I’ve been playing poker for almost 20 years now and I’ve come to a hard won realization: making significant money playing live low stakes poker is nearly impossible. That’s because no matter how good you are, it is almost impossible, at the low stakes, to overcome the rake and tips.
Consider my regular game: $2/$3/$5 No Limit at Casino M8TRIX in San Jose. M8TRIX charges a $6 rake every time there is a flop plus $1 goes to a jackpot for players. In a live game, you can probably get in about 25 hands per hour. If you multiply 25 * $7 = $175. Divided that by the 8 or 9 players at a table and the rake works out to about $20 per player per hour.
But that’s not your only hurdle. Most players tip when they win a pot. Most tip $1 for small pots and more for larger ones. Assuming you win 3 pots per hour, you’re probably tipping anywhere from $5 to $10 an hour.
In addition, most players tip the floorman in order to be given preference for being seated when the line is long. This can range anywhere from $5 to $20 depending on how long the line is.
For me personally, I estimate that all of this works out to about $30-$35 an hour in rake and tips (I’m a generous tipper). Therefore, in an average three hour session, I have to earn $100 just to break even. Since I buy in for $600, that is quite a hurdle to overcome.
The same logic applies to small stakes tournaments. For your average $400 buy in tournament, the fees are generally about $80. Therefore, in order just to break even, you have to have a 25% return on the part of your money that goes into the prize pool. Again, this is a significant hurdle to overcome.
I have played poker seriously for nearly 20 years. I have a significant poker library that I have studied over the years. I have played in some of the biggest poker tournaments in the world such as the WSOP Main Event, the WPT World Championship, the WPT Shooting Star and many WSOP Circuit and other prestigious events. I have played with some of the best players in the world like Darren Elias, Chino Rheem, Lonnie Harwood, James Carroll and many others. And still I am a barely above breakeven player.
Some will say that I’m just not that good but that’s not true. The truth is that the rake, fees and tips involved in low stakes poker are almost impossible to overcome no matter how good you are. It’s a harsh truth about live low stakes poker that most serious players are loathe to admit. Unless you keep precise records of your results, like I do, you likely believe you are making far more money playing than you really are.
There is one exception to the impossible economics of low stakes poker and that is online. There are no dealers and floormen to tip online and the rake is much smaller. In addition, you get in a much higher volume of hands per hour which allows your edge to show out. You can even multi-table. That’s how a micro stakes crusher like Nathan Williams can do so well using a tight aggressive, positionally aware strategy against weaker players over and over and over again. The one time I made significant money playing poker was on Full Tilt in the year or so leading up to Black Friday when the Justice Department shut it down.
The other way to make real money playing poker is to be a high stakes crusher like Daniel Negreanu. The rake for $10,000 buy ins is significantly less percentage-wise. The flip side is that these big events bring out the best players in the world.
Where does that leave the rest of us? I think there are two ways to look at live low stakes poker. One is as entertainment. Once you realize that you’re not going to make serious money playing these games, you can just choose to enjoy playing a fun and interesting game.
The other way to look at it is training. While you won’t make much money playing these games, you can keep your game sharp and improving for the few opportunities you’ll get at the bigger money events. For instance, I’m currently getting into form for the $5 Million Guarantee WPT Prime and the $40 Million Guarantee WPT Championship at the Wynn in Las Vegas in early December. While I won’t make much money from my low stakes games, I use them to stay on point to give myself a shot to do some damage in big events like that.