One of the things that troubles me about poker is that it seems like a major time sink and a deeply unhealthy lifestyle if you just want to calibrate yourself; but if you are interested in making some money as well or even making it your livelihood, it’s still troubling because online poker is a negative expected sum game which is receiving a lot of media exposure.
I’m frankly confused about the whole issue of poker (both online and real-life). I know a lot of smart people who claim to have made ridiculous amounts of money playing poker casually in their free time. Judging from what they’re saying, it would seem like there are so many suckers around playing for real money that a highly intelligent person willing to study the game can exercise a ridiculous amount of arbitrage.
But if I accept all their stories at face value, then why on Earth do all these smart people toil at difficult jobs for mediocre salaries when they could be earning much more money gambling? In particular, why do even all these people I know who boast about their earnings at poker still maintain difficult and demanding day jobs? (Of course, they can reply that gambling is only a short-term opportunity while the career is more important in the long run, but they could still invest more time in gambling while scaling down their careers temporarily with a clear net profit. And even if that’s not possible, with such vast profit opportunities, one would expect they’d be playing far more even in their presently available free time.)
I don’t know what to think of all this. Whatever the truth might be, either I know a bunch of otherwise honest and down to Earth people who are lying or delusional about this issue, or there is actually a screaming opportunity for making money on easy arbitrage that few people bother to exploit, and even they only partly and incompletely. Both possibilities seem to me highly implausible (but the latter more so).
Whatever the truth might be, either I know a bunch of otherwise honest and down to Earth people who are lying or delusional about this issue, or there is actually a screaming opportunity for making money on easy arbitrage that few people bother to exploit, and even they only partly and incompletely.
Otherwise whip smart people tend to be delusional about gambling. This applies also to the stock market. Gambling is a minefield of meaningless patterns which trigger our pattern detectors. I presume that’s a large part of why it’s so fun.
Some people reading that will say, “yes, I already know that for most people gambling is a pandora’s box of rationality-killing delusion-inducing spurious patterns, I’ve incorporated into my thinking, so belaboring the point is just wasting my time”. But what I have found is that, however much I think I have incorporated that insight into my thinking, I did not incorporate it fully enough.
My guess about your smart acquaintances is that they have been lucky and are delusional. As for why they don’t dive into their delusion, quit their day jobs and destroy their life savings, which is the point of inconsistency that’s puzzling you, it may be that on some level they suspect that they may be delusional.
Point of clarification: I am not saying that it is impossible to do what is proposed here, which is to systematically study the game and come up with a winning strategy. This has been done on multiple occasions. My guess about your acquaintances is based on your describing them as “casual” players.
Reading the discussion here, I got the impression, which is consistent with my prior expectations, that with the systematic method proposed in a given hour you only win, on average and with a lot of variance, a small fraction of the amount that you bet. Whereas what you seem to be saying is that your friends are claiming enormous wins. Such big wins are probably mostly due to luck. The drip, drip, drip of slow and unsteady profitability of a systematic method applied over an extended period, does not seem to be what your friends are talking about. In short, their wins as you relay their descriptions sound like free money, whereas the systematic method (which is all I really trust to work) sounds like a job.
Otherwise whip smart people tend to be delusional about gambling. This applies also to the stock market.
Yes, in fact it happens that some of the same people I know claim to be able to beat the stock market too. I think your theory is probably true: both in gambling and on the stock market, people get deluded by occasional lucky windfalls and fail to keep track of the big picture. Yet few of them actually get deluded to the point where they’ll go ahead and bankrupt themselves; the others remain rational at some level and refuse to actually put really significant sums where their mouth is, although they will brag around about their wins, possibly talking under honest delusions (but not actually acting on them, as with most beliefs that are held for signaling value).
Of course, as the EMH predicts, being smart and hard working people, if they really applied themselves to gambling systematically and full-time, they would probably be able to squeeze out something of roughly the same magnitude as what they earn in their existing day jobs. (But certainly nothing like these spectacular wins they’re talking about.)
One of my housemates in college was able to maintain a fairly decent middle-class income playing poker, starting from a few books on professional play and a few months of experience (as well as a preexisting Magic: The Gathering habit, which may have provided some crossover skills). He was a fairly bright guy, but not a genius and not unusually rational outside the game, so it can be done; I’ve got a few theories as to why more people don’t.
First, and probably most importantly, playing poker professionally is a job. It’s often tedious, it’s emotionally demanding, and since it relies on subverting the instincts that make gambling fun, it usually isn’t. My friend spent ten or twelve hours a day playing, often on four tables at once, and while he was making about the same money that I now do in software, I never got the impression that he was working any less hard for it.
