Poker as a Business

By Tony Guerrera

A good poker player is one who makes strategically sound playing decisions and controls his emotions. A successful poker player is a good player who’s able to manage his money properly. The first step towards properly managing your money is knowing what kind of player you are.

What Kind of Player are You?

1.) Recreational Player Who Isn’t Looking to Derive Income from Poker

The difference between the recreational player and the professional player isn’t skill…I personally know some recreational players who are better poker players than some professionals I’ve known. The difference isn’t regarding seriousness about the game…some recreational players study, practice, and play harder than some professionals I’ve known. The actual difference between recreational players and professional players is that recreational players don’t rely on their winnings for anything. Recreational players are simply playing the game.

2.) Professional Player Who Plays Poker As His Sole Source of Income

When it comes to making money, playing poker is all this person does (and in some cases, it’s all this person knows). This person needs money to make money, so he needs to make sure his risk of going broke is virtually nonexistent.

3.) Professional Player Who Plays Poker as a Primary Source of Income

This person makes a bulk of his money from playing poker, but he makes money elsewhere as well. Some players of this mold make enough from their regular work to pay their bills. Others need a portion of their winnings to pay their bills.

4.) Professional Player Who Plays Poker as a Secondary Source of Income

This person makes a bulk of his money from things other than poker. However, he’s a skilled player who relies on his poker-playing abilities to tuck away some extra money on the side. This line between this type of player and the serious recreational player might be a bit blurred. What distinguishes this player is that he’s playing with the intention of playing an amount that will lead him to a certain expected profit each month. Players in this category are usually looking to make an extra $500-$1,000 per month from poker and will play a fixed number of hours per week.

(Note that it’s assumed that the players in categories #2-#4 are actually winning players. If they aren’t winning players, then they are simply deluding themselves into thinking that they are professional players.)

Once you figure out which of the above categories you fall into, you can then begin thinking about how to manage your money. You’ll see that the most important factor will always be your personal preferences for how you wish to manage your money.

Money Management for Recreational Players

If you’re a recreational player, then you aren’t looking for consistent income. You have outside sources of income. Some recreational players prefer to keep a separate bankroll (either for themselves or for their significant others). However, realize that this only works if you’re a winning recreational player. If you’re a winning recreational player keeping a separate bankroll, then your money management goals will probably be similar to those of a professional player who plays as a secondary source of income, so consider the advice in that section.

If you’re a typical recreational player, then the only important thing is to make sure you only play with money you’re comfortable losing. Think of the money purely as entertainment money. If you’re playing in a casino, make sure that the limits you play ensure that you’ll be able to play for several hours, even if things go badly. If you’re planning on playing no-limit hold’em with a restricted buy-in, this means that you should plan on having three buy-ins minimum on you, but more realistically, you should bring at least five buy-ins. If you’re playing limit hold’em, then bring 50-75 big bets with you. If you buy-in for a typical 25 big bets, then this is equivalent to 2-3 buy-ins.

If you’re playing online poker, the best rule to follow is to make an initial deposit that will allow you to play the games you want to play comfortably…deposit several buy-ins, and don’t overextend yourself. You don’t want to run out of money and be forced to wait for a week while new money is electronically transferred. If you’re a losing player, you’ll obviously have to reload eventually. Again, set a budget, and don’t put any more into online poker than you’re comfortable with. And if you score big, consider taking some money out instead of rushing to play in games much bigger than you’re used to playing. Your decision to withdrawal is ultimately a function of your personal financial preferences, but if you usually play $25NL and hit a $10,000 score in a tournament, cash out a bunch and simply jump up to $50NL or $100NL instead of immediately taking a seat in a $600NL game. Treat yourself, your family, and your investment portfolio with your winnings instead of donating significant sums of cash to people you don’t know. Regulars at high-stakes cash games absolutely love recreational tournament winners for a reason…

Money Management for Professional Players

Regardless of what type of professional player you are, you treat poker as an investment. To get what you want from your investment, you need to ask yourself some important questions. How much do you want to pocket per month? Are you satisfied never moving up in stakes, or do you wish to climb the ladder so you can make even more? How much of your outside income can you pour into poker to increase your returns? What’s the minimum hourly rate you want to earn?

