What percent of onliner poker players are profitable?

[Nepa]

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(...and a very high percentage of long term active posters here are winners)


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Do you any evidence to support this statement?

[DarthIgnurnt]

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How can we assume that a large % of this 10% resides at 2+2?

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We can't. Hey, I love these boards as much as the next guy, but it never ceases to amaze me how people tend to overestimate the impact 2+2 has.

2+2 has 43,000 registered members (less than half of them active most likely), and about 450 of them are online right now.

I've seen estimates of about 2,000,000 online poker players each week (total number = somewhere north of that).

At best, 2+2ers represent less than 1% of online poker players.

Do they skew "better"? Yes. But my guess is that significantly less than half of 2+2ers are profitable long term.

I'd be most interested to see how many dedicated players are profitable long term (filtering out the large number of people who make one deposit, lose it, and then never come back). Of people who play 500 hours or more a year.

[Sniper]

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I gather that many marginally winning recreational players (and I am one) may be winners on paper but actual losers once tax liabilities and other "full costing adjustments" (such as gas to and from the casino, etc.) are included.

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First, while taxes reduce the winnings of a winning player, they can not turn a winning player into a loser! (unless they aren't paying their taxes)

Second, this discussion is about "online" poker players, thus B&M related issues don't apply!

[scrapperdog]

If I never see a another "when will poker die out" or "how many people win" thread it will be too soon. That being said....

I do have theories on this number. I think it is higher than the reported 8%. If an idiot like myself can be a winning player I dont see why only 8% of the people qualify.

The reason the number is so low is to make the winners feel special and the losers feel ok in that almost no body wins. If the number was higher then the winners would not feel elite and the losers would feel worse. Keeping the number low is a win win situation for the egos of both winning and losing players.

[MisterKing]

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I gather that many marginally winning recreational players (and I am one) may be winners on paper but actual losers once tax liabilities and other "full costing adjustments" (such as gas to and from the casino, etc.) are included.

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First, while taxes reduce the winnings of a winning player, they can not turn a winning player into a loser! (unless they aren't paying their taxes)

Second, this discussion is about "online" poker players, thus B&M related issues don't apply!

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Incorrect on both points, though I do see what you're saying.

First, taxes CAN take a winning recreational player into the red, and it has everything to do with the tax law. Read Ed Miller's November 2+2 Net Mag story and the thread in the Magazine Forum to get a sense of what I mean.

Recreational players (e.g. everyone who isn't a full time pro) pay taxes on the total of their WINNING SESSIONS, and may, on their separate deductions (if not claiming the standard deduction) claim losses up to the amount of their winnings. Recreational players may NOT simply aggregate their winnings & losses and pay on the resulting net amount.

So lets see how this works for a player who is a marginal winner -- say 0.5BB/100 over 100K hands. If the player experiences high variance, e.g. big winning sessions and big losing sessions, then he may end up having his winning sessions equal to about 180 to 200% of his actual net win. If I win $150 one day, lose $200 the next, lose $150 the next day, and win $250 the next day, I have net winnings of $50, but a sum winning session total of $400... or 8x the amount of my actual win. As the year progresses, your taxable poker income will gradually increase over your net winnings until the point where it COULD foreseeably cause you to have tax liabilities in excess of your net winnings, thus turning a winning player into a loser.

Second, I know exactly zero players who play exclusively online. I'm sure there are many out there, but I don't know them. Online players like to go to B&M joints, and when they do they incur poker expenses that should count. Thus my mention of those things.

[Rudbaeck]

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I do have theories on this number. I think it is higher than the reported 8%. If an idiot like myself can be a winning player I dont see why only 8% of the people qualify.

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Because I know several geniuses who are serious losers at poker. They go totally berserk when the 'idiots' draw out and take tilt to an entirely new level.