Second, it’s not a reliable source of income over the short term. The variance in day-to-day take is astounding: some days my friend would stagger out of his room thousands of dollars the poorer, either because he’d gotten in a bad emotional state and lost rationality (the jargon is “on tilt”) or just because of a run of bad luck. Indeed, professional poker players are expected to blow through their entire playing fund on a semi-regular basis. I imagine that a lot of people wouldn’t want to live that way; financial stability is itself a net positive for most, as evidenced by the existence of insurance companies.
Finally, it’s low-status. “Professional gambler” has a certain rough-edged glamour to it, but it occupies sort of the same mental space as “private investigator” or even “soldier of fortune”: exciting but not respectable. Status considerations being as important as they are with regard to career choices, it wouldn’t surprise me if this played an important role in limiting the number of people playing professionally.
Actually, the story of your housemate is precisely what the efficient markets hypothesis predicts: if you try hard to squeeze out some arbitrage profits from an efficient market, the profit you can expect will be roughly the same as what you could earn with other pursuits, including wage labor, given your talents and the amount of effort expended. So I’m not at all surprised to hear it; in fact, it would be surprising if the amount of arbitrage profits available were much less than that.
What does confuse me are the stories of people who claim that the arbitrage profits they can supposedly squeeze out are far above what they earn in their day jobs, as well as their unwillingness to spend more money and effort in gambling, which seems strikingly irrational if their stories are taken at face value.
Well, a decent middle-class income is far above what most college kids are making. At the time it was an absolutely astonishing amount of money to me. In a broader context it lines up well with the efficient markets hypothesis’s conditions, of course, but I wouldn’t be surprised if exactly the kind of astonishment I experienced back then, suitably inflated by word of mouth and barroom exaggeration, was responsible for the stories you’ve heard.
It’s really hard to exaggerate how many how silly people are playing poker. Right now I’m logged onto a pokersite that currently has 381793 people playing.
Most of those don’t bother to put work into learning how to play, so the “arbitrage” opportunities indeed are huge.
Why then more people don’t become poker professionals… well, I know quite a few who have, but I for one consider poker a really boring game. I couldn’t imagine playing it if the opportunities weren’t so good. Also, it can get really stressful if it’s your sole source of income, as in many forms of poker there are strings of bad luck where you lose money. Then you can get scared/nervous, and “scared money is losing money” is a saying that’s usually very true in poker.
A few different things going on here, but the bottom line is yes, there is a screaming opportunity for making money on easy arbitrage. You can easily and quickly make a decent living if you don’t mind putting in the hours, and you can with hard work, dedication and hopefully some talent get vastly more than that.
Why don’t more people do it? There are a lot of places people turn away, from the legal issues to the morality of the activity, to the low status, to the swings and need for psychological stability, to the lack of a long term plan, to the fact that poker gets boring after a while and it happens quicker if you’re maximizing alpha. It also doesn’t scale that well; to get past a certain point and earn top dollar you need expert-style training and talent. Marginal improvements in skill are huge over the long term in gambling.
However, I recommend that anyone who can’t otherwise get a good job seriously consider poker. Gambling in general involves huge amounts of money being effectively given away, resulting in lots of low hanging fruit. Sports betting is actually even softer than poker.
Poker machines are also a reliable source of free money in the long term. If you calculate the expected value based on accumulating jackpots and have complete control over your risk taking impulses.
They’re getting better at controlling for that, and actually exploiting this is as boring as it gets, but machines with jackpots that don’t max out can be worth keeping an eye on if you’re in a position to do so easily.
I ’d say that making a living by gambling is ambiguous so far as status is concerned. On one hand, it’s using cleverness to win again and again, and on the other, it doesn’t have the compliance and stability signaling you get from being a respected professional.
Since the people who are capable of making a living at poker would have a substantial overlap of intelligence and temperament with those who can become professionals, there might well be fewer people going into gambling than could make a living at it.
That is certainly true, but if their grandiose claims are true, it still doesn’t explain why they don’t spend more of their free time gambling. I mean, I’m having a beer or coffee with someone who claims to be able to earn so much from gambling that, if true, this means that he’s paying the opportunity cost of hundreds of dollars an hour for the pleasure of wasting time here with me and my friends instead of going gambling. That just makes no sense at all.
this means that he’s paying the opportunity cost of hundreds of dollars an hour for
the pleasure of wasting time here with me and my friends instead of going gambling.
That just makes no sense at all.
Playing high level poker is mentally very taxing and tiring. Even if one can do it for 2-3 hours per day, it’s often true that trying to spend too much time on it will result in losses.
