t be returning any time soon, you can still improve your poker outcomes by using these ideas. There is unlikely to be a massive infusion of new money, but there will be lots of little infusions that you can pursue.

New jurisdictions opening to the game

Any time poker becomes newly legal in a jurisdiction, there is a period where pent up money rushes to a brand new cardroom and the games become very good. This is particularly true when the new jurisdiction is a large, lucrative one like Florida was some years back, or when there is substantial marketing that comes with the opening.

This is also true for online jurisdictions. So far in the US, the legal jurisdictions are fairly small. They were good when they opened, but they saturated quickly. But if a new jurisdiction like California, New York, Texas, or Florida opened—especially if these states came online contemporaneously with other states—I’d expect a lucrative situation for a while.

Large, temporary events

If you come to Las Vegas on the average Tuesday afternoon and try to find a poker game, chances are you won’t find one that offers much profitability. But if you try to play in and around the large events that come to town (not the poker-specific events like the World Series of Poker), you can often find greener pastures. Try playing during the weekend of a huge blockbuster fight. Or track the convention schedule and try to find games when folks with high-paying jobs and an appetite for risk come to town.

Extraordinary promotions and freerolls

Sometimes cardrooms will offer promotions or freeroll events that are far outside the norm for the area. These opportunities can range from an extremely large bad beat jackpot to a big freeroll giveaway, to a large and well-promoted, but regionally-focused tournament series. In all these cases, there is considerably more money than usual entering the poker economy over a short, prescribed period of time. As you might imagine, if you seek to play during these times and move elsewhere when they’re over, you will see better results.

Final Thoughts

I think this idea of trying to position yourself to profit through proximity to the investments of others is a potentially valuable one. When big players are throwing even bigger investments around, they often aren’t very careful to make sure that their investment money serves only their interests. Often a lot of money kind of sloshes around in the system and leaks out around the sides.

These situations arise regularly, and if you throw yourself into one and really try to make the most of it, you have the chance to do very well.

But in poker, smaller versions of the same principle arise on a regular basis. The more you seek out and try to exploit these opportunities rather than just grind into your local game in unfavorable conditions, the better you will do. ♠

Ed MillerEd’s newest book, The Course: Serious Hold ‘Em Strategy For Smart Players is available now at his website edmillerpoker.com. You can also find original articles and instructional videos by Ed at the training site redchippoker.com.