Can You Do Everything Correctly in Video Poker and Still Go Broke?

The “system” I promote for winning at video poker has two main steps to it:

1. Only play when you have the advantage over the house. This includes the base return on the game, the slot club, promotions, mailers, drawing entries, and possibly other things.
2. Play for small enough stakes that your bankroll isn’t overly endangered. (Some simplify this to only play for what you can afford to lose.)

Do this, I tell gamblers, and in the long run you’ll very likely prosper.

Calling this an actual “system,” or suggesting that I invented it, is ludicrous. It is, however, the methodology I suggest is the best way to win at the game.

In last week’s column, I wrote that it’s conceivable that even when I think I have the advantage over the house, I’m actually the underdog. I don’t believe that happens very often, perhaps never, but it’s conceivable.

If you’re playing a game for stakes where your bankroll is going to be safe 99.99% of the time, one in 10,000 people who does this is going to end up broke. That’s what 99.99% means. It’s like when certain polls said Donald Trump had a 25% chance of winning the presidency at a certain point a few years ago, the polls weren’t wrong. A 25% chance means that there’s a 1-in-4 chance for it to happen, and in that election, the 1-in-4 “longshot” came in.

In truth, calculating exact bankroll requirements is essentially impossible. The two best programs for this, Video Poker for Winners and Dunbar’s Risk Analyzer for Video Poker, will tell you that if you play a particular game with a particular slot club forever and ever, your required bankroll for a 1% (or 0.1% or 0.001% or whatever) is such-and-such.

The thing is, available video poker games change over time. Slot clubs change over time. Many of us play a variety of different games at a variety of different casinos — and next year will have a new set of games to play as things evolve. Calculating exact bankroll calculations in this environment is essentially impossible — partly because we don’t know what games and slot club conditions will be available next year.

To work with this, many competent players (including me) take this approach: “Play with an advantage, with what seems like an appropriate bankroll, and hope for the best.” We all know that “hope for the best” isn’t a strategy, but in the face of such an insolvable mathematical problem, sometimes that’s the best we have. Under-betting your bankroll is safer than over-betting.

There are those who talk about Kelly betting, which is a system of bet-sizing that will grow your bankroll at the maximum rate while essentially reducing to zero your chances of going broke. I’m not going to go there because bet-sizing in video poker is often very limited (as in such-and-such a pay schedule is only available for quarters and this other pay schedule is only available for $5 Triple Play, Five Play, and Ten Play) and your actual edge has some guesswork in there since you’re never positive what your mailer is going to be next month. You can make an educated guess — but sometimes you get surprised.

So, occasionally, somebody can do everything right and still go broke. It’s fairly rare, but it does happen. And if it does happen, they can correctly call it bad luck. A 1-in-10,000 (or whatever it was) case of bad luck.

Those people who do go broke playing video poker, however, usually aren’t victims of this kind of very unusual bad luck. It’s far more likely that some or all of their play was on games where they didn’t have the advantage. Or when they had an advantage if they played every hand perfectly, but they made too many playing errors.  Or sometimes they played while under the influence of one thing or another and they didn’t actually have the advantage during those times. It’s far more likely that even if they did have an edge, the edge was too small relative to their bankroll and the stakes they were playing.

Let’s say we have heard that “Joe,” a guy we thought was a pretty good player, actually went broke while playing video poker. What we will almost certainly never know for sure is:

1. Exactly what games was he playing?
2. With exactly what slot club?
3. With exactly what other promotions going on at the time?
4. Under what state of sobriety, alertness, and psychological readiness?
5. What was his starting bankroll?
6. Did he make any major withdrawals from his gambling bankroll for anything else (perhaps a car, house, vacation, medical bills, helping out relatives, a mistress, drugs, etc.)?
7. How close to perfectly did he play?

Not knowing this kind of information (in addition to the fact that this particular Joe is hypothetical, so the information is even more unknowable), my personal conclusion would be that it is far more likely Joe violated one of the two numbered conditions at the start of this article than it would be he just got unlucky.

Knowing about a few such people doesn’t shake me from my belief that the “system” works. Call it a Bayesian probability approach, if you will.

I know others who take the approach that “If it could happen to Joe, it could happen to anybody. There’s no guarantee. It’s all random luck.” To those who believe that, I say I believe the math is on my side, but I understand that you are inconvincible.

Some people are more comfortable investing in the stock market rather than gambling. That’s a good bet. A considerable portion of my bankroll is in the stock market. But there’s risk there too. Ten years ago, the market took a 50% dump. For people who owned stocks on margin, it could have been a 100% or 200% dump or even bigger. If you’ve held on since then, the market has recovered and then some. But many people didn’t have the nerve or the wherewithal to hang on.

This column is not about politics, but with the chances of a trade war and/or nuclear war are arguably higher than they were two years ago.  Who knows what the prognosis of the stock market is over the next few years? With video poker, you can know before you make each bet.

(One anecdote isn’t proof of anything, but this one is close to home for me. My father, born in 1915, was 92 years old when the 2007 stock market crash happened. He had about $60 million invested in the market in 2007 — a considerable lifetime achievement — much of it on margin — because he was obsessed with making $100 million before he died. Everyone told him that what he was doing wasn’t prudent at all — but he wouldn’t listen. He felt that he had built up all that money, we hadn’t, and that proved he was smarter than us. He ended up losing everything — and the shock of going from a multi-millionaire to penniless and depending on his children for support was devasting. He ended up losing his mind and dying a few years later.)

Owning your own home has traditionally been a good investment. Many parts of the country, including Las Vegas, had a huge real estate recession 15 or so years ago. Some home owners are still upside down. Long term, if they can hold on, the prices will probably come back. But there will always be people who couldn’t hold on and lost everything with this “good” investment.

Any other investment vehicle you can name has had some ups and downs. I’m somebody who believes the ups and downs of video poker are lower than those of other investments — IF you follow the two rules set out at the beginning. Most people who fail at video poker broke one or both of those rules.  

I’ve been told that I’m responsible when somebody goes broke playing video poker because I encouraged them to play. To that I say I’ve been issuing the same caveats for years. I strongly recommend that if you don’t have the edge, don’t play. If you choose to play anyway, I don’t see how that is my responsibility at all.

On my father’s bookshelf when he died were numerous publications on making money in the stock market. The authors of those publications didn’t suggest he invest the way he did at all. Was it their fault that he went broke? Not in my opinion.