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PROFESSOR: Today, we're going
to be talking about something

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a little bit away from
the game of poker, per se,

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and more about looking at
poker as an investment.

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The conceit here is
that, to some extent,

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you're either a winning
poker player now,

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or eventually you'll get there.

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So this is looking at now that
you have these alpha streams,

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these streams of
positive EV that you

00:00:39.810 --> 00:00:42.070
can pick which ones you
want to embrace, how do you

00:00:42.070 --> 00:00:42.730
balance out?

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How do you look at your
future, given that this is now

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an option you hold?

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Cash game here
just means anything

00:00:48.820 --> 00:00:52.840
that's not a tournament,
where tournament is a poker

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structure where you buy
in, and with money, you

00:00:55.700 --> 00:00:57.880
receive tournament
chips, and you only

00:00:57.880 --> 00:01:01.997
get money to the extent
that you survive longer

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than someone else, where
the person with all

00:01:03.830 --> 00:01:06.280
the chips in the end
wins some set piece,

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not necessarily all their chips.

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Whereas a cash game is one
such that each chip has

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a specific value, like you're
actually bedding real dollars,

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and you can enter or
leave whenever you like.

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So in cash games, chips are
effectively literal money,

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so the more chips you win,
the more money you win.

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Whereas in tournaments, all
that matters is the position

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you finish.

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When we talk about the
Independent Chip model,

00:01:31.090 --> 00:01:33.290
we'll talk about
when those diverge.

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The second point is about that,
where Chip EV, like literally

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having more chips,
in a cash game

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is directly related to the
amount of money you make.

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If you're making a
decision that results

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in you having more chips,
you make more money

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in the long run.

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Whereas in a tournament, it's
a little bit more complicated.

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They're congruent,
and they generally

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trend in the same direction.

00:01:51.520 --> 00:01:54.100
But in some particular
cases, what's

00:01:54.100 --> 00:01:57.200
something that's
positive Chip Ev

00:01:57.200 --> 00:02:00.600
may be either positive or
negative in terms of Dollar EV,

00:02:00.600 --> 00:02:03.265
and we'll talk about
that in a little bit.

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Cash games-- you can come
and go whenever you want.

00:02:05.390 --> 00:02:06.770
That makes them very liquid.

00:02:06.770 --> 00:02:08.880
If you're a big
cash game player,

00:02:08.880 --> 00:02:12.310
you can generally grind
out your hourly win rate

00:02:12.310 --> 00:02:13.894
whenever you want,
especially online.

00:02:13.894 --> 00:02:16.060
There's a little bit of
overhead when you play live,

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but cash games are much easier
to just come and go with regard

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to kind of executing your skill.

00:02:22.417 --> 00:02:23.125
With tournaments.

00:02:26.200 --> 00:02:29.420
you get all your EV from
winning, from lasting long,

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so you're generally stuck.

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The better you are, the
longer these tournaments take,

00:02:33.290 --> 00:02:35.900
and you have to kind of
be there for the long run

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and generally plan
to last a long time.

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In cash games, you can buy
in as many times as you want.

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Like if you're in a cash game
with a lot of bad players

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and you get knocked out,
you can just buy back in.

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It's like it never happened.

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With a tournament, if
you're at a tournament

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with a lot of bad players,
and you get knocked out

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the first hand because
you get unlucky,

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you never get to redo
that for most tournaments.

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You always get kind of
a new field of players,

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and you don't have
the opportunity

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to reenter a tournament.

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Your only choice is to enter
at the first time or not.

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Cash games have fixed blinds.

00:03:09.430 --> 00:03:11.347
The situation that
you're in when you start

00:03:11.347 --> 00:03:13.680
is generally the situation
you're always going to be in,

00:03:13.680 --> 00:03:17.260
so you don't need to factor in
having a different size stack.

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Presumably, you're
always going to have

00:03:18.920 --> 00:03:21.796
at least the maximum
buy-in or more.

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Whereas in tournament
situations,

00:03:23.170 --> 00:03:24.545
you're going to
be short-stacked.

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People at your table
are going to have

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a widely different stack size.

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In cash games, you have
a single table selection,

00:03:30.990 --> 00:03:33.674
which is you get to see
the nine people that you're

00:03:33.674 --> 00:03:34.590
going to play against.

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And you can watch
them, and you can

00:03:36.048 --> 00:03:39.740
see if eight people call
pre-flop in a cash game,

00:03:39.740 --> 00:03:42.240
you know that probably seven
of those people are bad,

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and you can just enter that game
and play against those eight

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or nine people-- totally fine.

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Whereas for tournaments,
because you're only

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playing against nine other
people in the tournament

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of a field of say,
like 100, you only

00:03:54.970 --> 00:03:56.980
really get to target
groups of people.

00:03:56.980 --> 00:04:00.777
You can identify an
audience of people

00:04:00.777 --> 00:04:02.610
who would enter that
tournament and then get

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an idea of what the average
person you'll play against

00:04:04.900 --> 00:04:06.820
will be, but you
can enter tournament

00:04:06.820 --> 00:04:10.817
with 90 fish and 10 pros and be
at a table of 10 pros to start.

00:04:10.817 --> 00:04:12.400
So that adds a little
bit of variance.

00:04:12.400 --> 00:04:15.670
It also adds some
complexity in trying

00:04:15.670 --> 00:04:19.620
to get a read at your
table and kind of make

00:04:19.620 --> 00:04:22.360
that jive with your read of
what the average player should

00:04:22.360 --> 00:04:23.740
be for that tournament.

00:04:23.740 --> 00:04:26.820
Like the World Series
of Poker is typically

00:04:26.820 --> 00:04:29.550
a tournament that has
like 60% fish, 40% percent

00:04:29.550 --> 00:04:31.540
pros nowadays.

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But a lot of tables end up
like eight pros and two fish,

00:04:34.420 --> 00:04:37.267
and that creates a
much different type

00:04:37.267 --> 00:04:39.475
of situation for you than
if you were at a table that

00:04:39.475 --> 00:04:42.408
was primarily new players.

00:04:42.408 --> 00:04:46.220
As I said before, cash
games have higher liquidity.

00:04:46.220 --> 00:04:48.200
The best kind of career
you can make in poker

00:04:48.200 --> 00:04:50.200
is being really good at
a cash game, because you

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can go anywhere and play those.

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You can play as
long as you want.

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Like if you only have two
hours and you're in Vegas,

00:04:56.030 --> 00:04:58.060
you can grind out
pretty confidently

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like $150 in EV, no problem.

00:05:00.670 --> 00:05:02.880
Whereas in a tournament,
it's much more uncertain

00:05:02.880 --> 00:05:05.620
how long it'll take
you to capture that EV

00:05:05.620 --> 00:05:08.020
and how long you might be
obligated to stick around.

00:05:10.875 --> 00:05:12.920
For what's considered
normal win rates,

00:05:12.920 --> 00:05:15.970
cash games are considered
lower variance.

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Tournaments are considered
higher variance.

00:05:17.874 --> 00:05:20.040
If you're winning at cash
games, you're crushing it,

00:05:20.040 --> 00:05:23.390
but it's much, much harder to
win at cash games, at least

00:05:23.390 --> 00:05:25.110
at the medium high stakes.

00:05:25.110 --> 00:05:28.120
It's for this reason--
it's because anyone who's

00:05:28.120 --> 00:05:31.505
a loser at a cash game knows
it immediately and drops out

00:05:31.505 --> 00:05:32.130
really quickly.

00:05:32.130 --> 00:05:34.634
Whereas in tournaments,
some of the big name pros

00:05:34.634 --> 00:05:36.050
are probably losers
at this point,

00:05:36.050 --> 00:05:37.080
they just don't know it yet.

00:05:37.080 --> 00:05:38.538
Because you can go
years before you

00:05:38.538 --> 00:05:40.500
find out whether you're
actually a winner

00:05:40.500 --> 00:05:42.170
or a loser at big tournaments.

00:05:42.170 --> 00:05:44.850
Let's talk about the
tournament life cycle.

00:05:44.850 --> 00:05:49.390
The early game is going to be
everything before the bubble.

00:05:49.390 --> 00:05:53.150
So it's going to be like the
first 90% of eliminations

00:05:53.150 --> 00:05:55.010
in the tournament will
be in the early game,

00:05:55.010 --> 00:05:56.718
although because of
how tournaments work,

00:05:56.718 --> 00:05:59.350
that ends up being like half
the tournament in terms of time.

00:05:59.350 --> 00:06:01.510
But you get the idea anyway.

00:06:01.510 --> 00:06:04.260
Play during the early game is
very similar to cash games.

00:06:04.260 --> 00:06:06.250
There's no ICM.

00:06:06.250 --> 00:06:09.730
There's no difference
in the value of chips

00:06:09.730 --> 00:06:12.310
early on, because when
you have 1,000 chips,

00:06:12.310 --> 00:06:15.050
and you need 100,000
to win the tournament,

00:06:15.050 --> 00:06:17.530
a difference of 50 chips
isn't that big of a deal.

00:06:17.530 --> 00:06:20.730
The difference in value
of chips doesn't really

00:06:20.730 --> 00:06:24.300
matter that much, which is why
I'm saying that Tournament Chip

00:06:24.300 --> 00:06:28.910
EV is approximately
equal to real Dollar EV,

00:06:28.910 --> 00:06:32.990
so make decisions as if it
were a normal cash game.

00:06:32.990 --> 00:06:35.860
In addition, your
playing style is

00:06:35.860 --> 00:06:39.190
going to be entirely
influenced by your stack size.

00:06:39.190 --> 00:06:42.560
Having the same
proportional stack size

00:06:42.560 --> 00:06:44.560
later in the early
game, you'll make

00:06:44.560 --> 00:06:46.990
the same types of decisions.

00:06:46.990 --> 00:06:50.630
I'm defining different zones of
play based on your stack size.

00:06:50.630 --> 00:06:52.180
If your M is less
than 2, I'm calling

00:06:52.180 --> 00:06:55.140
that the dead zone,
Harrington called it that.

00:06:55.140 --> 00:06:57.530
2 to 8 is the steal period.

00:06:57.530 --> 00:06:59.830
8 to 12 is the steal
re-steal period,

00:06:59.830 --> 00:07:01.890
and we'll explain
what that is later.

00:07:01.890 --> 00:07:04.750
12 to 30 is the value-betting
zone, and then 30 or more

00:07:04.750 --> 00:07:07.090
is a set-mining zone.

00:07:07.090 --> 00:07:10.290
Let me talk about tempo before
we get into what exactly

00:07:10.290 --> 00:07:12.890
those things are.