Suppose you want to pocket $4,000 per month playing poker. If you play 40 hours per week (meaning 160 hours per month), this means that you are looking to make at least $25/hr. At a minimum, you need to be playing a game at which your win rate is $25/hr. Any competent player 4-tabling shorthanded $50NL hold’em online can pull this rate.

Since $50NL is the base game you can play to achieve your base rate, you need to make sure your bankroll is very large for that game. For cash game no-limit hold’em, you want at least 50 buy-ins as your base game bankroll, meaning that you need a base bankroll of at least $2,500. (for limit cash games, I suggest 500 big bets as your base bankroll, and for tournaments, I suggest at least 50 tournament buy-ins, but prefer at least 100 if you prefer multitable tournaments to single table tournaments).

However, these minimum requirements might not be enough depending on how you plan on paying yourself. Two different schemes for paying yourself exist:

1.) Pay yourself a fixed hourly wage…for every hour you play, take $25 from your bankroll regardless of your results. This is the best way to guarantee that you’ll pocket as much as you need every month, but if you’re going to pay yourself like this, your starting bankroll needs to be something more on the order of at least 75 buy-ins, and I would recommend something more along the lines of 100 buy-ins because starting off with a slow month can devastate your bankroll otherwise.

2.) Pay yourself a fixed percentage of your profits. Typically, you’ll do this on something like a monthly basis. The downside of this method is that your personal cashflow will be unsteady. In the long term, it’ll work out the same as option #1, but in the short term, you’ll notice the variance. The upside is that you don’t need as much of a bankroll to start.

Regardless of which withdrawal method you use, note that before even thinking of turning professional without any other income stream, you should have at least 6 months of savings tucked away (preferably 9 or 12). If you have other stable sources of income that at least cover your bills, than you’ll be much more flexible in how you handle your finances.

Now, the big question regards when to move up. The scheme I really like involves stacked bankrolls because it strikes a good balance between having a big base and taking stabs at bigger games. Assume your withdrawal method is such that you’re starting with $2,500, a 50 buy-in bankroll at $50NL. Your first goal is to get a playing cushion off of your base. This cushion should be something on the order of at least 20 buy-ins. 20 buy-ins is $1,000, so once your total bankroll is at $3,500, you’ve build an adequate cushion. Now here’s your plan.

Once you have your cuhsion, take any money above that cushion to play the next highest game. For, say your bankroll is $3,700. Your next session, you should buy into 2 $100NL tables and 2 $50NL tables. If you lose your two buy-ins at the $100NL tables, it’s okay. However, if you win, then you slowly can get a 3rd and a 4th $100NL table open. And before you know if, you’re playing $100NL. You see…now you have a total bankroll that’s compartmentalized. The first $3,500 is exclusively for $50NL. Anything above that is for $100NL. 75 $100NL buy-ins is $7,500, so then once your bankroll is a total of $11,000 ($3,500 + $7,500), then you can start taking stabs at $200NL with no worries whatsoever. At $11K, your bankroll is your 75 buy-in $50NL bankroll and your 75 buy-in $100NL bankroll.

The guidelines I recommend here aren’t set in stone, and quicker ways exist to move up the ladder. However, if you want to guarantee yourself steady pay and a decent rise up the ranks, then these guidelines should serve you quite well.

In The End, It’s All About Personal Finances

In the end, proper bankroll management is really just about how you wish to handle your personal finances. No cookie-cutter advice can help you with that. The big key is to make sure you achieve a balance between playing within your means and being able to move up and increase your resultant hourly. Regardless of your goals, stay disciplined and focused when playing and managing your bankroll. But most of all, don’t forget to enjoy the process!

Tony Guerrera is the author of Killer Poker By The Numbers

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