going pro
A good book you might want to check out
here.
Good articles from Ed Miller's site:
Going Pro: What You Should Know Before Playing Poker For a Living - Part 1 of 3
A fair amount has been written on the topic of going pro, but a lot of it is only moderately useful.
Most of the material written more than three years ago is almost entirely obsolete. And a lot of the new material is little more than a warning or plea to newer players not to try playing fulltime.
I quit my last job on March 14, 2003. Since then, I have derived 100 percent of my income from poker: playing, writing, and teaching. Leaving a steady income for poker was scary, but I am truly grateful that I made the leap. I don’t think it’s fair to tell new players, “Don’t even try going pro because most of you will fail and those who don’t won’t like it.” I tried, succeeded, and I like it. For the next few articles, I’ll give you my insights about going pro.
Is This Series of Articles Meant For You?
This article is meant for a very specific group of people. The advice is not applicable to those outside the group. Quitting your job to play poker is risky even under the best circumstances. Many of you who read this article and try to play fulltime will indeed fail and go broke. But the same is true for opening a restaurant, inventing and selling a product, or starting any small business. In any event, I am writing only for those who fit the following criteria:
- You have no dependants. You have no children, parents, significant others, or otherwise whose lives will be adversely affected if you end up broke. I’m not saying that going pro is impossible if you do have dependants, but my advice in these articles is inappropriate for someone who supports others.
- You have a Plan B. If you do go broke, do you have an alternate plan? Can you easily pick back up where you left off with your old job? These articles are for you only if leaving your job will not set you back significantly should you fail as a pro.
- You are healthy with no chronic problems or risk factors. Jobs usually provide health insurance, and playing poker does not. While you should buy health insurance on your own as a professional, your insurance probably won’t be as good or economical as what you would get with work. Don’t play games with your health.
- You really want to play poker for a living. You want to play poker fulltime because you love the game and hope to spend more time playing. You aren’t looking for a quick or easy buck. You play poker for fun first and money second.
- You already play fairly well. You don’t have to play particularly well to be a professional these days. This is one area where old material on going pro is obsolete. Three years ago, you had to be quite a good player to generate enough income to live on. Now, with online play and so many terrible players, you merely have to play decently to generate significant income. But you do have to be a winning player.
Specifically, I have in mind a young, single person with relatively few expenses. If you quit your job, you can find an equivalent after six months to a year of layoff with relatively little trouble. Your response to the idea going through every dime you have is, “Oh well, I guess I’ll just have to go get a job,” not, “That would be a disaster.”
What It Takes
Three years ago, playing poker professionally meant you had to be a very good player. If someone wanted to go pro, the first question that needed to be asked was, “How well do you play?” Only once that topic had been satisfactorily addressed would it be necessary to move on to other topics.
Now things are somewhat different. I know plenty of players who, quite frankly, don’t play that well who, nevertheless, are supporting themselves (some quite well) on poker. Of course, the better you play, the more money you make, but poker skill is now only part of the equation. (To make a lot of money, say $150,000 a year or more, you still have to play extremely well. Poker is no get rich quick scheme.)
However, most people who try to play fulltime with no significant external income still struggle or fail. I see common threads dividing the successful players from the failures, and this series of articles is intended to illuminate some of the habits of successful players. I feel that long-term success as a poker pro requires strength in four areas:
- Financial Planning
- Self Discipline
- Emotional Control
- Playing Ability
The first three are truly crucial, and they are mostly what I will discuss in this series of articles. Nowadays, most failures can be attributed to deficiencies in the first three areas: A mediocre player who is otherwise completely solid will likely succeed.
The rest of Part 1 and Part 2 will be devoted to the first area, Financial Planning. Later parts will address the other important areas.
How Much Money Do You Need?
Playing poker fulltime requires a bankroll, a stash of cash invested only in your poker career. You generally should not invest your bankroll in stocks, bonds, real estate, or anything else. You have invested it in your poker playing; that’s plenty of risk right there.
You can’t play poker professionally if your bankroll isn’t large enough to support your expenses. The first step to becoming a viable professional is to examine your expenses, determine how much income you can generate from your skill, time investment, and bankroll, and making sure your income will exceed your expenses. Negative cashflow destroys bankrolls quickly and with it your viability as a pro.
Estimating Your Expenses
Begin by tallying all of your recurring monthly expenses: rent and utilities, food, car payments, gasoline, car and health insurance, student loan payments, Internet access, phone, clothes and grooming expenses, etc. Then add 20 to 35 percent more for incidentals, emergencies, and miscellaneous expenses you forgot about. That number corresponds to your “monthly nut,” the amount of money you will go through in an average month. Say your monthly expenses look like this:
- $400 for rent and utilities
- $200 for car payment
- $100 for gasoline
- $150 for car insurance
- $100 for health insurance
- $100 for student loan payments
- $500 for food (food is expensive, so don’t underestimate)
- $50 for Internet access
- $50 for phone
- $50 for clothes and grooming expenses
That’s $1,700 per month in fixed expenses. Expect to spend another $400 to $600 in extras and incidentals. We’ll use the top figure, $600, as it is more realistic (and far better to overbudget than underbudget). So our example nut is $2,300.