00:07:12.890 --> 00:07:16.666
The most important
thing about tournaments

00:07:16.666 --> 00:07:18.040
with regard to
how it's different

00:07:18.040 --> 00:07:20.780
than a cash game is
getting the speed

00:07:20.780 --> 00:07:23.960
right, like getting your
aggression at the right level.

00:07:23.960 --> 00:07:27.990
Doyle Brunson used to
say "never get caught

00:07:27.990 --> 00:07:29.910
speeding in a tournament."

00:07:29.910 --> 00:07:32.060
What that means is
don't get caught

00:07:32.060 --> 00:07:35.860
being way too aggressive way
too early on, and by early on,

00:07:35.860 --> 00:07:38.840
I mean when you have
a big chip stack.

00:07:38.840 --> 00:07:41.280
So you need to win
coin flips, like you

00:07:41.280 --> 00:07:44.400
will have to win several
hands when you're behind

00:07:44.400 --> 00:07:45.550
to win a tournament.

00:07:45.550 --> 00:07:47.550
So what you should
do is make sure

00:07:47.550 --> 00:07:50.230
that when you're
not in coin flips,

00:07:50.230 --> 00:07:52.620
you slowly grow
your stack, and you

00:07:52.620 --> 00:07:54.150
avoid flipping
when you don't have

00:07:54.150 --> 00:07:56.380
to so that when you
actually do flip,

00:07:56.380 --> 00:07:58.669
you end up with more chips.

00:07:58.669 --> 00:08:00.460
Like those small
differences are the things

00:08:00.460 --> 00:08:02.780
that are multiplied all
throughout the tournament

00:08:02.780 --> 00:08:05.090
to make you-- instead of
like 1% chance of winning

00:08:05.090 --> 00:08:07.560
a tournament, like 3% or 4%.

00:08:07.560 --> 00:08:11.560
That's where your edge
really materializes.

00:08:11.560 --> 00:08:14.680
The dead zone-- being in
the dead zone is terrible.

00:08:14.680 --> 00:08:19.750
It's much worse than
half of having 4M.

00:08:19.750 --> 00:08:21.950
You should only
ever be in the zone

00:08:21.950 --> 00:08:26.350
because you lost the last hand,
and you had slightly more chips

00:08:26.350 --> 00:08:27.290
than that guy.

00:08:27.290 --> 00:08:29.120
Because this is a
really bad situation

00:08:29.120 --> 00:08:32.210
to be in, because you
have no fold equity.

00:08:32.210 --> 00:08:33.635
So fold equity is
where your value

00:08:33.635 --> 00:08:35.870
is going to come from,
because you're not

00:08:35.870 --> 00:08:38.669
going to win a lot of
showdowns in a tournament,

00:08:38.669 --> 00:08:41.450
and a lot of your EV
from the tournament

00:08:41.450 --> 00:08:43.320
is going to come
from fold equity.

00:08:43.320 --> 00:08:44.940
So if you have less
than 2M, you're

00:08:44.940 --> 00:08:47.470
going to bet like
pre-flop, and the big blind

00:08:47.470 --> 00:08:50.050
is going to call you without
even looking at his hand, which

00:08:50.050 --> 00:08:53.120
means you have no fold
equity-- like you basically

00:08:53.120 --> 00:08:57.000
have to win a showdown
to get back into it,

00:08:57.000 --> 00:08:59.450
and that's a really
bad situation.

00:08:59.450 --> 00:09:00.950
You want to get out
of the dead zone

00:09:00.950 --> 00:09:02.436
before you have to
pay a big blind,

00:09:02.436 --> 00:09:03.810
and then you're
going to be stuck

00:09:03.810 --> 00:09:06.534
on whatever hand you get there.

00:09:06.534 --> 00:09:08.200
The reason is you
want to be able to get

00:09:08.200 --> 00:09:10.490
your fold equity back.

00:09:10.490 --> 00:09:14.720
If you're under 1M under
any circumstance-- so never,

00:09:14.720 --> 00:09:15.570
never do that.

00:09:15.570 --> 00:09:20.608
Call any two cards
before you get to 1M.

00:09:20.608 --> 00:09:21.720
Why?

00:09:21.720 --> 00:09:25.510
Because if you have 1M,
and then you double up,

00:09:25.510 --> 00:09:29.470
you still are in the dead
zone, like you're basically

00:09:29.470 --> 00:09:34.140
at least one coin flip behind
being in a terrible situation.

00:09:34.140 --> 00:09:40.680
So enter any sort of coin flip
to avoid getting below 1M.

00:09:40.680 --> 00:09:43.560
So a lot of your value is going
to come from this steal period,

00:09:43.560 --> 00:09:46.930
and by steal, I mean
stealing blinds.

00:09:46.930 --> 00:09:50.310
When you have between 2
an 8M, your only decision

00:09:50.310 --> 00:09:51.890
is to go all in or fold.

00:09:51.890 --> 00:09:53.876
Because every time
you steal the blinds,

00:09:53.876 --> 00:09:55.625
and the blinds are
really valuable to you,

00:09:55.625 --> 00:09:58.620
you increase your stack
by like 20% or 30%--

00:09:58.620 --> 00:09:59.700
like that's a big deal.

00:09:59.700 --> 00:10:01.241
That's probably more
than your equity

00:10:01.241 --> 00:10:04.910
from actually going to showdown.

00:10:04.910 --> 00:10:07.592
Unless you literally have
aces, that's probably

00:10:07.592 --> 00:10:09.050
better than any
sort of edge you're

00:10:09.050 --> 00:10:10.820
going to have by getting called.

00:10:10.820 --> 00:10:13.280
So find out who doesn't
protect their blinds

00:10:13.280 --> 00:10:14.440
and steal from them.

00:10:14.440 --> 00:10:17.010
You should've been reading
people early in the tournament

00:10:17.010 --> 00:10:19.160
to find out who's a
pushover-- like they're

00:10:19.160 --> 00:10:21.243
going to be your best
friend, because you're going

00:10:21.243 --> 00:10:22.800
to steal blinds from them.

00:10:22.800 --> 00:10:26.190
On the converse,
pretend like you're

00:10:26.190 --> 00:10:28.650
someone who defends their
blind, because if you get

00:10:28.650 --> 00:10:31.600
walked-- if everyone folds
to your big blind-- you

00:10:31.600 --> 00:10:34.120
just get one
additional M for free.

00:10:34.120 --> 00:10:36.282
But don't actually
do it, because you

00:10:36.282 --> 00:10:37.490
don't want to see a showdown.

00:10:37.490 --> 00:10:42.300
It's a bit of a game of chicken,
and I will actively pretend,

00:10:42.300 --> 00:10:44.290
like I will tell a
person I will actively

00:10:44.290 --> 00:10:46.250
defend my blinds--
because it's not binding,

00:10:46.250 --> 00:10:50.130
and you can do that-- and then
just think about whatever hand

00:10:50.130 --> 00:10:51.420
I have and then fold.

00:10:51.420 --> 00:10:54.480
You should still be calling
at a very tight range,

00:10:54.480 --> 00:10:57.130
but to the extent that
you can convince them not

00:10:57.130 --> 00:11:02.190
to push into you, it's almost as
good as the stealing yourself.

00:11:02.190 --> 00:11:04.440
So avoid showdowns
if at all possible.

00:11:04.440 --> 00:11:07.760
A lot of your hands are going
to be played in this period,

00:11:07.760 --> 00:11:09.850
and the most important
thing you can do

00:11:09.850 --> 00:11:11.860
is find opportunities to steal.

00:11:11.860 --> 00:11:13.170
Don't get into showdowns.

00:11:13.170 --> 00:11:15.962
Don't call unless you think
you're like a 70% favorite.

00:11:15.962 --> 00:11:17.670
And it's related to
the Gap Theory, which

00:11:17.670 --> 00:11:22.760
is by Sklansky, which says to
call a hand, to call it all in,

00:11:22.760 --> 00:11:24.870
you need a much stronger
hand than to push.

00:11:24.870 --> 00:11:25.370
Why?

00:11:25.370 --> 00:11:29.070
Because when you push, when
you bet, you have full equity,

00:11:29.070 --> 00:11:30.367
and when you call, you don't.

00:11:30.367 --> 00:11:31.450
And that's the difference.

00:11:31.450 --> 00:11:36.010
Like you can push with any two
cards in a lot of situations,

00:11:36.010 --> 00:11:38.610
but you need to have
a good hand to call.

00:11:38.610 --> 00:11:41.290
So you're here your goal here is
to keep your head above water.

00:11:41.290 --> 00:11:43.370
Don't fall below
2, and preferably

00:11:43.370 --> 00:11:50.260
get into like the 10M
period, either by doubling up

00:11:50.260 --> 00:11:51.840
or by stealing.

00:11:51.840 --> 00:11:53.930
So if you steal
three hands in a row,

00:11:53.930 --> 00:11:56.164
you have 11M, if you're at 8.

00:11:56.164 --> 00:11:57.080
That's the idea, here.

00:11:57.080 --> 00:11:58.540
And then once you're
at 11M, you're

00:11:58.540 --> 00:12:00.600
in a much more
interesting situation.

00:12:00.600 --> 00:12:02.270
So this steal,
re-steal period is

00:12:02.270 --> 00:12:05.190
when everyone is
trying to steal blinds,

00:12:05.190 --> 00:12:10.060
except you have the equity
such that if you get re-raised,

00:12:10.060 --> 00:12:11.310
you can fold.

00:12:11.310 --> 00:12:13.400
What will happen is
people bet into you,

00:12:13.400 --> 00:12:15.400
and you have to
re-pop them sometimes.

00:12:15.400 --> 00:12:17.620
And then like you have
to identify who's going

00:12:17.620 --> 00:12:20.750
to re-pop you and avoid them.

00:12:20.750 --> 00:12:21.570
Here's the idea.

00:12:21.570 --> 00:12:26.090
If you steal a bet with like
2M, and if he re-raises you

00:12:26.090 --> 00:12:30.350
with 6M, you're like marginally
to call any two cards.

00:12:30.350 --> 00:12:36.330
Then if you have an M of 5,
for example, you fall below.

00:12:36.330 --> 00:12:39.320
If you have a 27%
equity, it's a good call,

00:12:39.320 --> 00:12:42.540
meaning any two cards, because
you're at least 70%-30%

00:12:42.540 --> 00:12:43.980
basically all the time.

00:12:43.980 --> 00:12:46.290
Whereas if you have an
M of 12 and he pushes,

00:12:46.290 --> 00:12:48.259
you have to have a
40% chance of calling,

00:12:48.259 --> 00:12:50.300
like you can actually fold
this, and that's good,

00:12:50.300 --> 00:12:52.500
it gives you more optionality.

00:12:52.500 --> 00:12:56.080
The Value Betting Zone is
where you might actually

00:12:56.080 --> 00:12:58.320
get to see a flop, and
you have to plan for that.

