Chapter 3

A Race To The Bottom

“I don’t expect people to put the well being of their community before their own personal well being. Not yet, not at this early stage of evolution… I do expect them to be able to apply logic and deductive reasoning to their decision making though- especially once they are shown why it is necessary and how to do it. I also expect them to finally be able to see the forest for the trees- once someone throws a black tarp over the trees.”

Me

(I tried to find a nice, cheesy quote about the perils of selfishness and/or shortsightedness but one did not exist and/or I’m not so good at searching the Internet, so I made one up. Don’t hate…)

 

When things go start to go bad, most people panic. When things get worse and worse, most people become increasingly self-absorbed. They also start to compromise their integrity and look for shortcuts- if it benefits them to do so and there aren’t really any immediate, visible ramifications…

Poker was a free for all for a few years after Chris Moneymaker held up the 2003 WSOP Main Event Champ bracelet on ESPN… If you knew anything about No Limit Hold ‘Em—and you lived on the right side of variance, of course—you were in line to make doctor money- seriously, just for showing up at your local casino everyday and playing a game. And the people that were funding these doctor salaries, most of them were merely donating a small portion of their immense real estate gains at the time. And they were happy to do it- because poker was fun!

No better way for me to say it, “Shit was booming…”

But then three things happened—pretty much all at once—and poker started to transform from a very lucrative social game to a sport- a sport that revolves around luck AND a sustained Herculean effort by the masses to never properly acknowledge that luck…

 

A) Heaters Got Unplugged

At any point in time since Chris Moneymaker “shipped it” and made poker a viable occupation in late ‘03, 100% of the active poker pro population has run well above expectation. WELL ABOVE…

No one I’ve ever come across in all my years of poker (even people much smarter than I am) seems to really understand this- just how drastically variance affects poker results. And I don’t blame them; it takes years of pondering away from the table and intense observation at the table to even begin to grasp it. In a word, it’s miserable. And in my experience it leads to writing essay after essay about it on poker forums- and at least two plus chapters about it in your first book!

People don’t lack understanding of variance because they aren’t smart. They lack understanding of variance because they aresmart. They know the story of Pandora’s Box…

Bro…

OK, my point is that at any point in time in the poker world, all active pros have run well above expectation and just about none of them realize(d) it. They think/thought flopping a set in a big multi-way pot and having it hold vs a slightly lessor hand or a big draw is normal. They think/thought it’s normal to blow up a pot with a suited connector and then make a straight or a flush. And so on…

And so at any point in time since the boom you have supremely confident (and proud) poker pros sitting down at a poker table, ready to make awesome hands and scoop huge pots. And they do exactly that- some of them for years. But eventually…

Heaters get unplugged.

It might start with a bad beat or a lackadaisical play or something else. And maybe it doesn’t happen entirely at once. Doesn’t matter, father time is (almost- God bless you outliers though) undefeated against luck.

I thought you said you were done with the whole variance is almighty thing back in the intro?

You’re right, I am. Just keep in mind forever please that EVERY poker pro you have ever seen/come across became a pro while on a heater. And that when you stopped seeing him/her walking around with a puffed out chest, a smug smirk and a satchel full of chips to dump on the table (usually within three years tops), his/her heater had simply been unplugged.

Survivorship Bias (you only see people on heaters at the tables and in the poker forums- mainly) and Recency Bias (those on heaters forget what it’s like to not be on one) are two of the biggest reasons almost no one grasps variance in poker, much less sees and understands its many tentacles… Enough about variance though, I’m going to just assume you have all received my message/opinion on that topic by now…

But what happens when someone stops winning at the unsustainable rate he/she was winning at when he/she became a poker pro?

Will this person still be the smiley face at the table, just sitting down and playing the game and letting the cards (and how they are played- to a degree) decide the results? Or will he/she drop the smile and start doing EVERYTHING he/she can get away with to make up for the lost “earnings”? I mean there is a sports car and baller pad habit to support now. And there is a super strong sense of entitlement at this point to win- A LOT.

—>

“Dealer, can I have the seat change button?”

“Floor man, put me on a table change list… What? No, I don’t have a specific table I want to go to, I’ll just get up and circle the table to see if I want it each time a seat opens.”

“Dealer, I’d like to call a string raise because the chips fell out of that guy’s hand as he was betting. Yes, I know there is no reason he would do that on purpose/his intention was to bet the full amount, but I have a draw and want to see the next card for as cheap as possible.”

