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Can YOU overcome B&M’s higher costs?

by Alan Schoonmaker |  Published: May 10, '11

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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

If you have a question, please add it in any comment section, or e-mail me alan_schoonmaker@yahoo.com. Before emailing, please check my first blog, “What is poker psychology coaching?”

 
Any views or opinions expressed in this blog are solely those of the author and do not necessarily represent those of the ownership or management of CardPlayer.com.
 

Comments

WPS22
over 6 years ago

There is a reason why there is no young live pros. The idea of making a living live compared to making one online is absurd. You expect people who could make 100k a year just from breaking even to embrace switching to a format where you have to absolutely crush just to show any profit?

Just because black friday happened and it would be convenient for everyone to just turn into a live pro doesn't mean its going to happen. The enormous obstacles to making a living playing live poker didn't go away on April 15th. Simply moving to Canada is a much more viable option, but I guess you wouldn't make any money off people doing that?

For you to suggest that somehow you are going to help people overcome these obstacles is either ignorant or intellectually dishonest. You either know better or you should.

 
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GordonGejko
over 6 years ago

The costs at Casino's are much higher as a percentage in smaller games.

I think it would be almost impossible to make a living at 1 2.

5 10 to 25 50 is probably the sweet spot.

The rake is much smaller at larger games and the other costs are fixed (food, gas, etc.)

Small online guys probably need to get a job or continue to play online.

Just my thoughts from a live (part time pro). It would be interesting to see an argument of living in LA vs Vegas for live pro's.

 
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hookedup81
over 6 years ago

lol i hate dusty soooooooooooooooooo much. what a pu##y blocking his comment board.

 
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JamesScou
over 6 years ago

Your all in each with $25???? What the hell live game are you playing? .10 .25 live? Those games don't exist. Do the math with more realistic numbers, don't just take numbers that prove your point.

 
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coldharbor
over 6 years ago

Why didn't he just make it so you're all in with $1? Then you really get screwed!

 
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JamesScou
over 6 years ago

I'm going to use realistic numbers now since you didn't. Lets say on average both players have $100 when they go all in in a 55/45 situation (I honestly think the average is higher, but I'll lower it so that it doesn't look like I'm taking numbers just to prove MY point). $100
You win 55 times at $93 ($100 minus $5 rake, $1 jackpot drop, and $1 dealer tip) = $5115

You lose $100 45 times = -$4500.

Total Profit = $615. or $6.15 a hand. 6.15% of your investment returned.

much different when you do correct math.

 
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GordonGejko
over 6 years ago

if you do the math with $1,000 it makes even more sense

 
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JamesScou
over 6 years ago

yeah, but I'm just talking about the lowest limit game possible, 1/2 would be that at a casino. of course the higher you go the more profit your going to see.

 
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