00:12:58.320 --> 00:13:02.150
Your hand, pre-flop, is
actually valuable to the extent

00:13:02.150 --> 00:13:05.744
it hits the flop, not like it
is when you have lower M, where

00:13:05.744 --> 00:13:07.660
your hand's going to be
valuable to the extent

00:13:07.660 --> 00:13:10.000
that you're likely to
be winning pre-flop.

00:13:10.000 --> 00:13:13.900
So this play in 15M to 30M
is very similar to what

00:13:13.900 --> 00:13:15.440
a cash game play is like.

00:13:15.440 --> 00:13:17.481
So you're probably going
to see a bunch of flops,

00:13:17.481 --> 00:13:19.630
and we're going to
plan accordingly.

00:13:19.630 --> 00:13:21.935
You still don't want
to flat call pre-flop.

00:13:21.935 --> 00:13:24.060
When you play a hand, you
want to be the aggressor.

00:13:24.060 --> 00:13:26.150
You want to raise when
you have a good hand.

00:13:26.150 --> 00:13:28.060
You want to fold when
you have a bad hand.

00:13:28.060 --> 00:13:30.018
I'm going to call this
Flop, Turn, River, Play,

00:13:30.018 --> 00:13:33.090
but I really mean it's play
when you have enough ships

00:13:33.090 --> 00:13:34.850
to actually see the flop.

00:13:34.850 --> 00:13:37.410
What you should do is
not play that many hands,

00:13:37.410 --> 00:13:40.780
but when you play hands,
play them aggressively.

00:13:40.780 --> 00:13:42.320
So the standard
bet here is going

00:13:42.320 --> 00:13:45.560
to be 3 big blinds,
plus one big blind

00:13:45.560 --> 00:13:47.290
for every caller before you.

00:13:47.290 --> 00:13:49.910
So if everyone folded
before you, you bet 3.

00:13:49.910 --> 00:13:54.220
If two people call before you,
you bet 5, 5 times a big blind.

00:13:54.220 --> 00:13:55.810
All your bets should be big.

00:13:55.810 --> 00:13:57.970
They should be big, big
portions of the pot.

00:13:57.970 --> 00:13:59.420
2/3 is an OK number.

00:13:59.420 --> 00:14:01.400
If you think the person
is particularly weak,

00:14:01.400 --> 00:14:03.486
you can bet the pot.

00:14:03.486 --> 00:14:05.110
First, we're going
talk about pre-flop.

00:14:05.110 --> 00:14:07.390
When your M is high,
your value comes

00:14:07.390 --> 00:14:10.480
from having a good
hand on the flop.

00:14:10.480 --> 00:14:13.010
I still don't care
about the river.

00:14:13.010 --> 00:14:14.840
If you do this right,
you're probably

00:14:14.840 --> 00:14:16.214
not even going to
reach the river

00:14:16.214 --> 00:14:17.780
by the time someone is all in.

00:14:17.780 --> 00:14:19.770
We're only worried
about the extent

00:14:19.770 --> 00:14:22.590
that your hand is
valuable on the flop.

00:14:22.590 --> 00:14:24.330
Depending on your
position, this is

00:14:24.330 --> 00:14:26.270
what I'm recommending
your opening range is,

00:14:26.270 --> 00:14:32.200
where I'm saying you're opening
by raising to three big blinds.

00:14:32.200 --> 00:14:34.860
So I'm saying that if
you're an early position,

00:14:34.860 --> 00:14:37.840
you should really only do this
with like the top 5% of hands,

00:14:37.840 --> 00:14:42.340
which is 10s or Ace-Queen,
suited, or Ace-King.

00:14:42.340 --> 00:14:45.090
The difference in suitedness
actually matters there.

00:14:45.090 --> 00:14:47.630
If you're first to
act, any other hand,

00:14:47.630 --> 00:14:50.020
you should fold,
which is obviously

00:14:50.020 --> 00:14:52.370
the majority of
hands, because you

00:14:52.370 --> 00:14:53.870
have the least
amount of information

00:14:53.870 --> 00:14:56.210
now-- like you might
be up against someone

00:14:56.210 --> 00:14:58.120
with another strong hand, now.

00:14:58.120 --> 00:15:02.860
And then on like
every card hereafter,

00:15:02.860 --> 00:15:05.180
you're going to be in
the worst position.

00:15:05.180 --> 00:15:11.740
So to win in that position, to
be profitable in that position,

00:15:11.740 --> 00:15:14.140
you need to already
have a really good hand.

00:15:14.140 --> 00:15:16.977
To the extent that you have the
option to just not play a hand,

00:15:16.977 --> 00:15:19.560
it seems to make sense that you
would prefer not playing hands

00:15:19.560 --> 00:15:21.010
when you're in a bad position.

00:15:21.010 --> 00:15:23.456
So that's why that's
a really tight range.

00:15:23.456 --> 00:15:24.830
When you get to
middle position--

00:15:24.830 --> 00:15:27.930
so maybe like four
people to act after you--

00:15:27.930 --> 00:15:31.390
you could widen up a little bit,
which a lot of you might think

00:15:31.390 --> 00:15:34.000
is still very tight
range-- and it is.

00:15:34.000 --> 00:15:37.110
This might be close
to like 15%, where

00:15:37.110 --> 00:15:41.200
you have 8s or Ace-Jack,
and maybe, King-Queen.

00:15:41.200 --> 00:15:43.280
Every other hand, you
should be folding.

00:15:43.280 --> 00:15:45.040
Like that's your
range for raising out

00:15:45.040 --> 00:15:46.967
of any sort of middle position.

00:15:46.967 --> 00:15:48.550
And then it makes
it easy, because you

00:15:48.550 --> 00:15:51.060
can imagine what type
of flop you either hit

00:15:51.060 --> 00:15:53.270
or don't hit, here.

00:15:53.270 --> 00:15:55.380
So if you're facing a
raise, what I recommend

00:15:55.380 --> 00:15:57.590
is you just move
everything up one.

00:15:57.590 --> 00:16:00.880
So if you're facing a raise
in early or middle position,

00:16:00.880 --> 00:16:04.430
then you can play 10s,
Ace-Queen, Ace-King,

00:16:04.430 --> 00:16:08.080
and if you're late, then you
can start playing like Ace-Jack.

00:16:08.080 --> 00:16:10.390
So when it comes to
a flop, by this time,

00:16:10.390 --> 00:16:13.690
you will have raised
pre-flop, and you are now

00:16:13.690 --> 00:16:15.800
the aggressor in the hand.

00:16:15.800 --> 00:16:19.060
So if you were the aggressor,
you should bet 2/3 of the pot.

00:16:19.060 --> 00:16:20.890
That works a lot
more often than you

00:16:20.890 --> 00:16:24.680
would think, even among people
who know what a seed bet is.

00:16:24.680 --> 00:16:26.430
Then the break-even,
based on our formula,

00:16:26.430 --> 00:16:31.230
is going to be 2/3
divided by 5/3, or 40%.

00:16:31.230 --> 00:16:33.690
This is what I'm recommending
in terms of tiers.

00:16:33.690 --> 00:16:36.850
This Tier 1 is a
King-high flush,

00:16:36.850 --> 00:16:39.312
like I'm giving you a
little bit of leeway,

00:16:39.312 --> 00:16:40.770
there, where you
don't need to have

00:16:40.770 --> 00:16:42.470
literally the Ace-high flush.

00:16:42.470 --> 00:16:44.050
But if you have the
King-high flush,

00:16:44.050 --> 00:16:46.310
you can go broke for 30M.

00:16:46.310 --> 00:16:48.740
In addition, the
literal top straight.

00:16:48.740 --> 00:16:52.010
So if the board is 4,
5, 6, and you have 7, 8,

00:16:52.010 --> 00:16:53.790
you can consider that Tier 1.

00:16:53.790 --> 00:16:56.260
And this is only going to be
relevant on an unpaired board.

00:16:56.260 --> 00:16:56.760
Why?

00:16:56.760 --> 00:16:59.452
Like, what does a
paired board mean?

00:16:59.452 --> 00:17:01.102
STUDENT: Somebody's got a flush.

00:17:01.102 --> 00:17:02.310
STUDENT: Somebody [INAUDIBLE]

00:17:02.310 --> 00:17:04.510
PROFESSOR: It means a
full house is possible.

00:17:04.510 --> 00:17:07.420
So if a full house is
possible, it basically

00:17:07.420 --> 00:17:11.619
makes your hand worse than six
more hands that are possible.

00:17:11.619 --> 00:17:13.650
Like a flush or a
straight on a paired

00:17:13.650 --> 00:17:16.150
board would be
considered Tier 2.

00:17:16.150 --> 00:17:18.066
Like if they're betting
aggressively into you,

00:17:18.066 --> 00:17:20.740
and you have an Ace-high
flush, you might be ahead.

00:17:20.740 --> 00:17:23.020
But then if they're
raising you, then I

00:17:23.020 --> 00:17:25.710
would be very worried about you
being up against a full house.

00:17:25.710 --> 00:17:28.099
So I would bet those
much less aggressively,

00:17:28.099 --> 00:17:30.780
and then I would only bet
the Ace-high flush, here.

00:17:30.780 --> 00:17:33.010
Like if you have a King-high
flush on that board,

00:17:33.010 --> 00:17:36.580
there are all sorts of
hand that can beat you.

00:17:36.580 --> 00:17:39.310
In addition, I'm saying
if you have what--

00:17:39.310 --> 00:17:42.130
like the fourth best flush,
here, you can bet it,

00:17:42.130 --> 00:17:45.131
but you can't raise it, really.

00:17:45.131 --> 00:17:48.390
You can't raise it if they raise
into you, because that just

00:17:48.390 --> 00:17:50.400
gives them too
many opportunities

00:17:50.400 --> 00:17:52.570
to have a hand that
would actually beat you.

00:17:52.570 --> 00:17:53.940
So a 10-high flush isn't bad.

00:17:53.940 --> 00:17:55.220
You shouldn't fold it.

00:17:55.220 --> 00:17:57.496
And you're not really
drawing, but you

00:17:57.496 --> 00:17:58.870
should understand
that it doesn't

00:17:58.870 --> 00:18:00.290
have four bets of value.

00:18:00.290 --> 00:18:02.280
It only really has
two bets of value,

00:18:02.280 --> 00:18:04.640
either a bet and their
raise, which you'll call.

00:18:04.640 --> 00:18:09.030
Or if they bet, you can raise
them, and that's generally it.

00:18:09.030 --> 00:18:11.060
And that's obviously
on an unpaired board.

00:18:11.060 --> 00:18:13.330
This also counts a second
straight-- so a straight

00:18:13.330 --> 00:18:15.744
where you don't have
the top two cards,

00:18:15.744 --> 00:18:17.910
but you have two cards that
give you a straight that

00:18:17.910 --> 00:18:19.540
are slightly lower.

