‘Return of Investment’ my poker portfolio

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Is poker a form of gambling – or is it investing? According to Tom Murcko, CEO, InvestorGuide.com, it depends on how you define each.

When we play poker, we risk money, taking a chance while hoping to win money. That’s gambling! As for investing, from my perspective, it is exactly the same, except for one big difference: We use our intelligence to expect a return on the investment (ROI).

Strict gambling is betting when the odds are against you – or, at best, even-money; or perhaps you have no idea of the odds. You depend strictly on good luck to make you a winner.

A wise investment will make a profit for you. A foolish investment is just plain gambling, like tossing a coin, hoping for heads-up. You cannot control the coin; the odds are never in your favor. You are depending on good luck.

To be a winner at the game of poker, you must make wise investments – hand after hand. To accomplish this goal: Be sure the odds are in your favor.

Positive expectation: When the poker odds are in your favor, in the long run, you will realize ROI. In poker, we call this a Positive Expectation (PE). Compare the game of poker to other casino games – slots, dice, roulette, etc. Typical of all games of chance, there is a degree of risk; so all are forms of gambling.

In these other games of chance, the odds are set to favor the house. It has the “edge.” For the casino, it is an investment. In the long run, the casino is destined to come out ahead. The more money put into play, the more the casino will benefit. But, for us players, these games are strictly a matter of gambling.

On the other hand, when you play poker, if you are skilled and make decisions based on having a PE, you can expect a ROI. Even so, since you cannot control luck, there will be occasions when you fail to win. In the long run – as luck evens out – you can be assured of a profit.

Poor poker players rarely consider the concept of PE. They just bet or raise, trusting to the whims of the poker gods. They are gambling and usually losing. Skilled players, on the other hand, pause to estimate the PE before making their bets. They invest wisely – with the odds in their favor.

Pot Odds vs. Card Odds: Most important, to realize a PE, the Pot Odds must be higher than your Card Odds. The Pot Odds simply are the ratio of the amount of money (chips) in the pot to the amount you must “invest” (to call an opponent’s bet) to stay in.

Just estimate the number of chips in the pot before you bet. Example: In a $3-$6 limit game on the turn, there are $60 in chips in the pot, including your opponent’s last bet. You must call a $6 bet. The Pot Odds are $60/$6 or 10-to-1.

To estimate the Card Odds on the turn, first count your “outs” – how many unseen cards that will make your hand. Then use the simple Rule of 13 (below) suggested by Tom Green (Reference: Texas Hold ‘Em Poker Textbook; www.poker-textbook.com.)

13 – No. of Outs = Approx. Card Odds

Example: You saw the flop with A-10 of spades; after the turn, two more spades are on the board and need one more for the nut flush. You have 9 outs (13 – 4 spades). Using the Rule of 13, you get 13 – 9 = 4. So the Card Odds are approx. 4-to-1 against.

Since the Pot Odds are higher than the Card Odds, you have a PE. Calling to see the river is the wise investment; in the long run, you will profit from that decision. You are, indeed, investing – not just gambling.

Final analysis: The game of poker is both gambling and investing. To be a winner, you must invest wisely; otherwise you are only gambling. And you can quote me on that.

“The Engineer,” a noted author and teacher in Greater Los Angeles, is a member of the Seniors Poker Hall of Fame. Contact George at [email protected].

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About the Author

George Epstein

A retired engineer, George Epstein is the author of “The Greatest Book of Poker for Winners!” and “Hold’em or Fold’em? – An Algorithm for Making the Key Decision.” He teaches poker courses and conducts a unique Poker Lab at the Claude Pepper Senior Center under the auspices of the City of Los Angeles Dept. of Recreation and Parks and at West Los Angeles College.

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