Actually, they really aren’t a problem, unless one insists on playing exactly those rather few variations of poker where they supposedly are common nowadays (haven’t checked myself). In most forms of poker there aren’t good bots commonly around, or even in existence as far as I know. (They’re also banned on the major sites, which try to detect bots and kick you out without giving you your money back if you get caught.)
I’m frankly confused about the whole issue of poker (both online and real-life). I know a lot of smart people who claim to have made ridiculous amounts of money playing poker casually in their free time. Judging from what they’re saying, it would seem like there are so many suckers around playing for real money that a highly intelligent person willing to study the game can exercise a ridiculous amount of arbitrage.
But if I accept all their stories at face value, then why on Earth do all these smart people toil at difficult jobs for mediocre salaries when they could be earning much more money gambling? In particular, why do even all these people I know who boast about their earnings at poker still maintain difficult and demanding day jobs? (Of course, they can reply that gambling is only a short-term opportunity while the career is more important in the long run, but they could still invest more time in gambling while scaling down their careers temporarily with a clear net profit. And even if that’s not possible, with such vast profit opportunities, one would expect they’d be playing far more even in their presently available free time.)
I don’t know what to think of all this. Whatever the truth might be, either I know a bunch of otherwise honest and down to Earth people who are lying or delusional about this issue, or there is actually a screaming opportunity for making money on easy arbitrage that few people bother to exploit, and even they only partly and incompletely. Both possibilities seem to me highly implausible (but the latter more so).
Otherwise whip smart people tend to be delusional about gambling. This applies also to the stock market. Gambling is a minefield of meaningless patterns which trigger our pattern detectors. I presume that’s a large part of why it’s so fun.
Some people reading that will say, “yes, I already know that for most people gambling is a pandora’s box of rationality-killing delusion-inducing spurious patterns, I’ve incorporated into my thinking, so belaboring the point is just wasting my time”. But what I have found is that, however much I think I have incorporated that insight into my thinking, I did not incorporate it fully enough.
My guess about your smart acquaintances is that they have been lucky and are delusional. As for why they don’t dive into their delusion, quit their day jobs and destroy their life savings, which is the point of inconsistency that’s puzzling you, it may be that on some level they suspect that they may be delusional.
Point of clarification: I am not saying that it is impossible to do what is proposed here, which is to systematically study the game and come up with a winning strategy. This has been done on multiple occasions. My guess about your acquaintances is based on your describing them as “casual” players.
Reading the discussion here, I got the impression, which is consistent with my prior expectations, that with the systematic method proposed in a given hour you only win, on average and with a lot of variance, a small fraction of the amount that you bet. Whereas what you seem to be saying is that your friends are claiming enormous wins. Such big wins are probably mostly due to luck. The drip, drip, drip of slow and unsteady profitability of a systematic method applied over an extended period, does not seem to be what your friends are talking about. In short, their wins as you relay their descriptions sound like free money, whereas the systematic method (which is all I really trust to work) sounds like a job.
Yes, in fact it happens that some of the same people I know claim to be able to beat the stock market too. I think your theory is probably true: both in gambling and on the stock market, people get deluded by occasional lucky windfalls and fail to keep track of the big picture. Yet few of them actually get deluded to the point where they’ll go ahead and bankrupt themselves; the others remain rational at some level and refuse to actually put really significant sums where their mouth is, although they will brag around about their wins, possibly talking under honest delusions (but not actually acting on them, as with most beliefs that are held for signaling value).
Of course, as the EMH predicts, being smart and hard working people, if they really applied themselves to gambling systematically and full-time, they would probably be able to squeeze out something of roughly the same magnitude as what they earn in their existing day jobs. (But certainly nothing like these spectacular wins they’re talking about.)
One of my housemates in college was able to maintain a fairly decent middle-class income playing poker, starting from a few books on professional play and a few months of experience (as well as a preexisting Magic: The Gathering habit, which may have provided some crossover skills). He was a fairly bright guy, but not a genius and not unusually rational outside the game, so it can be done; I’ve got a few theories as to why more people don’t.
First, and probably most importantly, playing poker professionally is a job. It’s often tedious, it’s emotionally demanding, and since it relies on subverting the instincts that make gambling fun, it usually isn’t. My friend spent ten or twelve hours a day playing, often on four tables at once, and while he was making about the same money that I now do in software, I never got the impression that he was working any less hard for it.
Second, it’s not a reliable source of income over the short term. The variance in day-to-day take is astounding: some days my friend would stagger out of his room thousands of dollars the poorer, either because he’d gotten in a bad emotional state and lost rationality (the jargon is “on tilt”) or just because of a run of bad luck. Indeed, professional poker players are expected to blow through their entire playing fund on a semi-regular basis. I imagine that a lot of people wouldn’t want to live that way; financial stability is itself a net positive for most, as evidenced by the existence of insurance companies.