00:18:19.540 --> 00:18:22.460
In addition, bottom
set-- I would put here

00:18:22.460 --> 00:18:24.360
in addition to any two pair.

00:18:24.360 --> 00:18:28.700
So two pair is crushed by
a set, and then bottom set

00:18:28.700 --> 00:18:30.590
is also crushed by any set.

00:18:30.590 --> 00:18:32.400
It has the same problem.

00:18:32.400 --> 00:18:34.150
So I'm calling this
Tier 2, and I'm saying

00:18:34.150 --> 00:18:35.750
that's good for like two bets.

00:18:35.750 --> 00:18:38.060
Tier 3 is an Overpair.

00:18:38.060 --> 00:18:41.797
So if you have a pair of Jacks,
and the flop comes 2, 3, 4,

00:18:41.797 --> 00:18:43.880
or something that is a
little bit less correlated,

00:18:43.880 --> 00:18:45.320
like 2, 3, 10.

00:18:45.320 --> 00:18:46.700
Like an Overpair is good.

00:18:46.700 --> 00:18:51.080
It's slightly better
than Top-Pair Top-Kicker,

00:18:51.080 --> 00:18:54.380
because you beat
Top-Pair Top-Kicker.

00:18:54.380 --> 00:18:56.390
And then Top-Pair
Good-Kicker, I'm saying

00:18:56.390 --> 00:19:00.020
is also Tier 3, where you
might be able to take it down.

00:19:00.020 --> 00:19:02.650
Like if you bet, and they
call, you might still

00:19:02.650 --> 00:19:03.890
be ahead if they're drawing.

00:19:03.890 --> 00:19:05.910
But if you bet, and
they raise, you're

00:19:05.910 --> 00:19:07.460
probably behind,
and should treat it

00:19:07.460 --> 00:19:09.450
like you're drawing thereafter.

00:19:09.450 --> 00:19:10.950
Then all these
hands, which you guys

00:19:10.950 --> 00:19:13.490
might have previously thought
were good hands, are not.

00:19:13.490 --> 00:19:15.910
They're just going to be
called drawing hands-- so

00:19:15.910 --> 00:19:18.640
Top-Pair Bad-Kicker,
Mid or Bottom Pair,

00:19:18.640 --> 00:19:20.700
or a Pocket Pair
that's not an Overpair.

00:19:20.700 --> 00:19:23.730
So if you have 5s, when
the board is 2, 6, 7.

00:19:23.730 --> 00:19:25.180
So by the Turn
and the River, all

00:19:25.180 --> 00:19:28.084
your turns, like they're
already going to be big pots.

00:19:28.084 --> 00:19:29.750
You don't need to
worry about extracting

00:19:29.750 --> 00:19:31.580
additional bets on the Turn.

00:19:31.580 --> 00:19:33.340
So in general,
try to figure out,

00:19:33.340 --> 00:19:36.410
based on his action, what are
the possible groups of hands

00:19:36.410 --> 00:19:37.550
that he could have here.

00:19:37.550 --> 00:19:39.020
And in general, like that's it.

00:19:39.020 --> 00:19:41.170
By the time you're
on the Turn, there

00:19:41.170 --> 00:19:43.450
aren't like going to
be that many more bets.

00:19:43.450 --> 00:19:47.011
So usually on the Turn, it's
either like go all in or fold.

00:19:47.011 --> 00:19:49.010
Then hopefully you're
going to be in a situation

00:19:49.010 --> 00:19:51.296
where you played it
right previously, where

00:19:51.296 --> 00:19:53.670
you're going to have a better
idea of whether to do that.

00:19:53.670 --> 00:20:00.840
Bubble play is going
to be around 20% to 10%

00:20:00.840 --> 00:20:01.620
of the field left.

00:20:01.620 --> 00:20:04.020
If we're saying that 10%
of the field makes money,

00:20:04.020 --> 00:20:06.470
we're saying that
around 10% more

00:20:06.470 --> 00:20:10.370
is when like everyone at every
table thinks that oh, like they

00:20:10.370 --> 00:20:13.790
have a pretty good chance of
making money at some point.

00:20:13.790 --> 00:20:15.500
So they change
around a little bit.

00:20:15.500 --> 00:20:17.110
This is when ICM
starts mattering.

00:20:17.110 --> 00:20:20.070
This is when your
decisions to win more chips

00:20:20.070 --> 00:20:23.150
may not necessarily be the
maximal decision with regard

00:20:23.150 --> 00:20:25.250
to winning money.

00:20:25.250 --> 00:20:29.400
And it's when players
who are probably not

00:20:29.400 --> 00:20:31.150
very comfortable with
the amount of stakes

00:20:31.150 --> 00:20:34.620
that they're playing for start
to make really big mistakes.

00:20:34.620 --> 00:20:37.910
Typically, the bad
players around the bubble

00:20:37.910 --> 00:20:39.852
will be a little bit too
tight, like if you're

00:20:39.852 --> 00:20:41.310
playing in the
World Series, you'll

00:20:41.310 --> 00:20:45.820
see that like there
are 250 people left,

00:20:45.820 --> 00:20:50.200
and 240 people get $12,000,
and everyone else gets zero.

00:20:50.200 --> 00:20:52.110
And they're going
to say like OK,

00:20:52.110 --> 00:20:53.960
maybe I don't need to
worry about increasing

00:20:53.960 --> 00:20:56.872
my chances of getting first
place by half a percent

00:20:56.872 --> 00:20:58.330
if it means that
I'm putting myself

00:20:58.330 --> 00:21:00.280
at risk of getting zero now.

00:21:00.280 --> 00:21:03.180
Like they weigh that little
jump in money quite a bit,

00:21:03.180 --> 00:21:07.540
and as a result, they play
a little bit too tight.

00:21:07.540 --> 00:21:10.310
Then the general-- at
least as of a couple years

00:21:10.310 --> 00:21:13.469
ago-- the consensus was that
how you do during this bubble

00:21:13.469 --> 00:21:15.260
period basically
determines how deep you're

00:21:15.260 --> 00:21:16.650
going to go during
the tournament,

00:21:16.650 --> 00:21:18.733
because this is when the
amateurs make the biggest

00:21:18.733 --> 00:21:20.450
mistakes.

00:21:20.450 --> 00:21:23.750
So if you're a player who likes
to exploit those mistakes,

00:21:23.750 --> 00:21:26.990
this is when you're going to--
a good player can just crush it.

00:21:26.990 --> 00:21:30.670
Like he can be
much more than 50%

00:21:30.670 --> 00:21:34.610
to double up during this
period by just identifying

00:21:34.610 --> 00:21:37.920
weaker players who don't want to
get knocked out for any reason

00:21:37.920 --> 00:21:40.080
and just bullying them around.

00:21:40.080 --> 00:21:42.630
So there are two types of
meta-game going on now,

00:21:42.630 --> 00:21:43.510
just so you know.

00:21:43.510 --> 00:21:46.010
This was a conventional belief--
"the average amateur player

00:21:46.010 --> 00:21:47.390
is way too tight."

00:21:47.390 --> 00:21:49.420
But then once everyone
realized that,

00:21:49.420 --> 00:21:53.320
it became the opposite, where
the average amateur player

00:21:53.320 --> 00:21:56.550
was way too aggressive.

00:21:56.550 --> 00:22:00.550
Because once the first
one gets priced in,

00:22:00.550 --> 00:22:03.390
then everyone starts
to be too aggressive,

00:22:03.390 --> 00:22:05.050
because everyone
wants to do what

00:22:05.050 --> 00:22:06.782
good players do on the bubble.

00:22:06.782 --> 00:22:08.990
You could probably identify
your table pretty quickly

00:22:08.990 --> 00:22:10.810
around this time,
whether you see

00:22:10.810 --> 00:22:15.470
weaker players making really
bad calls or really bad folds.

00:22:15.470 --> 00:22:17.450
That will kind of
give you an idea

00:22:17.450 --> 00:22:18.840
of what situation you're in.

00:22:18.840 --> 00:22:20.710
To the extent you can
bully people around,

00:22:20.710 --> 00:22:23.590
but to the extent that other
people are bullying you,

00:22:23.590 --> 00:22:27.120
you don't need to
necessarily push them back.

00:22:27.120 --> 00:22:28.060
Let's talk about ICM.

00:22:28.060 --> 00:22:30.950
The Independent Chip
Model is highlighting

00:22:30.950 --> 00:22:36.320
when the chip value
diverges from your dollar

00:22:36.320 --> 00:22:37.410
value in the tournament.

00:22:37.410 --> 00:22:39.510
So Chip-EV, which
is a C, here-- how

00:22:39.510 --> 00:22:41.930
it's different than
Dollar-EV in tournaments.

00:22:41.930 --> 00:22:44.680
It's related to the
chance of you ending up

00:22:44.680 --> 00:22:46.670
in certain payout spots.

00:22:46.670 --> 00:22:48.660
That's why it's
particularly nonlinear.

00:22:48.660 --> 00:22:51.815
Rather, when the first
place gets everything,

00:22:51.815 --> 00:22:53.940
Chip-EV goes Dollar-EV,
because you eventually just

00:22:53.940 --> 00:22:54.950
have to win all the chips.

00:22:54.950 --> 00:22:56.533
And to the extent
it brings you closer

00:22:56.533 --> 00:22:59.690
to winning all the chips, your
expectation for the tournament

00:22:59.690 --> 00:23:01.220
is a little bit higher.

00:23:01.220 --> 00:23:03.800
But when payouts are steep,
it gets a little bit more

00:23:03.800 --> 00:23:06.350
complicated, because
in some situations,

00:23:06.350 --> 00:23:10.710
surviving a little bit
longer has a material dollar

00:23:10.710 --> 00:23:14.300
difference and getting more
chips in that situation

00:23:14.300 --> 00:23:16.510
may not be as
important as surviving.

00:23:16.510 --> 00:23:17.930
And we'll go through examples.

00:23:17.930 --> 00:23:19.950
The Dollar-EV is not symmetric.

00:23:19.950 --> 00:23:21.120
There's curvature.

00:23:21.120 --> 00:23:27.400
So there's this idea of
convexity, where when you win,

00:23:27.400 --> 00:23:29.790
you always lose in
this kind of situation,

00:23:29.790 --> 00:23:33.260
because when you
win a lot of chips,

00:23:33.260 --> 00:23:35.580
those chips go down
in value over time.

00:23:35.580 --> 00:23:39.100
And when you lose chips, those
chips are really valuable.

00:23:39.100 --> 00:23:41.550
So it makes your
marginal threshold

00:23:41.550 --> 00:23:45.047
for making a risky
decision much higher.

