Recently on vpFREE, a man (I think) with the pseudonym “nightoftheiguana” (NOTI) posted “I think Bob Dancer has admitted to going bankrupt at least once. Perhaps he can say something on whether or not it is something he would risk doing again.” (NOTI regularly posts knowledgeable information regarding the Kelly criterion and various alternative strategies on how to best play video poker based on your goals.) When I wrote out the draft to my response, I saw it covered more than 1000 words, which made it more appropriate to run here than on vpFREE itself. It will likely get posted there eventually anyway.
In my Million Dollar Video Poker autobiography, I mentioned that I went broke in the late 1970s while playing backgammon. When that occurred, I needed to, horrors, go out and get a real job. I was born in 1947 so I was in my early 30s at the time. Once I got over the psychological hurdle of working for a living, I did pretty well.
The reason for going bankrupt had little to do with the Kelly criterion or anything like that. It had to do with game selection. I enjoyed playing backgammon with opponents who were stronger players than I was (including Munchkin, occasionally). Alcohol and marijuana were among my habits at the time, and I didn’t always limit my gambling to when I was completely at my best. It also had to do with lumping my gambling bankroll and my “regular expenses” bankroll into one un-separated pile of money.
When I returned to playing backgammon a few years later, (in the evenings and weekends after working a full time job), I was very careful to get into games with players I considered to be weaker than I was. Or in chouettes (which is what we called games involving three or more players) where at least some of the players were weaker than me. I gave up alcohol and drugs (and smoking) completely. In this environment, my gambling bankroll grew — in addition to having regular infusions from a weekly paycheck.
In video poker, game selection has been key. It’s now in my DNA not to play when the house has the edge. Through a combination of luck and skill, along with my writing and speaking abilities on which I’ve capitalized, I’ve been able to amass an enviable bankroll — which is still sizeable even after giving 50% of it to Shirley in a divorce I didn’t see coming and certainly fought very hard to keep from happening.
Perhaps the biggest form of luck was starting my video poker career at a time when casino managers were regularly offering big promotions while not understanding casino math. Casinos have wised up more now and the video poker opportunities available 10 or 20 years ago simply aren’t there in abundance today. You see some good ones from time to time, but not nearly as many as before.
Fortunately for me, I’ve been growing my bankroll in an era when the economy has, for the most part, been expanding. Most of my bankroll is invested. When the stock market lost half its value almost a decade ago, it didn’t affect me much because I didn’t need the money at that time. I left my money invested and the economy completely bounced back — and then some. That was very lucky for me —unlucky for many others. How soon is the next economic downswing coming and how big will it be? I have no idea.
I’m also 68 years of age now. Going broke today would be MUCH worse than it was going broke 35 years ago. Today my best earning years are behind me. Going back to college to improve my job prospects now is not as good of an option today as it was then. I could possibly get some casino consulting jobs, possibly find work as a writer (trust me, that doesn’t pay very well — at least not with my skill set), but nobody is going to hire me to work 40-60 hours a week at a high salary. I could, I suppose, drive a bus to and from casinos and airports. I very much doubt that it will ever come to that. I think/hope I have enough “for the duration,” but nobody can know that for sure.
How much attention do I pay to the Kelly criterion when I play video poker today? NONE AT ALL. The numbers NOTI publishes concerning playing 25 cent FPDW forever are of no interest to me as a gambler (although they are of interest to me as a video poker writer and teacher). I am likely never going to play that game because 25 cent single-line games are of no interest to me whatsoever.
The big advantage NOTI has in publishing those numbers is that the 0.76% edge and the hand frequencies are well known and easily pluggable into various formulae. But that doesn’t make them relevant to most of us. Most of these formulae assume that we have a fixed bankroll — with no extraneous inputs (perhaps income from a job, alimony, Social Security, a pension, etc.) or outputs (rent, our car needs a new transmission, expensive hobbies, etc.) Studying these models has some value, but my life doesn’t fit the parameters of those models.
I play in a world of murkier numbers. I play in a world where you get indeterminate amounts from drawings, wheel spins, and mailers; sometimes extra comps you can talk a host into (How much are free meals worth anyway? If you think the M buffet is equal in value with the Palace Station buffet, you and I judge things differently.) How much is standing in a three-minute VIP buffet line worth compared with standing one hour in a regular line for the same meal? Kelly numbers ignore such factors, but I assure you that the shorter line has significant value to me. (Significant value — but I’m not willing to pay real cash money for it. I would not spend $15 to avoid an hour line. I just wouldn’t eat there.) Getting elegant, two-hour meals comped is less important to me than it is to many others. “Eating and talking” give many people great pleasure, so that would be worth a great deal to them. I prefer to use my time doing other things.
I let Bonnie spend the $xxx a month we earn as “Resort Credit” at the Silverton gift shop. She likes it. My life works better when she’s happy. But how much is that worth? We spend it on Wednesdays rather than any other day of the week because it’s worth 25% more when we do. We may not know what it’s really worth, but we do know that 25% more is better. Getting comped in a room at the Palms is better than getting comped in a room at the Gold Coast across the street, but how do you put a number on it? “Free” cruises — which aren’t — add to the quality of my life, but not my bottom line.
I still use the rule that I don’t play games unless I have the edge, but how much edge I have is frequently a guess — an educated guess, to be sure, but still a guess. It’s very difficult to put these educated guesses into the various formulae. Since your educated guess may be better or worse than mine, the formulae you use would have to be different than the ones I use.
Is potentially going broke something to think about for most gamblers? Absolutely! It’s much better to err on the side of caution. Poker players (for whom figuring out EV is much tougher) regularly go broke. Many get an edge from their superior ability to study and understand their opponents, so the math behind every game is different depending on whether the poker player (and others at the table) is having good days or bad days at doing this.
When good video poker players go broke, it’s usually because they are using old skills for the new environment. The games and edges we found in the year 2000 are simply not available in 2015. I’ve studied quite hard to become proficient at Quick Quads, Ultimate X, 9/5 Jacks or Better, Double Bonus Deuces Wild, and a variety of other games that weren’t on my radar 15 years ago. A number of players either refuse to study or aren’t good at studying and making the necessary adjustments. THOSE are the video poker players who are more likely to go broke. Or, rather than go broke, they sometimes simply leave the game because they recognize their edge has shrunk. And when somebody is forced to leave the game, he often has bad words to say about other people or things which caused him not be competitive any more.
I’m not aware of video poker players going broke because they were expertly playing too big a game — and got eaten alive by the variance. The ones I’ve heard of going broke are the ones who are no longer playing with an advantage.