Whispers:

“Hey bro, have you ever thought of reducing variance by splitting action? I mean especially now that we are 3-handed with this whale… No, we won’t cheat, I just won’t 3-bet you and stuff, etc.”

Boom…

That bright-eyed and bushy-tailed pro that everyone thought was so good at poker for months (maybe even years) is on the steep trek down into Nit Ville. You won’t even recognize him/her in a few months. You might not even really notice him/her at the table after a while as he/she quietly ruins your games. Parasites are sneaky like that.

And in poker…

A parasite is a “nit”. And when heaters get unplugged (and they almost always do), most poker players become nits. It’s their perhaps not-so-evolved survival instinct to start only looking out for #1, and to mortgage the entire future of their livelihood for a few bucks today. And forget them EVER seeing the forest for the trees once that metamorphosis occurs… Anyways, by 2007 we were 3 solid years into the boom and most of the O.G. poker pros’ heaters had been unplugged. If you were there (and I was), you started seeing some very self-serving, very short-term behavior at the table that previously just wasn’t there…

 

B) Poker Capitalists (aka “The Biggest Nits of All”)

What does one do when his/her heater gets unplugged and the regression to actual variance expectation (or lower) becomes too formidable- even given all his/her new parasitic practices? Does he/she start living more moderately? Does he/she sell the sports car, leave the baller pad… maybe get a reliable economy car and some roommates for a crash pad?

Nah…

He/she looks for other ways to suck money out of poker:

Home/private games

The gall of home/private game operators to take the biggest donators out of the casinos/public card rooms (an open competition for whoever gets there in time and has enough money to buy in) and put them in private games (where they control who plays and who gets shut out) is incredibly strong. Preferably they will host these new games outside the casinos. They will rent a mansion or get a suite at a nice hotel for a night. They will get someone to cater the event with delicious food. They will have all the best alcohol. There will be beautiful young “massage” girls lurking around. The dealer might even be topless. There will often be a mound of cocaine in the bathroom.

Sounds like heaven, right?

Well… these games are also generally unbeatable- even if you are Phil Ivey! Sooooo much money (well beyond the significant expenses) is taken out of pots that generally no one can win in a session without running like the sun (in a casino, if you are good and run even+, you can a least win some money). Most likely, there will be one or two small winners at the end of the night and everyone else that played will have lost- A LOT.

The game operator though? He/she just made heaps without ever having to look down at hole cards or sweat a river card. He/she also likely had a nice percentage of whoever actually did win in the game (hmmm). And if you(a normal invitee/not on the payroll) somehow won, he/she might just decide to not pay you. I mean what are you going to do about it?

Or… say you parlay the several small miracles mentioned above and somehow walk out of a private game with money- you might just get robbed by a disgruntled former employee of the game, or by someone who lost a lot in the game, or maybe by someone else…

An ecosystem that depends on open competition, reasonable rake, and strict regulation- because those things ensure that there are many winners/the money that is lost doesn’t just disappear down a hatch never to be set down on a poker table again- it gets completely wrecked by home games. All the “big games” that had long been steady at all the nearby casinos are absolute toast; they just cannot survive without the biggest donators. And as mentioned in the intro, poker in general can’t survive without “big games”, and certainly not without some significant recycling of the losses.

Now, the guys/girls who poach the biggest donators from the normal casino games and put them in exclusive games still at casinos, they aren’t a whole lot better for the game. While rake isn’t the black hole it is in home games, private games in casinos are still often built for the organizer to win ALL the money.

The organizer of a private game in a casino (I’m not talking about a group of friends getting together btw obv) has pieces of all the professional players that are allowed to play- almost always. They also make the stakes gigantic- artificially high in order to price out almost all non-payroll pros who might try to cause a fuss about being shut out, while at the same time getting the big donators for as much as possible as quickly as possible. And if you think there isn’t collusion/cheating in these games (pros vs donators), it’s time to start watching more closely/thinking a lot more deductively…

So home/private game operators are pretty brutal, right? They respect the poker community almost nil, they give a fuck if their peers ever eat again and they care next to zero amount about the future of the game. Well, wait until you meet their big brothers; Training Site operators…