00:23:45.047 --> 00:23:47.380
In addition, when you factor
in actual utility of money,

00:23:47.380 --> 00:23:51.130
it's even worse, where
clearly big upsides

00:23:51.130 --> 00:23:56.250
are less good than protecting
against big downsides.

00:23:56.250 --> 00:23:58.040
That's kind of the idea there.

00:23:58.040 --> 00:24:00.410
Losing hurts more than winning.

00:24:00.410 --> 00:24:02.210
Let's just go through
an example of this,

00:24:02.210 --> 00:24:04.410
and hopefully this
will make it intuitive.

00:24:04.410 --> 00:24:06.330
Say that we're playing
in this situation.

00:24:06.330 --> 00:24:09.230
It was whatever, like a
100-person tournament that

00:24:09.230 --> 00:24:13.160
was a $20 buy-in, and we're
down to the final four people,

00:24:13.160 --> 00:24:15.970
and we have 2,500 chips each,
and these are the payouts,

00:24:15.970 --> 00:24:21.330
where first gets a grand, second
gets $600, and third gets $400.

00:24:21.330 --> 00:24:23.970
If we look at player
Adam, what's his equity?

00:24:23.970 --> 00:24:27.360
Like what's his expected dollar
amount in this tournament,

00:24:27.360 --> 00:24:29.610
assuming that everyone is
approximately equal skill,

00:24:29.610 --> 00:24:32.890
which is the underlying
assumption here?

00:24:32.890 --> 00:24:34.670
STUDENT: [INAUDIBLE]

00:24:34.670 --> 00:24:37.960
PROFESSOR: Yeah, it should be
like just 25% of the whole pot,

00:24:37.960 --> 00:24:40.000
because he has 25% of the chips.

00:24:40.000 --> 00:24:44.120
The whole pot is $2,000, so
I expect that his EV is $500.

00:24:44.120 --> 00:24:44.670
And it is.

00:24:44.670 --> 00:24:46.460
So everyone has a $500 EV.

00:24:46.460 --> 00:24:49.700
But say that we're
in a situation where

00:24:49.700 --> 00:24:52.250
Adam and David go into
a coin flip, and then

00:24:52.250 --> 00:24:55.780
Adam beats David.

00:24:55.780 --> 00:25:00.100
Intuitively, what do you think
Adam's equity should change to?

00:25:00.100 --> 00:25:03.150
I would imagine you would
think that he just gets

00:25:03.150 --> 00:25:06.520
the equity from David,
because those 2,500 chips are

00:25:06.520 --> 00:25:10.710
worth $500 in equity
in the tournament.

00:25:10.710 --> 00:25:14.122
So when this happens, how
does the equity change?

00:25:14.122 --> 00:25:15.830
You could run it
through a poker tracker,

00:25:15.830 --> 00:25:18.910
and I'll go through the kind
of rudimentary math for it.

00:25:18.910 --> 00:25:22.790
You might think that Adam
now has $1,000 in EV,

00:25:22.790 --> 00:25:25.246
and these guys have $500 in EV.

00:25:25.246 --> 00:25:26.620
And like really,
you should think

00:25:26.620 --> 00:25:29.400
those guys shouldn't have
gain from this happening,

00:25:29.400 --> 00:25:30.900
because the pot
size doesn't change,

00:25:30.900 --> 00:25:33.200
and they don't even
change in chip value.

00:25:33.200 --> 00:25:37.810
But in actuality, Adam
only gains $266 of equity

00:25:37.810 --> 00:25:40.450
for doubling up here,
and these guys actually

00:25:40.450 --> 00:25:43.350
gain $100 from that happening.

00:25:43.350 --> 00:25:47.990
Let me show you why that is.

00:25:47.990 --> 00:25:52.030
Let's look at the
deltas of these payouts.

00:25:52.030 --> 00:25:54.680
This is worth $400, and
then this is worth $200,

00:25:54.680 --> 00:25:58.450
and getting to first is
worth an additional $400.

00:25:58.450 --> 00:26:01.350
So we originally have
$500 of value here,

00:26:01.350 --> 00:26:05.980
but now that one person's out,
everyone's guaranteed what?

00:26:05.980 --> 00:26:09.460
Like certainly, when
someone has zero chips,

00:26:09.460 --> 00:26:13.360
what's their equity
in this tournament?

00:26:13.360 --> 00:26:15.630
It should be this, right?
$400-- like they already

00:26:15.630 --> 00:26:18.170
are guaranteed $400 of chips.

00:26:18.170 --> 00:26:21.290
OK, so now that
everyone has $400,

00:26:21.290 --> 00:26:24.830
we're just allocating
the remainder of this.

00:26:24.830 --> 00:26:27.930
We're deciding who gets
this remaining $600.

00:26:27.930 --> 00:26:30.300
So you can see that
these guys have

00:26:30.300 --> 00:26:34.200
a 25% chance of getting
that remaining $600,

00:26:34.200 --> 00:26:37.060
which is why they
have just about $150

00:26:37.060 --> 00:26:40.250
more than that $400 number.

00:26:40.250 --> 00:26:44.140
So that's where it comes.

00:26:44.140 --> 00:26:48.930
The reason this is is because
the winner does not eventually

00:26:48.930 --> 00:26:52.290
get all of the equity, like
the winner doesn't end up

00:26:52.290 --> 00:26:53.260
with $2,000.

00:26:53.260 --> 00:26:55.380
He ends up with
$1,000, which is a less

00:26:55.380 --> 00:26:59.340
valuable than adding up all
the equities from every player.

00:26:59.340 --> 00:27:02.530
Really, he's giving value out
to the second and third place

00:27:02.530 --> 00:27:03.680
player.

00:27:03.680 --> 00:27:06.260
So that first spot is
probably the worst value

00:27:06.260 --> 00:27:11.154
when it comes to your equity per
chip, because if it were winner

00:27:11.154 --> 00:27:12.820
take all, then the
equity would be flat,

00:27:12.820 --> 00:27:13.900
and then who would care?

00:27:13.900 --> 00:27:15.210
But the fact that
he's giving money

00:27:15.210 --> 00:27:17.400
to players who didn't have
all the chips in the end

00:27:17.400 --> 00:27:19.400
caused that first
place to be really bad.

00:27:19.400 --> 00:27:21.956
So since Adam is really
close to first place,

00:27:21.956 --> 00:27:23.080
he's getting hurt the most.

00:27:23.080 --> 00:27:25.880
You would think like fair value
would be $1,000, but he's not.

00:27:25.880 --> 00:27:27.110
He's well short of it.

00:27:27.110 --> 00:27:29.630
Whereas these guys are
just gaining from it,

00:27:29.630 --> 00:27:32.050
because they're most likely
place is second and third,

00:27:32.050 --> 00:27:34.210
and they're capturing
some of that value.

00:27:34.210 --> 00:27:37.830
So a satellite is a tournament
that a certain x number

00:27:37.830 --> 00:27:41.190
of people win a ticket
to a bigger event.

00:27:41.190 --> 00:27:43.540
The World Series of Poker
runs a lot of satellites,

00:27:43.540 --> 00:27:45.206
and I think these
tournaments are great,

00:27:45.206 --> 00:27:47.620
because this is a really
difficult situation for people

00:27:47.620 --> 00:27:49.560
to figure out, and it
causes a lot of people

00:27:49.560 --> 00:27:51.580
to make a huge,
huge, huge mistakes.

00:27:51.580 --> 00:27:53.300
Say this is like
100-person tournament,

00:27:53.300 --> 00:27:57.280
where they all buy in for
like $90 or something,

00:27:57.280 --> 00:28:00.326
such that first through
ninth gets $10,000,

00:28:00.326 --> 00:28:03.780
and tenth place gets zero,
and there are 10 people left.

00:28:03.780 --> 00:28:07.290
So their equity is just
their percentage chance

00:28:07.290 --> 00:28:09.130
of winning this flat payout.

00:28:09.130 --> 00:28:10.630
Since they all have
the same amount,

00:28:10.630 --> 00:28:13.082
they're splitting that
$90,000 pool even, right?

00:28:13.082 --> 00:28:15.290
So they all have approximately
the same equity, here,

00:28:15.290 --> 00:28:17.190
because no one
gets hurt by having

00:28:17.190 --> 00:28:20.210
more chips by the curvature.

00:28:20.210 --> 00:28:23.630
Say they were in a situation--
blinds are $200-$400,

00:28:23.630 --> 00:28:27.020
and Irene, here, who's
in the small blind,

00:28:27.020 --> 00:28:30.477
raises $2,5000 to
Jessica, who has Kings.

00:28:30.477 --> 00:28:32.310
This is one person down
until we make money.

00:28:32.310 --> 00:28:33.640
Jessica has Kings, here.

00:28:33.640 --> 00:28:35.820
So intuitively, what
should we do, here?

00:28:38.430 --> 00:28:40.790
Yeah, like calling
seems not that bad.

00:28:40.790 --> 00:28:43.660
What do I give you, here?

00:28:43.660 --> 00:28:44.972
Like what is Jessica's range?

00:28:44.972 --> 00:28:46.680
Jessica is pushing
anything, here, right,

00:28:46.680 --> 00:28:48.764
because Jessica
has an M of like 3.

00:28:48.764 --> 00:28:50.930
And she's in the small
blind, so she's appropriately

00:28:50.930 --> 00:28:54.027
pushing any two cards,
because as we showed earlier,

00:28:54.027 --> 00:28:55.610
you're definitely,
definitely supposed

00:28:55.610 --> 00:28:59.450
to do that at least when
it comes to Chip-EV.

00:28:59.450 --> 00:29:02.310
So Jessica is 82%
with the Kings,

00:29:02.310 --> 00:29:05.960
and if we look at chip
equity, she is crushing it.

00:29:05.960 --> 00:29:10.080
She is 82% to win
$5,000, doubling up.

00:29:10.080 --> 00:29:12.210
She's 18% to lose.

00:29:12.210 --> 00:29:16.540
So her equity, her expected
value after this is 4,100,

00:29:16.540 --> 00:29:18.940
meaning her delta is 1,600.

00:29:18.940 --> 00:29:22.280
She is expected to win
1,600 chips for this.

00:29:22.280 --> 00:29:25.410
But what about when
we look at Dollar-EV?

00:29:25.410 --> 00:29:28.160
We see for Dollar-EV,
she has an 82% chance

00:29:28.160 --> 00:29:32.720
of winning $10,000 and an
18% chance of getting zero.

00:29:32.720 --> 00:29:34.760
So her expected
value after this call

00:29:34.760 --> 00:29:36.720
is actually $8,200,
which is worse

00:29:36.720 --> 00:29:38.780
than her equity of
this tournament.