Finally, it’s low-status. “Professional gambler” has a certain rough-edged glamour to it, but it occupies sort of the same mental space as “private investigator” or even “soldier of fortune”: exciting but not respectable. Status considerations being as important as they are with regard to career choices, it wouldn’t surprise me if this played an important role in limiting the number of people playing professionally.
Actually, the story of your housemate is precisely what the efficient markets hypothesis predicts: if you try hard to squeeze out some arbitrage profits from an efficient market, the profit you can expect will be roughly the same as what you could earn with other pursuits, including wage labor, given your talents and the amount of effort expended. So I’m not at all surprised to hear it; in fact, it would be surprising if the amount of arbitrage profits available were much less than that.
What does confuse me are the stories of people who claim that the arbitrage profits they can supposedly squeeze out are far above what they earn in their day jobs, as well as their unwillingness to spend more money and effort in gambling, which seems strikingly irrational if their stories are taken at face value.
Well, a decent middle-class income is far above what most college kids are making. At the time it was an absolutely astonishing amount of money to me. In a broader context it lines up well with the efficient markets hypothesis’s conditions, of course, but I wouldn’t be surprised if exactly the kind of astonishment I experienced back then, suitably inflated by word of mouth and barroom exaggeration, was responsible for the stories you’ve heard.
It’s really hard to exaggerate how many how silly people are playing poker. Right now I’m logged onto a pokersite that currently has 381793 people playing.
Most of those don’t bother to put work into learning how to play, so the “arbitrage” opportunities indeed are huge.
Why then more people don’t become poker professionals… well, I know quite a few who have, but I for one consider poker a really boring game. I couldn’t imagine playing it if the opportunities weren’t so good. Also, it can get really stressful if it’s your sole source of income, as in many forms of poker there are strings of bad luck where you lose money. Then you can get scared/nervous, and “scared money is losing money” is a saying that’s usually very true in poker.
A few different things going on here, but the bottom line is yes, there is a screaming opportunity for making money on easy arbitrage. You can easily and quickly make a decent living if you don’t mind putting in the hours, and you can with hard work, dedication and hopefully some talent get vastly more than that.
Why don’t more people do it? There are a lot of places people turn away, from the legal issues to the morality of the activity, to the low status, to the swings and need for psychological stability, to the lack of a long term plan, to the fact that poker gets boring after a while and it happens quicker if you’re maximizing alpha. It also doesn’t scale that well; to get past a certain point and earn top dollar you need expert-style training and talent. Marginal improvements in skill are huge over the long term in gambling.
However, I recommend that anyone who can’t otherwise get a good job seriously consider poker. Gambling in general involves huge amounts of money being effectively given away, resulting in lots of low hanging fruit. Sports betting is actually even softer than poker.
Poker machines are also a reliable source of free money in the long term. If you calculate the expected value based on accumulating jackpots and have complete control over your risk taking impulses.
They’re getting better at controlling for that, and actually exploiting this is as boring as it gets, but machines with jackpots that don’t max out can be worth keeping an eye on if you’re in a position to do so easily.
I ’d say that making a living by gambling is ambiguous so far as status is concerned. On one hand, it’s using cleverness to win again and again, and on the other, it doesn’t have the compliance and stability signaling you get from being a respected professional.
Since the people who are capable of making a living at poker would have a substantial overlap of intelligence and temperament with those who can become professionals, there might well be fewer people going into gambling than could make a living at it.
That is certainly true, but if their grandiose claims are true, it still doesn’t explain why they don’t spend more of their free time gambling. I mean, I’m having a beer or coffee with someone who claims to be able to earn so much from gambling that, if true, this means that he’s paying the opportunity cost of hundreds of dollars an hour for the pleasure of wasting time here with me and my friends instead of going gambling. That just makes no sense at all.
Even Bill Gates and Warren Buffett waste time playing bridge and eating steaks and going to parties.
Playing high level poker is mentally very taxing and tiring. Even if one can do it for 2-3 hours per day, it’s often true that trying to spend too much time on it will result in losses.
People normally have diminishing marginal value for money, and need time off.
Poker bots reportedly have become extremely good. Given that bots can be scaled enormously, that makes the situation even worse.
Actually, they really aren’t a problem, unless one insists on playing exactly those rather few variations of poker where they supposedly are common nowadays (haven’t checked myself). In most forms of poker there aren’t good bots commonly around, or even in existence as far as I know. (They’re also banned on the major sites, which try to detect bots and kick you out without giving you your money back if you get caught.)