Training Sites

People in the poker world just don’t seem to have a problem with guys who have had the most success in poker (hello variance) deciding at some point/for some reason (hello variance) to basically just sell any and all trade secrets to the masses. Maybe it’s because these guys were considered the best in the world for a while and they were undeniably great poker players (run good confidence is a helluva drug). Maybe it’s because they all have such shiny images/reputations. Or maybe it’s just because fanboys and fangirls just gonna fanboy and fangirl; no one is going to think critically about what their heroes are doing to the game of poker- the game that has already been so anomalously good to them…

As stated in the super-long-sorry-I-was on-a-lot-of-tilt-when-I-wrote-it Intro, poker is a game that depends on lots of edge being available. It NEEDS long-term winners to prop up all the big games across the world. And it needs stars (the biggest long-term winners with the most charisma) like Doyle Brunson and Phil Ivey to keep it popular/a viable American Dream…

Teach the masses to play well errr not play horribly exploitable (as they always have, sorry!) and there just isn’t enough edge available for poker to have the long-term winners and superstars it needs. The game is just played too slowly and with too much rake and variance for people with shrunken edges to win enough/often enough (damn, I feel like I’ve said that a million times in past 10 years). Eventually, people start to realize (I think this is coming- it has to, right?) that ALL the big winners in poker are basically just state lotto winners in terms of luck, and poker is nothing but a tiny edge gambling game, played at an incredibly slow pace, in a tense environment…

Cardrunners was the first poker training site. It came to prominence around 2007. Around the same time people started poaching the biggest donators from the public games and setting them up in home/private games. Around the same time almost all O.G. boom pros had been unplugged from their heaters. Around the same time…

 

C) The Economy Went Busto

I bought a 940 square foot house in San Diego, CA for $415,000 in June of 2006. A year later it was worth around $225,000 (yay me)…

As stated, a huge % of the free money at poker tables during the boom came from folks in real estate. There was just a ton of loose cash being generated by all the bullshit loans- the same bullshit loans that eventually sparked the U.S. economic collapse in 2007.

A year later- at some point during 2008, the whole world’s economy was basically in the shitter…

(Wikipedia has a nice little summary on this if you are not already well versed ;))

So what happened? What happened to the guys giving away their money at the poker tables? Well, some of them just straight up quit- they didn’t love poker that much anyways. They just had that real estate money burning holes in their pockets for a while and they had to get rid of it before any serious damage occurred to their legs. And the ones that still very much had the poker jones (and could get past their spouses) after the crash? They kept playing. But…

They started trying harder.

A lot harder…

One of the biggest donators at my local casino during the boom was this really nice guy named ________.  He was way into the real estate game and had plenty of money to throw around. He would come to the casino daily, usually in a nice suit, and all but give away a few thousand. And then he would get up, shake your hand if you had been talking to him that day, and he would stroll out of the casino…

THIS GUY IS A PRO NOW. He is always in a 5-10 game. He doesn’t dress that well anymore, doesn’t smile much (he’s still a pretty nice guy though usually), and he never gives it away anymore. He started taking poker very seriously (I’m almost positive he got a Cardrunners account back then- and I’d bet he has one either at Run It Once or Upswing currently), got pretty damn good at it, and now you really don’t want to see him walking towards your table (whereas before you would stand up and pull out his seat for him like a waiter at a nice restaurant when you saw him coming).

^^^ is what happened when the economy shit the bed. Almost all the loose money disappeared. Suddenly (just about) everyone was trying to win…

Take pros with huge spending habits off their heaters, have some Poker Capitalists suck a ton of money out of the poker economy and/or teach everyone how to play un-terribly, and have the economy take a nose dive, and things start to get ugly.

At some point in 2007/2008, someone fired a gun towards the sky in the poker world and the race to the bottom was officially underway…

Seat changes and table changes were the initial sprint from the starting line with all the adrenaline. Then came hitting and running (illogical if you are a winning player but nevertheless horrible for the longevity of the game)- you know, after a half mile or so and that adrenaline was starting to fade and fatigue was beginning to kick in. Then collusion (there have always been unofficial teams in poker, but it became a real problem at this point)- you know once runners started collapsing on the side of the road from dehydration and what not. Then…

Suddenly shit wasn’t so booming anymore…

 

Pre-order “The Long Run…”

AKA “Light a fire under my ass to finish this book!” I will donate $1 to the Las Vegas homeless for every pre-ordered book. All purchases will be refunded in full if the book doesn’t get published for any reason. It will be an Ebook or an Ibook (or both). Cancel and get a full refund at any time.

$20.00

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