00:29:38.780 --> 00:29:41.790
She actually loses money
if she makes us call.

00:29:41.790 --> 00:29:44.320
In fact, if you put the other
person on any two cards,

00:29:44.320 --> 00:29:46.080
you should even fold aces.

00:29:46.080 --> 00:29:48.280
Like you should only pretend
to look at your cards

00:29:48.280 --> 00:29:49.950
before you fold this hand.

00:29:49.950 --> 00:29:53.510
And this is what it is for
every person in this situation,

00:29:53.510 --> 00:29:55.490
unless you're more
than a 90% favorite

00:29:55.490 --> 00:29:59.250
to win, which you're not,
because unless you can

00:29:59.250 --> 00:30:01.850
particularly put them on
a hand, which you have

00:30:01.850 --> 00:30:04.830
a Pocket-Pair that
dominates their lower,

00:30:04.830 --> 00:30:08.530
uncorrelated cards,
you should fold.

00:30:08.530 --> 00:30:09.950
How should this pay out?

00:30:09.950 --> 00:30:13.090
It doesn't play out like this.

00:30:13.090 --> 00:30:16.530
In Vegas, there's
virtually 100% chance

00:30:16.530 --> 00:30:20.880
Jessica calls here, to
Irene and Jessica's dismay,

00:30:20.880 --> 00:30:24.080
but to the benefit of
everyone else at the table.

00:30:24.080 --> 00:30:25.280
But what should happen?

00:30:25.280 --> 00:30:27.390
If you're playing
in this situation,

00:30:27.390 --> 00:30:30.350
and everyone's
playing rationally,

00:30:30.350 --> 00:30:33.917
how do you think this will
play out at $200-$400 blinds.

00:30:33.917 --> 00:30:36.720
STUDENT: So Irene would
just push it, [INAUDIBLE]

00:30:36.720 --> 00:30:40.130
PROFESSOR: Yeah, so if
you're in the big blind,

00:30:40.130 --> 00:30:42.500
and you're pushed into,
what's your calling range?

00:30:46.080 --> 00:30:47.550
Zero, it's 0%.

00:30:47.550 --> 00:30:49.620
There are no cards
that you should call.

00:30:49.620 --> 00:30:52.930
And then every single person
at that table has that 0%

00:30:52.930 --> 00:30:54.140
calling range.

00:30:54.140 --> 00:30:56.780
However, knowing
that your fold equity

00:30:56.780 --> 00:31:00.050
is virtually 100%,
every single person,

00:31:00.050 --> 00:31:02.660
at the first opportunity,
should just go all in.

00:31:02.660 --> 00:31:05.135
Under the gun, every
single hand will open push,

00:31:05.135 --> 00:31:06.730
and everyone else will fold.

00:31:06.730 --> 00:31:09.280
And every single hand, that
will happen until the blinds

00:31:09.280 --> 00:31:12.330
eventually put someone
all in against their will.

00:31:12.330 --> 00:31:16.250
So this is a situation where
ICM comes into huge play,

00:31:16.250 --> 00:31:20.060
like people really screw
this up, especially live.

00:31:20.060 --> 00:31:22.370
That's why satellites are
one of my favorite types

00:31:22.370 --> 00:31:25.730
of tournaments to play-- is
because like every idiot will

00:31:25.730 --> 00:31:28.370
tell you that calling
with Kings here is clearly

00:31:28.370 --> 00:31:32.390
the right move, when even
folding Aces is like way, way,

00:31:32.390 --> 00:31:34.970
way better than
calling with anything.

00:31:34.970 --> 00:31:37.740
You should definitely do your
best to identify opportunities

00:31:37.740 --> 00:31:40.260
like this, because to
the extent that you

00:31:40.260 --> 00:31:42.060
find a tournament
like this that ends up

00:31:42.060 --> 00:31:45.250
in these types of
situations, it's

00:31:45.250 --> 00:31:48.440
really hard for live
players to get this right.

00:31:48.440 --> 00:31:49.509
Let's jump to late game.

00:31:49.509 --> 00:31:51.550
Late game-- I don't have
that much to talk about.

00:31:51.550 --> 00:31:55.660
Late game, you just have
to keep steal, re-stealing.

00:31:55.660 --> 00:31:58.270
You're going to have
an M less than 10

00:31:58.270 --> 00:32:01.740
probably, unless you
literally just doubled up.

00:32:01.740 --> 00:32:02.280
Yeah?

00:32:02.280 --> 00:32:03.860
STUDENT: What is re-stealing?

00:32:03.860 --> 00:32:07.130
PROFESSOR: Stealing is when
you try to steal the blinds,

00:32:07.130 --> 00:32:08.420
because they're so valuable.

00:32:08.420 --> 00:32:11.560
Re-stealing is when
someone you identify

00:32:11.560 --> 00:32:13.820
as stealing your blinds,
and you re-pop them

00:32:13.820 --> 00:32:15.850
some percentage of the time.

00:32:15.850 --> 00:32:21.060
It's like protecting your
blind, or in some cases, when

00:32:21.060 --> 00:32:22.932
you see someone
steal before you,

00:32:22.932 --> 00:32:24.390
and you're not
necessarily a blind,

00:32:24.390 --> 00:32:26.400
just raising against them.

00:32:26.400 --> 00:32:28.500
This is all going to
be pre-flop stuff.

00:32:28.500 --> 00:32:31.487
Just be conscious of
ICM, like maybe it's

00:32:31.487 --> 00:32:33.570
not a good time to take a
coin flip for your life.

00:32:33.570 --> 00:32:35.830
Like don't call
with Ace-King, here,

00:32:35.830 --> 00:32:40.130
because you have like a 2%
edge for [? a certain ?] range.

00:32:40.130 --> 00:32:41.620
OK, so that's it for late game.

00:32:41.620 --> 00:32:43.880
I really don't find it
to be hugely different.

00:32:43.880 --> 00:32:48.410
Late game just plays like
a 10-handed sit-and-go.

00:32:48.410 --> 00:32:52.650
The biggest difference is that
it's as if all the players are

00:32:52.650 --> 00:32:55.930
playing way above their head,
because say you're bankrolled

00:32:55.930 --> 00:32:58.280
for a $100 tournament
with 1,000 people,

00:32:58.280 --> 00:32:59.730
and you get down to last 10.

00:32:59.730 --> 00:33:01.370
It's now is if
you're all playing

00:33:01.370 --> 00:33:03.090
in a $10,000 tournament.

00:33:03.090 --> 00:33:05.690
So to some extent
that changes it up,

00:33:05.690 --> 00:33:08.340
but it should
generally be treated

00:33:08.340 --> 00:33:12.405
as if it is a sit-and-go that
just pays out a little bit

00:33:12.405 --> 00:33:12.905
flatter.

00:33:15.910 --> 00:33:17.970
That's it for tournament play.

00:33:17.970 --> 00:33:19.960
Any questions on that?

00:33:19.960 --> 00:33:23.330
Otherwise, we can move on
to bankroll management.

00:33:23.330 --> 00:33:25.360
This is really the
stuff that's going to be

00:33:25.360 --> 00:33:28.056
about poker as an investment.

00:33:28.056 --> 00:33:28.930
So what's a bankroll?

00:33:28.930 --> 00:33:31.430
Bankroll has a couple
different definitions.

00:33:31.430 --> 00:33:33.490
The bankroll is like
the amount of money

00:33:33.490 --> 00:33:37.450
you can devote to playing
poker, making poker investments.

00:33:37.450 --> 00:33:40.160
However, like I think
it should be defined

00:33:40.160 --> 00:33:43.180
as the amount of money
that you would have to lose

00:33:43.180 --> 00:33:47.060
to never play poker again.

00:33:47.060 --> 00:33:49.680
Not because you're necessarily
ashamed of how much you lost,

00:33:49.680 --> 00:33:52.270
but because like you
lost so much money

00:33:52.270 --> 00:33:56.030
that the stakes that you
would be required to play,

00:33:56.030 --> 00:33:58.390
given your remaining
amount of money

00:33:58.390 --> 00:34:01.950
would be so low that you would
never make that amount of money

00:34:01.950 --> 00:34:02.720
back.

00:34:02.720 --> 00:34:07.090
It's like if you can conceivably
put like $20,000 into poker,

00:34:07.090 --> 00:34:10.659
and you lose like
$19,900, you're

00:34:10.659 --> 00:34:13.620
not going to grind out like
one-cent, two-cent games

00:34:13.620 --> 00:34:15.360
until you have
that $20,000 back.

00:34:15.360 --> 00:34:17.020
You would just
stop playing poker.

00:34:17.020 --> 00:34:20.520
You would just be like OK,
you would get a normal job

00:34:20.520 --> 00:34:23.030
and rebuild your bankroll
through something else.

00:34:23.030 --> 00:34:24.530
So that's how I'm
defining bankroll.

00:34:24.530 --> 00:34:27.159
It's the amount of
money where poker

00:34:27.159 --> 00:34:31.574
is no longer a realistic option
to be making money for you.

00:34:31.574 --> 00:34:33.449
This only matters if
you're a winning player,

00:34:33.449 --> 00:34:38.030
because if you're
losing player, I mean,

00:34:38.030 --> 00:34:39.415
you should play not at all.

00:34:39.415 --> 00:34:40.790
You should figure
out how to win,

00:34:40.790 --> 00:34:42.659
or more accurately, you
should move down to stakes

00:34:42.659 --> 00:34:43.920
that you're actually a winner.

00:34:43.920 --> 00:34:46.820
That only matters
if you're winning.

00:34:46.820 --> 00:34:48.409
The formula for
your right bankroll

00:34:48.409 --> 00:34:50.690
doesn't work if you're
in negative expectation,

00:34:50.690 --> 00:34:54.000
because you're eventually going
to go broke no matter what.

00:34:54.000 --> 00:34:56.800
Some examples of what this
is-- for like a new player,

00:34:56.800 --> 00:35:01.780
you're just going to think of
what's a lot of money to you.

00:35:01.780 --> 00:35:04.670
If you're a new player to
poker, and you lose $10,000,

00:35:04.670 --> 00:35:06.420
you're probably never
playing poker again.

00:35:10.900 --> 00:35:12.940
You're a huge underdog
to ever make that up,

00:35:12.940 --> 00:35:14.939
so that's probably the
end of your poker career,

00:35:14.939 --> 00:35:15.880
if you're fairly new.

00:35:15.880 --> 00:35:18.512
If you're an amateur,
realistically I

00:35:18.512 --> 00:35:20.970
would consider your bankroll
your liquid investments-- cash

00:35:20.970 --> 00:35:23.440
that, if you lose-- like
you shouldn't mortgage

00:35:23.440 --> 00:35:28.300
your house-- but like
a portion of the money

00:35:28.300 --> 00:35:30.660
you have in the bank
that if you lose,

00:35:30.660 --> 00:35:34.440
you wouldn't be homeless
seems kind of realistic, here.