This nut is relatively typical for a young, single person without a family. You may be able to cut some of these expenses out, the car ones most obviously, which will help you tremendously. Many of you will have to shave this nut down to $2,000 or lower to succeed.
How Much Can You Make?
This portion requires a lot more guesswork because you have to make realistic estimates of your ability to generate profit by playing poker. First decide what game you wish to play. Though I play live almost exclusively, I highly recommend you plan to play online. Playing live for a living drastically increases the bankroll and skill level required to generate a given income. The rest of these articles will assume that you plan to play online.
Next you must choose a game. You can choose almost anything you like, except I recommend against multi-table tournaments of any type. As a professional, you will need a steady monthly income (at least as steady as poker income can be). If you play cash games or sit ‘n go’s, you will have very few losing months provided you play enough hours and stick to the limits you know you can tackle.
If you play multi-table tournaments, particularly the big ones with large entry fees and payouts, you will have occasional huge scores and long losing droughts. If you depend on poker to pay your nut, two consecutive losing months will likely send you to a much lower limit or wipe you out completely. Steady monthly income should be your top priority, and multi-table tournaments don’t fit that bill well at all.
Other than that, play whatever game you are best at: limit hold ‘em cash games, no limit hold ‘em cash games, sit ‘n go’s, pot limit Omaha, etc.
Since it is a common choice, I will use limit hold ‘em cash games as an example. Say you estimate that you can generate approximately 2 BB/100
hands playing $3-$6 limit hold ‘em. You should count on playing multiple tables, usually at least four, so you might see about 300 hands per hour. Thus, your theoretical winrate is about 6 BB/hour or $36 an hour. Cut that number by a third, down to $24 an hour. Why? You likely won’t make anywhere near your theoretical winrate for several reasons:
- You won’t play as many hours as you think you will
- You will take breaks where you aren’t earning (doing laundry, going to the bathroom, etc.)
- You will sometimes end up in bad games
- You won’t always be playing your best
Also, you should chop your winrate to protect you somewhat from an early bad run. If you budget for $36 per hour of income and happen to make only $24 an hour for the first month or two because you are running bad, you don’t want to slaughter your bankroll before it has a chance to grow.
So you are a 2 BB/100 hands player at $3-$6, and you estimate that you can make about $24/hour of real income over the long run playing. Now cut it by another 25 percent, down to $18/hour — taxes. Yes, you have to pay taxes, and the US tax code is not particularly friendly to professional gamblers. If you make more than our example player, you will obviously have to cut an even higher percentage from your winnings for taxes.
Poker For a Living - Part 2 of 3
Growing Your Wealth
Your monthly nut is $2,300. So you have to generate $2,300 per month in income, right? No! You need to make more, at least $2,700 per month and preferably at least $3,000. You can’t spend every dollar you make each month. If you do that, you will go broke. You will have no cushion against overspending, you won’t be able to take vacations (one of the big perks of being a pro poker player), and you will be bled dry by emergencies. And you won’t be putting away any money for retirement (yes, you need to do that now, too).
So in addition to your monthly nut, you should plan to save an additional 20 to 25 percent extra to build your wealth. This is not an optional expense; it is just as critical as paying your nut. So take $500 each month (don’t skimp on months you run bad), put it in a savings vehicle — IRA, CD, savings account, etc. — and don’t touch it. I’m not a financial planner, so I won’t advise you on the best place to keep your savings. But I will assure you that if you fail to save something each month, you will likely fail as a professional as well.
Dealing With a Good Month
The month is over. You’ve paid all your expenses and deposited $500 into your savings. But you ran great and have an extra $1,400 left over. What should you do with it? Absolutely nothing. That’s because it’s not yours at all; it belongs to your bankroll. This is the part that destroys tons of pro careers, so pay attention. Some wanna-be pros take the extra $1,400 and figure, “Hey, this is free money. I can buy toys with it.” They buy plasma TVs and drum sets and new cars.
Unfortunately, it’s not free money at all; it’s insurance against a bad month. Normal jobs receive even payments from month to month. If you had a normal job, you might make your $3,000 each month, spend $2,300 of it on your nut, save $500, and spend $200 on extras.
As a poker player, you get paid in fits and spurts instead. Some months you’ll win $5,000 and others you’ll win only $1,000. But you make $3,000 a month on average, and you’d better still have the $2,000 extra you made during the $5,000 month when the $1,000 one rolls around.
Extra money you make beyond your budgeted expenses and monthly savings deposit belongs to your bankroll. It belongs in liquid form, uninvested and unspent. If you practice this from month to month, you’ll have a great cushion against bad runs so you won’t even have to worry about them anymore. And as your skills improve and your winrate increases, your bankroll will gradually grow until it is large enough to support moving up to the next limit. Your success hinges on your self-control during good months.