You need a weird mix of skills to be a winning poker player over any length of time. You must be decently sharp, willing to seek out and internalize criticism, understand the motivation of people without becoming soft, have an ass of lead, controlled yet aggressive... The list just goes on, and some of these traits virtually never occur together naturally. (As Schoonmacher points out, almost no one is both tightly controlled and aggressive naturally, it's a well rehearsed behaviour.) The only naturally occuring group with characteristics like poker players that I can think of is highly functioning sociopaths.

The reason the number is so low, while it might seem higher, is that losers don't stick around while winners do. According to Roy Cooke if there are 2 million poker players online today, then something like a third of those will still be around in six months time. The rest will have quit.

When I play onlin there are generally 2-3 other people at the table who I am fairly sure are long term winners. This doesn't mean that 40% of all online players are winners, as the remaining six seats are over the course of the night shared by maybe as much as 30 different losers over 8 hours.

[paperboyNC]

A) Your friends lie about their winnings. I know a guy who won $4k getting first in a MTT last week and is still down for the month. People tend to focus on the times they won and write off the rest as bad beats.

B) Personally, I know that my friends that play online are all long-term losers. Only one has shown a profit and that is only because I subsidized her with deposit bonuses. She has lost a lot without bonus.

C) Most players do not take advantage of bonuses. They often lose all their money before they get the bonus and they don't bother taking advantage of bonuses in the future. When I first started out (as a losing player), I never once earned a deposit bonus.

D) Statistically, if the average player makes -3BB/100 with a std dev of -1BB/100, then only 0.2% of players would be long-term winners. Of course the players are not normally distributed and the std dev is higher, but if you think about the fact that I've paid $2000 in rake this month and think about how many losing players it takes to just cover that..

E) Most 2+2'ers are long-term losers. Even if they win at their main limit, they take shots at higher-limits or go on tilt and lose it all. Most people lack the discipline necessary to make money gambling.

[Stefan Prodan]

About the tax law thing, if you're taking the standard deduction you can't deduct your losses at all? So I guess if you're a serious player though, you'd probably end up taking your losses as your deduction instead of the standard in no time.

[Zetack]

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I gather that many marginally winning recreational players (and I am one) may be winners on paper but actual losers once tax liabilities and other "full costing adjustments" (such as gas to and from the casino, etc.) are included.

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First, while taxes reduce the winnings of a winning player, they can not turn a winning player into a loser! (unless they aren't paying their taxes)

Second, this discussion is about "online" poker players, thus B&M related issues don't apply!

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Incorrect on both points, though I do see what you're saying.

First, taxes CAN take a winning recreational player into the red, and it has everything to do with the tax law. Read Ed Miller's November 2+2 Net Mag story and the thread in the Magazine Forum to get a sense of what I mean.

Recreational players (e.g. everyone who isn't a full time pro) pay taxes on the total of their WINNING SESSIONS, and may, on their separate deductions (if not claiming the standard deduction) claim losses up to the amount of their winnings. Recreational players may NOT simply aggregate their winnings & losses and pay on the resulting net amount.

So lets see how this works for a player who is a marginal winner -- say 0.5BB/100 over 100K hands. If the player experiences high variance, e.g. big winning sessions and big losing sessions, then he may end up having his winning sessions equal to about 180 to 200% of his actual net win. If I win $150 one day, lose $200 the next, lose $150 the next day, and win $250 the next day, I have net winnings of $50, but a sum winning session total of $400... or 8x the amount of my actual win. As the year progresses, your taxable poker income will gradually increase over your net winnings until the point where it COULD foreseeably cause you to have tax liabilities in excess of your net winnings, thus turning a winning player into a loser.

Second, I know exactly zero players who play exclusively online. I'm sure there are many out there, but I don't know them. Online players like to go to B&M joints, and when they do they incur poker expenses that should count. Thus my mention of those things.

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I don't think your answer is right, although it may be that I'm just not understanding it. As long as you itemize your deductions, your taxable poker income should never increase over your total net winnings.

The point at which taxes can you drive you into a net poker loser is based on the standard deduction. If you itemize already, taxes won't drive you into the red poker wise. If you take the standard deduction, however, then you lose all benefit of your poker losses and are taxed on your gross poker winnings.