00:35:34.440 --> 00:35:37.240
The amount of money
that you're not

00:35:37.240 --> 00:35:42.530
investing for the long
term, but if you lost it,

00:35:42.530 --> 00:35:45.130
and as a result, would
have to stop playing poker,

00:35:45.130 --> 00:35:46.820
you would find that
to be reasonable.

00:35:46.820 --> 00:35:50.550
The threshold here is like--
the bankroll management rules

00:35:50.550 --> 00:35:53.350
are such that you're at a
2% chance of ever losing

00:35:53.350 --> 00:35:54.840
your bankroll.

00:35:54.840 --> 00:35:57.900
So that's a kind of ballpark
for someone who's an amateur.

00:35:57.900 --> 00:36:00.740
And for pros, it's
all of that money,

00:36:00.740 --> 00:36:02.920
plus as much money as
they could possibly

00:36:02.920 --> 00:36:04.840
borrow before they get cut off.

00:36:04.840 --> 00:36:07.437
Look, if you're
a Phil Hellmuth--

00:36:07.437 --> 00:36:09.520
he's probably worth like
$5 million or something--

00:36:09.520 --> 00:36:12.360
and he loses $5 million,
he's not quitting poker.

00:36:12.360 --> 00:36:14.760
He's going to raise
another million dollars

00:36:14.760 --> 00:36:15.876
and start playing again.

00:36:15.876 --> 00:36:18.500
So his bankroll is probably like
$8 million before every single

00:36:18.500 --> 00:36:21.430
person goes OK, I'm not
loaning you any money,

00:36:21.430 --> 00:36:24.700
and then he has to get a
job at like McDonald's.

00:36:24.700 --> 00:36:26.305
So they're in a
different situation,

00:36:26.305 --> 00:36:31.070
and especially when we're
talking about like staking.

00:36:31.070 --> 00:36:34.870
You can have no money and have
a bankroll of a couple hundred

00:36:34.870 --> 00:36:36.690
grand, if you have a
track record that's

00:36:36.690 --> 00:36:40.210
good enough that people
will just loan you money.

00:36:40.210 --> 00:36:45.352
Let's go through some rules of
thumb for bankroll management.

00:36:45.352 --> 00:36:46.060
This is the idea.

00:36:46.060 --> 00:36:47.059
This was the motivation.

00:36:47.059 --> 00:36:48.550
Someone did the math on this.

00:36:48.550 --> 00:36:49.800
I remember checking it before.

00:36:49.800 --> 00:36:50.820
It seemed about right.

00:36:50.820 --> 00:36:54.660
So we're assuming a
2% chance to go broke

00:36:54.660 --> 00:36:58.840
based on your average
buy-in, and we're assuming

00:36:58.840 --> 00:37:00.080
you don't change stakes.

00:37:02.734 --> 00:37:04.650
People kind of forget
what this assumption is,

00:37:04.650 --> 00:37:08.060
so if you change stakes,
you're never going to go broke.

00:37:08.060 --> 00:37:08.560
Why?

00:37:08.560 --> 00:37:10.650
Because when you
lose half your money,

00:37:10.650 --> 00:37:13.350
you're going to drop
down to half the stakes.

00:37:13.350 --> 00:37:15.430
So like, you
asymptote near zero,

00:37:15.430 --> 00:37:17.784
but you're never going to
actually lose all that money,

00:37:17.784 --> 00:37:20.450
you're just going to lose a lot,
until eventually your hourly is

00:37:20.450 --> 00:37:21.390
not worth it.

00:37:21.390 --> 00:37:23.400
And when you go up in
stakes, it's the opposite.

00:37:23.400 --> 00:37:29.710
Like your 2%-- -- say one the
rolls is like $100 buy-ins.

00:37:29.710 --> 00:37:32.540
So if you have $100 buy-ins
for the main event of the World

00:37:32.540 --> 00:37:34.500
Series-- like you have
$1 million dollars,

00:37:34.500 --> 00:37:38.660
and then as a result of
winning that, you start playing

00:37:38.660 --> 00:37:42.420
$50,000 buy-in tournaments,
you're not that still 2%

00:37:42.420 --> 00:37:46.320
from the beginning to go
broke, you are now a new 2%.

00:37:46.320 --> 00:37:51.820
So it causes a multiplying
factor if, when you win,

00:37:51.820 --> 00:37:53.350
you take on more risk.

00:37:53.350 --> 00:37:55.750
And the same way, if you
lose and take on less risk,

00:37:55.750 --> 00:37:57.250
it has a dampening factor.

00:37:57.250 --> 00:38:01.410
So this 2% is only if
you don't change stakes,

00:38:01.410 --> 00:38:03.640
and you really should be
changing stakes, especially

00:38:03.640 --> 00:38:08.210
because there's a high
correlation between actually

00:38:08.210 --> 00:38:10.470
losing and not being a good
player at whatever stakes

00:38:10.470 --> 00:38:12.030
you're playing,
and it'll give you

00:38:12.030 --> 00:38:16.674
a chance to identify what's the
right place for you to play.

00:38:16.674 --> 00:38:17.840
That's what the numbers are.

00:38:17.840 --> 00:38:22.810
I'd recommend-- I happen to
play over bankroll, typically,

00:38:22.810 --> 00:38:27.320
just because I find 2% a little
bit too-- like I wouldn't

00:38:27.320 --> 00:38:31.440
be happy with 2% that I lost all
my money, but some people are.

00:38:31.440 --> 00:38:35.600
I usually double these.

00:38:35.600 --> 00:38:37.950
If you're kind of nervous
when you play poker,

00:38:37.950 --> 00:38:39.950
it's either because you're
new, and you've never

00:38:39.950 --> 00:38:42.240
done it before, in which
case, you'll get over it.

00:38:42.240 --> 00:38:44.100
But if you actually
get hurt by losses,

00:38:44.100 --> 00:38:46.460
to the point where it's
always on your mind,

00:38:46.460 --> 00:38:48.630
it's probably because
you're not really bankrolled

00:38:48.630 --> 00:38:49.290
appropriately.

00:38:49.290 --> 00:38:51.950
It's because if you lost
five of those buy-ins,

00:38:51.950 --> 00:38:53.870
you would stop
playing poker, which

00:38:53.870 --> 00:38:56.680
meant that you
didn't really have

00:38:56.680 --> 00:38:58.160
20 buy-ins worth of bankroll.

00:38:58.160 --> 00:39:00.850
You only had 5.

00:39:00.850 --> 00:39:03.400
So the theory here, it's based
on-- do you have question?

00:39:03.400 --> 00:39:05.200
STUDENT: Yeah, when
you play a cash game,

00:39:05.200 --> 00:39:08.430
and say you double or triple
your money, should you just

00:39:08.430 --> 00:39:12.022
walk away, or should you just,
because you're playing well,

00:39:12.022 --> 00:39:14.994
you have a bigger stack,
should you just keep playing?

00:39:14.994 --> 00:39:16.250
What's the [INAUDIBLE]

00:39:16.250 --> 00:39:19.730
PROFESSOR: So if they're
really bad players--

00:39:19.730 --> 00:39:21.905
This is based on average
buy-in, so basically,

00:39:21.905 --> 00:39:23.060
if you double your
stack, and then

00:39:23.060 --> 00:39:24.851
a lot of players at
the table also doubled,

00:39:24.851 --> 00:39:27.630
you're playing a game
that's twice as big.

00:39:27.630 --> 00:39:31.380
So it's not like that
makes it your normal game,

00:39:31.380 --> 00:39:33.350
especially if they're bad.

00:39:33.350 --> 00:39:37.600
These numbers go way down if
you're ROI goes up materially,

00:39:37.600 --> 00:39:38.680
or your win rate.

00:39:38.680 --> 00:39:42.500
So if you're winning a game
by a lot more than average,

00:39:42.500 --> 00:39:43.750
you can go with fewer buy-ins.

00:39:43.750 --> 00:39:46.041
So if you're in a situation
where the other players are

00:39:46.041 --> 00:39:47.419
bad, I would just stay there.

00:39:47.419 --> 00:39:49.210
If you're in a situation
that they're good,

00:39:49.210 --> 00:39:51.920
I would, as soon as I double
up, I would change tables.

00:39:51.920 --> 00:39:53.420
STUDENT: So it
depends on the table.

00:39:53.420 --> 00:39:56.890
PROFESSOR: You can't take
money off a table in a casino,

00:39:56.890 --> 00:39:59.780
but in general, I wouldn't
be too happy about having now

00:39:59.780 --> 00:40:04.230
like more at risk than my
normal risk metrics dictate.

00:40:07.050 --> 00:40:09.820
The theory, here, is based
on the Kelly Criterion.

00:40:09.820 --> 00:40:13.340
Kelly was a big guy
in information theory

00:40:13.340 --> 00:40:15.300
a couple of decades ago.

00:40:15.300 --> 00:40:18.120
His idea is that, say you're
utility curve is logarithmic,

00:40:18.120 --> 00:40:19.760
you maximize your
utility by betting

00:40:19.760 --> 00:40:21.090
with regard to your edge.

00:40:21.090 --> 00:40:23.200
For example, if
you're in a one to one

00:40:23.200 --> 00:40:24.680
bet, where you're
60% to win, you

00:40:24.680 --> 00:40:26.570
should bet 20% of your bankroll.

00:40:26.570 --> 00:40:27.847
And he proves it out.

00:40:27.847 --> 00:40:28.930
You can look up his paper.

00:40:28.930 --> 00:40:30.636
It's pretty famous.

00:40:30.636 --> 00:40:33.010
He's been getting a lot of
flak, because this is probably

00:40:33.010 --> 00:40:36.170
not a great assumption,
the logarithmic utility.

00:40:36.170 --> 00:40:38.800
So this is used in
blackjack, in particular,

00:40:38.800 --> 00:40:41.300
where the crux of
counting cards is

00:40:41.300 --> 00:40:43.800
that when the count
is in your favor,

00:40:43.800 --> 00:40:47.200
you bet more, such
that eventually

00:40:47.200 --> 00:40:49.410
your wins outpace your losses.

00:40:49.410 --> 00:40:50.910
And then investment
management, it's

00:40:50.910 --> 00:40:52.285
the same idea,
where you're going

00:40:52.285 --> 00:40:54.180
to put more money
to what you consider

00:40:54.180 --> 00:40:56.756
higher alpha-generating ideas.