Startup Costs
If you are broke, you can’t be a pro player. You need a bankroll and some modest savings to get started. Before you take the plunge and quit your job, you should have at least three month’s expenses in savings plus 500 big bets in bankroll (if you are playing limit poker). If your winrate is relatively low, less than 1.5 BB/100 hands, if you play shorthanded, or if you play a relatively high limit such as $15-$30, you might want to start with a bigger 800 big bet bankroll.
You need such a large starting bankroll because there is a reasonable chance you will start off your pro career with a bad run. If you skimp on the beginning bankroll, you’ll be fine if you win big your first month, but a poor start could sink you immediately.
Continuing the example we’ve used so far, playing $3-$6 with a 2 BB/ 100 hand winrate, you’d need three month’s expenses plus 500 big bets. That’s $2,800 × 3 = $8,400 in savings plus $6 × 500 = $3,000 in bankroll, or $11,400 total. Again, you can start a pro $3-$6 career with less than $11,400 in the bank, but your chances of failing increase significantly as your starting capital gets smaller.
Some of you may see that $11,400 number and think, “Cool, I’m ready to get started.” But most of you reading this will probably react the opposite way: “Wow, that’s a lot of savings. Do I really need that much?” That thought takes me to my final point.
Playing Part-Time
This “Going Pro” series is designed to help you plan your time and finances if playing poker is the only thing you plan to do for income. That is, I’m trying to help those who want to quit their jobs, businesses, and everything else, and live solely off poker.
But, for various reasons, most people probably shouldn’t do that. Poker should be part of their incomes, not all of it. The most obvious reason is that they don’t have enough startup cash. If $11,400 sounded like a lot to you, you aren’t ready to quit your job. There’s no shame in playing poker twenty hours a week alongside your present job. In fact, if you do that, you will almost certainly generate more combined income than if you quit your job and played only poker. (Yes, I realize most people want to quit their jobs because they don’t like their jobs. But sometimes we must suffer some short-term indignities to achieve our long-term goals.)
To be sure, more than half of the most successful poker players I know have kept their jobs. These players make $200/hour or more playing, yet they do it only part-time. Why? The reasons are varied, but most of them are trying to build careers for after poker.
Playing part-time is almost certainly best for you if:
- You are still in school. Do not quit school to play poker! Go to school and play poker in your free time. I don’t care if you hate school. If you quit school to play poker, you will likely be very sorry you did in ten years.
- You have a good job that you like. Are you about to get a promotion? Could you see yourself in ten years doing the job you’re doing now? Don’t quit. Good jobs are hard to come by, and, sooner or later, you will want probably one. Building a career is more important than realizing your short-term poker fantasy. In other words, if you are stacking boxes at Walmart, quit. If you are CTO of a tech company and love your work, please don’t quit.
- You don’t have enough startup cash. I quoted $11,400 of startup cash for our prospective pro. If you have $9,000 instead, you can probably give it a go. If you have $1,500 and maybe could sell your bicycle for a few hundred extra, please don’t quit your job.
- You don’t really want to play full-time. Playing poker is a terrible “last resort” career. It’s mentally draining and financially difficult. If you don’t have a dream of playing poker for a living, trying to do so anyway is a very bad idea.
Summary of Financial Aspects
If you want a good shot at making poker your full-time career for the years to come, you have to do some significant planning and preparation. Most poker players aren’t the planning or preparing type. Their thinking runs mostly along the lines of, “I have $1,000 in my pocket. Hey, that’s a $20-$40 buy-in.” Most poker players who quit their jobs end up broke and in debt to their friends and credit card companies. Lack of planning has more than a little to do with that. Take these steps outlined in my first two articles, and you will significantly improve your chances:
- Estimate your monthly nut. Tally up all your monthly expenses and add $400 to $600 for incidentals. Make sure you include health insurance. You do have health insurance, don’t you?
- Estimate your earn. Take a guess at your theoretical winrate in the game you want to play. Cut that number by a third because you won’t play as often as you think you will play, and the games won’t always be as good as you think they will be. Then cut that number by another 25 percent for taxes. You do plan to pay taxes, don’t you?
- Add monthly savings to your nut. You should save at least $500 a month for retirement, rainy days, etc. This is not optional. If you fail to do this, you will likely end up flat broke sometime down the road. That’s not fun.
- Make sure the earn you calculated covers your nut and savings. If your nut is $2,300 and you plan to save $700 a month (the more the better), make sure you can earn $3,000 per month on average.
- Keep your bankroll in a safe place where you won’t spend it. If you make money beyond your budgeted $3,000, it belongs to your bankroll, not you. Don’t spend it. If you routinely spend your bankroll, it won’t be there to save you when you run bad.
- Make sure you have a big enough starting bankroll. Without a job to support you, your bankroll must be large enough to play comfortably, and you must have a few months of savings to cope with emergencies. 300 big bets is simply not enough if that’s all the money you have in the world.
- Before you quit your job, consider playing part-time. Part-time play is less-stressful, requires less planning, and often generates a higher gross income. Usually you won’t have to worry about finding health insurance or, say, how to pay the rent after an under-bankrolled bad run. And, please, do not quit school!