Ok, say you are married. You have no house, medical expenses, kids, or anything else that would cause you to itemize. Your standard deduction is 9720 dollars.

Now say you net 1000 dollars playing poker. It breaks out this way, you win 10 grand in total winning sessions and lose 9 grand in your losing sessions. Well you have to claim 10k in poker winnings, but you aren't going to claim any of your poker loses because its less than the standard deduction.

So if you are in the 25% marginal tax rate (say you made 70k at your regular job and your spouse made nothing). You pay 2500 dollars in tax on your one thousand dollars of poker winnings. Fun eh?

Ok, even if you lose enough to get to itemize you still lose out by losing your standard deduction. Say you made that same 1000 grand playing poker but this year you did it by winning sessions that totaled 25k and losing sessions that totalled 24k. Great, now you itemize your 24 k in losses and only pay taxes on your net win of 1K. So 250 dollars in taxes. Yea! You're still in the black for poker! But wait a minute, because you would have taken the $9720 standard deduction but for your poker play, you now have 9720 more in taxable income than you would have had. At a marginal tax rate of 25%, that's $2430 in extra taxes. Congratulations, winning that 1000 bucks caused you to lose cost around 1700 dollars in real money.

Now if you do itemize, I don't belive that you can be turned into a net loser by taxes, (please correct me if I'm wrong) but you could come out worse financially by the fact of having your Gross Income increased by having to report your total poker winnings before deductions for losses in your gross income. This could cause you to miss out on medical deductions and limit your ability to contribute money to various retirement vehicles among other things.

The bottom line is that the tax system with regard to gambling winnings is really screwed up, and seems almost designed to cause people to cheat on their taxes. The fair thing to do would be to simply let people net their winnings and report it as income. If the IRS is worried about cheaters under that system, they could still require taxpayers to fill out a schedule of wins and losses, if you can't document the losses you don't get to subtract them from the reportable net winnings.

Note all this only applies to the US.

--Zetack

Edited to use a marginal tax rate that exits in real life in the US.

[MicroBob]

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I'll explain the seemingly high number of winners in everyones PT database once again. (This should be in the FAQ on right about every forum!)

Let's say you have played 100000 hands and know you win 2BB/100 and have a standard deviation of 16BB/100.

In my database I have 250 hands on you. It's not even 60% certain that you show up as a winner in my database.

To get a 40/60 spread on winners/losers must require something like the average player to be atleast a 3BB/100 loser.


A small homework to grind this idea in. Draw a bell curve, cut it out in two copies. Make a coordinate system on a piece of paper. Place one bell curve so that it has it's base on the horizontal line, and it's peak just to the right of the vertical axis. This is how the distribution over 100 hands looks for a winning player. A ~40% chunk of the curve lies to the left of 0, in the negative.

Take the other curve and place on the same horizontal line, but with it's peak slightly to the left of the vertical axis. This is the distribution of a losing player. Some ~40% of all sets of 100 hands will look winning.

The 40/60 spread doesn't actually require a single honest to god winning player to exist for it to appear in our data.

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If you have 1-million players all playing -EV blackjack at a gigantic casino (about 1-2% disadvantage) then after 100 you will probably have 45% of your players showing a profit and 55% in the red.

This does not mean that blackjack is beatable for 45% of players though.


If you let them keep playing until they reach 1,000 hands then you will probably only have 40% or less showing a profit.

after 10,000 hands then probably 10% will still be ahead.

after 1,000,000 hands I would guess that less than 1% of your 1-million players will be break-even or higher.



So - back to the original point. If you have 1-million players who all played 100 or 1000 hands each you still don't have a sufficient sample size to determine how many of those players are true winners.
In this game, 0% win in the long-run because everybody is at a disadvantage.
but to somebody who doesn't know how to interpret the data it will LOOK like 35-40% of players are actually winners (when it's obviously just a function of variance).