00:40:56.756 --> 00:40:58.380
The World Series of
Poker is an example

00:40:58.380 --> 00:41:01.970
I find to be really ridiculous,
because it's like the biggest

00:41:01.970 --> 00:41:03.680
tournament in the
world-- at least,

00:41:03.680 --> 00:41:06.970
live-- 6,000 entries, $10,000,
like one of the biggest

00:41:06.970 --> 00:41:07.990
entries in the world.

00:41:07.990 --> 00:41:09.990
So the right bankroll is
like $1 million dollars

00:41:09.990 --> 00:41:11.110
for this tournament.

00:41:11.110 --> 00:41:15.240
And given the risk of playing
a $10,000, 6,000 person

00:41:15.240 --> 00:41:17.977
tournament, like you're
not getting good returns

00:41:17.977 --> 00:41:19.227
on your $1 million investment.

00:41:23.180 --> 00:41:24.840
I always found this
to be a paradox.

00:41:24.840 --> 00:41:27.660
For someone who actually plays
poker for money, no matter

00:41:27.660 --> 00:41:29.160
how easy The World
Series is, you're

00:41:29.160 --> 00:41:31.451
not getting good risk-adjusted
returns, especially when

00:41:31.451 --> 00:41:32.570
you count overhead.

00:41:32.570 --> 00:41:35.285
However, The World Series
of Poker, the average player

00:41:35.285 --> 00:41:36.930
is really bad, still.

00:41:36.930 --> 00:41:39.140
And you have good
upside in that I

00:41:39.140 --> 00:41:42.720
think there are a lot of good
outside benefits from making

00:41:42.720 --> 00:41:45.660
big live scores.

00:41:45.660 --> 00:41:47.590
Like Chris Moneymaker
has made way more money

00:41:47.590 --> 00:41:50.630
as a result of winning
the World Series

00:41:50.630 --> 00:41:52.380
and getting these
sponsorships than he has

00:41:52.380 --> 00:41:53.927
from actually winning, I'm sure.

00:41:53.927 --> 00:41:56.260
And he won, I think, like
probably more than $1 million.

00:41:56.260 --> 00:41:58.070
It wasn't huge then.

00:41:58.070 --> 00:42:01.720
But there are a lot of
pretty big upsides there.

00:42:01.720 --> 00:42:04.300
However, you can do-- for
the summer tournament,

00:42:04.300 --> 00:42:06.050
I think it's very
common for pros

00:42:06.050 --> 00:42:09.030
to do some risk
management techniques.

00:42:09.030 --> 00:42:11.590
One is staking.

00:42:11.590 --> 00:42:14.110
If I have an investor that
has more than $1 million,

00:42:14.110 --> 00:42:18.300
he can allocate this to
his portfolio and stake

00:42:18.300 --> 00:42:20.530
like 10 people and
have a little bit more

00:42:20.530 --> 00:42:22.300
of a diversified investment.

00:42:22.300 --> 00:42:25.450
So the common deal for
this, just so you know,

00:42:25.450 --> 00:42:28.180
is them getting
50% of the upside.

00:42:28.180 --> 00:42:31.530
So they get the first $10,000
and 50% of the remainder.

00:42:31.530 --> 00:42:34.132
And to the extent that it's
a long term staking deal,

00:42:34.132 --> 00:42:35.840
you don't get money
until they get money.

00:42:35.840 --> 00:42:38.910
So if we play two of these,
and I lose the first one,

00:42:38.910 --> 00:42:43.490
they get $20,000 of the second
one, plus 50% of the remainder.

00:42:43.490 --> 00:42:45.410
That's a pretty
common staking deal.

00:42:45.410 --> 00:42:46.530
It generally works out.

00:42:46.530 --> 00:42:48.110
And that was, to
the extent that you

00:42:48.110 --> 00:42:49.610
don't need to worry
about friction--

00:42:49.610 --> 00:42:51.950
like trustworthiness--
it seems to work out

00:42:51.950 --> 00:42:54.260
for everyone involved where
there is a lot of overhead,

00:42:54.260 --> 00:42:56.865
but the player is grinding
out like a high dollar amount,

00:42:56.865 --> 00:42:58.865
and the investor is getting
good diversification

00:42:58.865 --> 00:43:01.279
to his portfolio.

00:43:01.279 --> 00:43:03.820
And it's an equity investment--
like you don't owe this money

00:43:03.820 --> 00:43:04.780
back if you lose it.

00:43:04.780 --> 00:43:08.697
They're just partnering
with you in the tournament.

00:43:08.697 --> 00:43:10.280
Something that is
more common recently

00:43:10.280 --> 00:43:12.640
is selling shares and
trading percentages.

00:43:12.640 --> 00:43:14.820
So this lets them create
some sort of syndicate.

00:43:14.820 --> 00:43:16.450
I think it's all
like handshakes,

00:43:16.450 --> 00:43:20.840
but it makes it so that
they're pretty diversified.

00:43:20.840 --> 00:43:23.390
In addition, with regard
to outside investors,

00:43:23.390 --> 00:43:28.780
players will just sell shares of
themselves to other investors.

00:43:28.780 --> 00:43:32.990
They'll cut their next 10
tournaments into 10 pieces,

00:43:32.990 --> 00:43:35.490
and they'll try to raise
like $15,000 for them,

00:43:35.490 --> 00:43:38.300
where they sell it
off in $1,500 pieces.

00:43:38.300 --> 00:43:39.910
So it lets a relatively
small investor

00:43:39.910 --> 00:43:43.320
diversify across a lot
of different players.

00:43:43.320 --> 00:43:45.610
This make a lot more sense
from a finance standpoint

00:43:45.610 --> 00:43:50.110
in terms of you still
get this dollar amount,

00:43:50.110 --> 00:43:52.910
but you're reducing the
variance by quite a bit.

00:43:52.910 --> 00:43:55.030
So counter-party risk is
important, for staking,

00:43:55.030 --> 00:43:55.530
certainly.

00:43:55.530 --> 00:43:58.640
Like if you stake someone, and
they don't play the tournament,

00:43:58.640 --> 00:44:01.010
or you need to worry
about them not paying you

00:44:01.010 --> 00:44:02.840
back if they win,
that's a huge friction,

00:44:02.840 --> 00:44:05.740
in addition to if you play in
like underground card rooms

00:44:05.740 --> 00:44:08.340
or play online, you may
not your money back,

00:44:08.340 --> 00:44:10.300
and you should
keep that in mind.

00:44:10.300 --> 00:44:13.610
So if you think the club
that you pay in is 1 in 10

00:44:13.610 --> 00:44:16.570
to get raided during
any night that you play,

00:44:16.570 --> 00:44:20.489
you should probably reduce your
expected gross winnings by 10%

00:44:20.489 --> 00:44:21.280
and factor that in.

00:44:21.280 --> 00:44:26.390
The current poker environment
is-- online poker started out,

00:44:26.390 --> 00:44:30.430
basically, back in 2003, where
The World Series of Poker

00:44:30.430 --> 00:44:34.050
started investing a lot of
money to build up the publicity.

00:44:34.050 --> 00:44:36.571
They invested in hold
card cams, and then

00:44:36.571 --> 00:44:37.570
they really built it up.

00:44:37.570 --> 00:44:39.736
And then Chris Moneymaker--
arguably the worst poker

00:44:39.736 --> 00:44:41.610
player, yet the
most charismatic--

00:44:41.610 --> 00:44:42.610
won the tournament.

00:44:42.610 --> 00:44:44.030
And he was a great ambassador.

00:44:44.030 --> 00:44:45.529
And then the following
year, someone

00:44:45.529 --> 00:44:48.800
else who played a
satellite to get in also

00:44:48.800 --> 00:44:51.780
won-- Brehmer, who was a pretty
good guy-- so poker blew up,

00:44:51.780 --> 00:44:53.327
and then online poker blew up.

00:44:53.327 --> 00:44:54.910
And it was great,
because people could

00:44:54.910 --> 00:44:57.780
just, like your average Joe
college student could just load

00:44:57.780 --> 00:45:02.010
like $50 on Poker Stars
and lose it to me.

00:45:02.010 --> 00:45:03.860
So that was really good
for like five years,

00:45:03.860 --> 00:45:06.720
and then eventually the
natural course of the game

00:45:06.720 --> 00:45:07.930
is players get better.

00:45:07.930 --> 00:45:11.620
Then eventually Black Friday
happened a couple years back,

00:45:11.620 --> 00:45:13.910
where Full Tilt, one
of the poker sites,

00:45:13.910 --> 00:45:17.380
turned out to be a Ponzi
scheme, and they actually

00:45:17.380 --> 00:45:21.030
took everyone's money, so
anyone who had money on that

00:45:21.030 --> 00:45:23.530
got it confiscated, and they
possibly got a percentage back,

00:45:23.530 --> 00:45:26.116
although I'm not sure
exactly how that worked.

00:45:26.116 --> 00:45:28.240
Then all of the poker sites
got banned from the US.

00:45:28.240 --> 00:45:31.450
So online is kind of
gone, and like that was

00:45:31.450 --> 00:45:32.760
a bit of a nail in the coffin.

00:45:32.760 --> 00:45:34.610
Then poker has
contracted quite a bit.

00:45:34.610 --> 00:45:37.610
The World Series of Poker used
to have-- you could sit down

00:45:37.610 --> 00:45:40.930
at a table, and there would
be like six amateurs, one pro,

00:45:40.930 --> 00:45:43.390
and two guys reading
like Poker For Dummies.

00:45:43.390 --> 00:45:44.700
Now it's like 50-50.

00:45:44.700 --> 00:45:47.140
Like for a $10,000 tournament,
it's still pretty soft.

00:45:47.140 --> 00:45:48.970
But like I played
a couple years ago,

00:45:48.970 --> 00:45:52.220
and I played in a cash game,
where 10 people at my table

00:45:52.220 --> 00:45:54.840
were saying that they were
professional poker players.

00:45:54.840 --> 00:45:58.030
Probably a couple were lying,
but it's much different

00:45:58.030 --> 00:45:59.444
than it was before.

00:45:59.444 --> 00:46:01.110
However, if you use
good game selection,

00:46:01.110 --> 00:46:03.410
if you can find games that
are soft-- like the side

00:46:03.410 --> 00:46:05.720
games of the World Series
are soft, and like low stakes

00:46:05.720 --> 00:46:07.840
games are always
soft-- I find it

00:46:07.840 --> 00:46:10.930
to be something that
could add a lot of value

00:46:10.930 --> 00:46:14.030
to an otherwise good,
separate career,

00:46:14.030 --> 00:46:17.200
like it diversifies
your own investments,

00:46:17.200 --> 00:46:21.640
especially if you handle
the bankroll stuff properly.

00:46:21.640 --> 00:46:22.337
And that's it.

00:46:22.337 --> 00:46:23.420
So thanks a lot, everyone.

00:46:23.420 --> 00:46:24.849
[APPLAUSE]