Sunday, June 12, 2005

Under the gun

I. Online Poker: Boom or Bust?

Party Poker is projecting profits of $350 million this year? Wow. But I can believe it. The online poker gaming business is a cash cow -- Party Poker now has 40,000 or more players online at any given time (and reportedly over 1 million registered players) generating $1 million in rakes per day. *Plus* they can invest the $200 million or more in cash deposited by those 1 million players for a 3-5% return that can cover overhead. They're just printing money at this point. Now they're about to go public. A good buy? Depends on whether you think the poker boom will last.

Seems like everyone's playing internet poker these days, which has lead to talk about whether the poker explosion is a "bubble". As a bear (by which I mean I'm a naysayer, not a hairy burly dude in Bob Hoskins mold), count me in as to predicting a big slowdown in poker in the next five years. The reasons why:

(1) At some point the fish will get tired of losing their money and the pond will dry up. As in real estate, if everyone you know is making a ton, who are the chumps giving their money away? With anything generating such easy money, the losers will catch up to the winners.

(2) Having so many smart guys waste away so much time on something entirely unproductive can't be good for the world economy. I expect some kind of government intervention at some point.

(3) Computer robot players might be just a year away. Once bots become widespread, I imagine fish and recreational players will be very leery of playing online, except in private tourneys.

Last week, my cousins and I were ruminating about designing 'bots playing Sklansky-textbook poker that can probably earn $100,000 or more a year 4-tabling the $25 cash game 24 hours a day. Of course, having no programmers in the family, it was just a fantasy. Well, bots are coming. Supposedly, poker, with the x-factors of incomplete information and psychology, make it difficult for programmers to design skilled bots. It's easy to design a bot to just play the cards. You can beat the microlimits just playing tight textbook. But in anything above the micro-limits, you gotta play the player along with your cards. How a bot deal with the nuances of poker psychology? Well, some computer programs can already give you a big edge by analyzing opponents' play. With programs like Poker Tracker, a human player can already compile info on players you play against, categorize their tendencies (including how many times they go into a pot, how much they raise on each street, and what hands they've shown down with), then adjust play accordingly.

According to Poker Tracker, my play is loose-aggressive-aggressive. I've got a "Taz" icon. I take down a lot of pots by being aggressive, and I play a lot of suited connectors/one-offs. A bot sophisticated enough to analyze this data and change its style against me will play back at me more, and possibly call down more of my position bets. Sure, if you know you're playing a bot, you can try to outwit it. But I don't think it'd be impossible to design a program to beat the online cash game up to the $200 buy-in level. Play differently in pots against specific players using Poker Tracker type technology; make mathematically sound calls on draws, all-ins, etc. Plus, the bot can still take advantage of dumb mistakes by mediocre players at that level. It'll be a long time before a bot can beat the WSOP, or even the top high stakes SNG games, but a proliferation of bots at the lower stakes will drive out the recreational player.

I think in the end, a few poker sites will remain highly profitable (the business model is an MBA's dream -- all cash/no risk), but we're hitting just about the peak of the craze.

II. The Value of Suited Connectors

Eric, my hyper-aggressive poker savant cousin, was shocked to hear that I'm now loose-aggressive. My style-change happened some time in May, when I became a decent poker player who netted the monthly income of an administrative assistant, at three times the hourly rate. Prior to May, I was a marginal player who played mechanical tight-aggressive poker, textbook style. I raise with premium hands, play the recommended starting hands, leverage position, and look for odds on draws. I look to minimize mistakes and exploit unsound play. I won some, lost some, and generally pocketed what amounts to loose change. A winning player, yes. But not much of one.

So how did that change? After two or three consecutive days of playing in May, I became more confident -- and more willing to experiment. Following Mike's strategy, I realized that the NL cash game is a game of implied odds. The game's not about picking up small pots, though that's important (I'll pick up any pots that can be won with a bet). It's about busting people by taking their stack. Textbook poker will only get you so far; you end up playing too predictably to be given any action. I began to emulate my cousin Eric and try to see a lot of flops. Many of the best players in the world have a loose aggressive style, but to be a consistent winner, you've got to read the flop and other players better than your opponents. The risk in limping in with trash like 64s or calling a raise with marginal hands like QJo (which you shouldn't do) isn't in putting in the money while you're behind; it's the risk of getting trapped by hitting a marginal hand you can't lay down. You limp-call a raise with QJo in middle position. The flop comes Q 8 5 rainbow. You bet, the pre-flop raiser raises 2x. Well, out of position, you've got to lay it down. Maybe he's making a play with AK or TT. But if you're wrong, it'll cost you.

Medium suited connectors are a safer bet. According to Poker Tracker, my two most profitable hands, after my rockets got choked out by an idiot hitting his flush on the river after the guy called his entire stack on the turn with 1.5-to-1 odds yesterday (turning AA into just a marginally profitable hand for me), are 76s and 53s. I've taken down huge $300+ pots with them and won a few other decent pots. Calling raises with suited connectors -- provided you can lay down your hand if you hit just a pair -- is the best play in NL cash games. My absolute favorite hand is when I flop an opened-ended straight and flush draw and have an overpair bet into me. I've won more money in those situations than in any other.

Doyle Brunson reaffirms my attachment to medium suited connectors in his seminal Super/System, which I finally read yesterday thanks to Eric. I wish I'd read it earlier, since he's got great tips that would've helped with my recurring mistakes (not playing fast enough with two pairs, overplaying AA/KK/QQ/JJ, and being a net loser with AK). The key is to be able to get away from a hand. Plus, the trouble with my new flop-heavy aggressive-style is that when I'm off my game, it can be costly. You end up going too far with one pair and misreading people for overcards when they've got JJ/TT. I still make too many mistakes per hour to feel comfortable moving up in stakes. But I do well enough two-tabling the $100 ($.5/$1) cash game, where there's plenty of fish to give you action. And there are plenty of mediocre mechanical players to piss off. If I could get a nickel for every time some by-the-book loser bitches me out for calling a raise with 54s... (Those morons who talk about the poor "expected value" of suited connectors need to actually play poker instead of running computer simulations (obviously, if you take 76s to a showdown out of 1,000 hands, you'll lose way more than if you showdown KTu 1,000 times. But that's why you fold 76s when you don't hit it, and play to extract your opponent's entire stack when you do.))

III. Poker Nerd Threads for Amusement and Fun

This poker nerd thread is really funny. It's the Jack Madison of poker nerd discussions.

And these two poker nerd threads, by internet sit n go monster Gigabet (who reportedly makes six-digits a month six-tabling $200+$15 sngs) is very informative for anyone looking into how a top player thinks at the highest levels in high stakes SNG play.