Reality of Poker – Loans, Sharks, Losers and Variance

Over the last few weeks it’s come to light that Full Tilt had made several large “loans” to FTP pro’s and other professional poker players. This revelation that over $10m was missing from the FTP coffers drew stunned amazement from much of the online poker community – but should it have ?

Well … Yes and No

While nobody disputes the flawed logic of a poker business like Full Tilt freely loaning out what became effectively the players funds to fuel high stakes nose-bleed games and big buy-in tournament fees for FTP Pro’s …

Many if not most of the recreational online poker players have no real understanding of the realities of life as a professional poker player, earning their crust in both online and live cash games & tournaments.

Phil Galfond recently posted in his blog a very succinct and insightful summary of why loans to other players, staking, bad debt, slow repayment was a fact of the poker players life. In addition swimming with chancers, degens and bullsh*t was something of an occupational hazard.

This is a world he ventured your average cosseted online poker grinder has no real understanding of … and he is right.

Phil Galfond Blog … Lindgren, Loans, and a Little Advice

Now he might not have minced his words and it may hurt a few feelings of those 20 something university geeks who rule the interweb – However it’s essentially true that many of today’s online poker players now dipping into live poker games have not experienced the old rough and tumble of backroom games, dodgy characters and are therefore a little bit ripe for the picking.

While its great (and right) that online poker had matured (before Black Monday destabilized things) into a broadly safe and reasonably regulated environment and that regulated live casino poker is booming …

But old habits die hard, some of the necessities of the tournament circuit mean big loans and IOU’s between players will always be a part of the game. In a lot of cases its simple logistics of one players money online or at one end of the country while the game is in another … Trust counts for a lot in poker.

However the other reality is that even amongst regulars and known pro’s there will be more than a fair share of losing players chasing loses, victims of variance and chancer’s looking for a stake.

Poker IS a game of skill if you have skill and work at your game. But for some it’s all to easy to over estimate their own abilities especially if its with other peoples money. For others poker is just another outlet for their passion for gambling.

And this is where Variance can easily blur the line between a winning or losing player … Variance – Making Losers into Winners

Another great article I re-read this week from Luke “Desultory” Hatfield in this months PokerPlayer magazine about the realities of variance ties in nicely with this weeks winners and losers theme.

For those that don’t understand the definition of variance …

It’s basically the measure of how far a set of numbers deviates from the expected value or mean … either positively or negatively.

In poker terms this means the gap or “variance” between your actual results over a period of time and your mathematically expected results over that period of time.

I won’t try to paraphrase the whole article – go and get this months pokerplayer magazine and read it in full. But the crucial points about his article on variance are that the vast majority of players grossly underestimate the effect of variance.

Variance can make losers can look like winners & winners look like losers

The impact of variance using a fairly typical standard deviation on a “winning” player even over say 100,000 hands can be massive. This is even more reason not to base any assessment of your own ability on a sample of less than 100k hands.

In Hatfields example uses a mean win rate of 8BB/100 over 100,000 hands and a deviation of 100BB/100 from the mean due to variance.

This could create a “luck” gap of as much as 18,000 BB difference – reflected with best run giving a 17,000BB win on the upside or on the worst run a 1,000 BB loss.

The mean profit / expected profit would equate to roughly 8000 BB over the 100,000 sample.

Without getting too drawn into the maths this means the “luck” factor over 100,000 hands has a huge effect – It could be the difference between possible stardom and tournament victories for one player while for another equally able player concluding they were in fact a losing player.

Hatfield points out on the flipside players with a losing rate of -1BB/100 could (infact they often do) end up with a higher real win rate than those with a mean 8BB/100 win rate that are just on a bad run of luck …

Hilariously (or not) he goes on to point out this could mean those actual losing players luckily on the top of their variance manage to blag (or kid themselves) into becoming poker coaches etc while the technically winning player (on the bottom of his luck) doesn’t get anywhere.

Enjoy … How to masquerade as a champion poker player

1 Million Hands

In summary Hatfield concluded (as have others) that the only way to truly know if a player is good or not is to rack up about a million hands and then look at the win rate. This is the point where you can finally start to discount variance in poker.

For those rigtards who post in our PokerStars / Poker is Rigged Thread with a handful of hand histories, not even close to the 100,000 required to make comparision to Hatfield’s example the reality should be stark …

You can’t have a clue if your a winning or losing player or if the RNG is rigged or running true.

(nb. That’s why rigtards should accept the data from other players with 100k HH that they have checked and verified that the RNG’s in fact do run within the bounds of probability)

Anyway I did some quick calculations to see when that magic 1 millions hands moment would be for most players, including myself …

For live game players (averaging 30 hands per hour) achieving 1 million hands would require 33,333 hrs of play … Averaging say 8hrs per session, it would mean playing live poker two nights a week, every week for 40 years.

For an online player (averaging 60 hands per hour) achieving 1 million hands would require 16,666 hrs of play … Averaging say 4hrs per night, it would mean playing 4 nights a week, every week for just over 20 years.

Either way that means after a lifetimes play you would likely be able to conclude whether you were in fact a winning player or you had benefited from a lifetime of living at the top (or bottom) of variance.

For those looking for a more “immediate” indicator of their skill, a comparison over 100,000 hands could be achievable using the same session time after 4 years in the example of live play and 2 years of playing online.

Poker can be a cruel mistress – Good Luck Everyone

May the Variance be with You – Gamblista

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