The idea of being a poker pro is alluring. You are your own boss. You play when you want. You study when you want. You have nearly infinite vacation days. You can travel on a whim to a tournament series on the east coast, or take a month traveling in Europe, and find grind sessions when your schedule allows for it. That’s a sexy life if you ask me.
But being a poker pro is more than just a cool title. There are lots of things to consider before you pull the trigger and quit your day job. If you’ve been flirting with the idea of going pro, give this podcast episode a listen and the entire guide a read.
This guide is complete with my opinions on the matter, but please check with your accountant and local tax experts for answers that are personal to you, your situation, and your exact location.
What Is Your Survival Number?
Do you know exactly how much it would take to maintain a cost of living that appeals to you? This includes rent/mortgage, utilities, food, entertainment, etc. Of course, if you are single living in Vegas this number will be far lower than if you are supporting a family of 4 in NYC. And to be honest, whether you end up going pro or not you should know your bare minimum number to maintain your lifestyle. Take a moment and jot down the lowest amount of money you would need to earn to retain a lifestyle you would be OK with.
Poker Winnings & Estimates
Most players consider going pro after a period of poker success – maybe that’s a great month at the tables or it’s a solid year. And when they start fantasizing about quitting their job and playing full-time, they do all of their calculations on their current winrate. This is an issue for a few reasons:
- The smaller the sample of recent wins, the less reliable they are
- Your winrate today is not a perfect predictor of future winrates
- Your winrate will change when you start playing full-time
For instance, a $1/$2 live player has been crushing for $32/hr over the last month (60hrs of play). Forgetting for a moment that 60hrs of live play is only about 1.8K hands, which is a very minimal sample size – they would start calculating a possible full-time poker income. They start by saying “well, I’m going to play 40hrs/week and I’ll just multiply 32*40*52 and get my annual gross income of ~66K”
This is wrong on SOOOOO many levels. Your current job may require 40hrs/week, but as a pro you would set your own schedule. For giggles, go find anyone who has ever gone pro and ask them how many hours/week they put in the very beginning vs 6 months later. Trust me – the number almost always trends downwards. You also won’t play every week – especially if you are traveling for the tournament circuits and you’re going to need decompression time after extended trips.
do you have the self-discipline to set and keep a grind schedule?
Oh yeah…and that $32/hr they started working with – that’s a nonsense number too. That’s $32/hr in recent time which is above the average hourly rate in that game AND it’s not significant at all due to the sample size. Also remember that even if your winrate in this game were $32/hr – that’s THIS game. You can almost never get a special home game to run enough hours per week for you to play it enough, and your winrate can be very different in various locations.
No, I’m not talking about the rake that gets taken out of every pot you play. I’m talking about the bigger rakes – like taxes and other expenses. This gets massively overlooked by most players considering this transition, so let’s break it down.
If you currently work a normal 9-5, chances are the taxes are automatically taken out of your paycheck. And in the beginning of a new year you file your taxes, and voila, you get some money back from the government. Awesome!
As a poker pro, you are responsible for paying your own taxes and you’re almost always going to have write a large check to the IRS in the beginning of each new year – yeah…they aren’t sending you a check anymore. Welcome to being your own boss!
Taxes range from state to state, yet alone from country to country. Some places have tax-free gambling winnings, but most don’t. Check with your local tax professional and run some numbers with them. Even if they charge you for an hour or so of their time – it’ll be the best money you’ve ever spent. Get answers on this stuff early and avoid being surprised at tax time. There is nothing worse than getting a bill for $20K when you weren’t expecting it.
Listen to the Paying Taxes as a Poker Player podcast
Along these same lines are poker-related expenses. Now, a traveling tournament/circuit player is going to have much higher expenses due to all the travel, hotel/AirBnB, etc. – so if you plan on going that direction make a one-year plan and figure out the estimated cost. Can you reasonably handle that bill with the annual income minus taxes that you calculated from above, or is it too high?
Which brings us BACK to taxes. If you currently have a 9-5, chances are you file your poker winnings as a recreational player (you ARE already filling taxes as a poker player, right?). When you switch over to being a full-time poker player you can file as a pro (again, check with your accountant for information on your exact situation), and as a pro you get taxed differently and as I understand it this makes it easier to write off poker-related expenses such as training, traveling for poker tournaments, etc. This can massively influence your tax burden – so if you are serious about making this transition – PLEASE GO SPEAK WITH YOUR ACCOUNTANT!
If you made it this far through the guide and are STILL interested, high-five! Now it’s time to talk about the stuff that nobody wants to talk about openly. As your own boss, you get to set your own hours. This is attractive in theory, but something many people struggle with. It takes a lot of motivation and discipline to set hours and keep those hours – and when dealing with the mental swings of being a poker player it can be very tough.
First, think of a normal 9-5. You show up, you work for a few hours, you grab lunch, you work for a few more hours, and then you go home – and chances are there was some Facebook time and/or inter-office socialization in between those working hours. In a normal non-commission job you get paid whether you put in an A+ day or a C- day. Hell, you could have a D+ month and chances are you wouldn’t lose your job. THIS DOES NOT WORK AS A POKER PLAYER.
Go ahead, try and put in D+ work for a week on the tables and see how your winrate is affected. And besides that, you don’t get paid for lunch. You don’t get paid vacations. You don’t get paid to peruse Facebook. You don’t get paid unless you put in work AND avoid running like hell. And this is the honest truth that players who consider this transition need to face: it’s VERY difficult to put in the necessary volume at the highest-caliber when you are running like hell.
This issue is that most players consider this transition when they are in a good season of poker. Things have been going well, they’ve been banking away some money, and things are looking up. They don’t consider the impact of a bad week or bad month and how that would affect them mentally (and how that then trickles into how well they play and how many hours they can reasonable put in) – yet alone when a bad month stretches into multiple.
how would a bad poker week or month affect you mentally?
You won’t know exactly how you would handle this until it actually happens – but be brutally honest with yourself. If you’ve encountered rough stretches in life and it’s resulted in you being utterly-depressed and unable to function well – that’s going to happen when you are a poker pro. And to be honest, for people like that, playing poker as their sole source of income is a pretty awful idea IMO.
Let’s say the overly-inflated winrate you were so stoked about winning for the next 3 years was real – you’d need some serious study to continue making that winrate over time. Poker is constantly in flux and the game is constantly getting tougher – which means you need to study diligently to stay on top of the game. But there are two issues here:
- Most players aren’t used to studying 10+ hours/week
- Studying enough can be difficult during bad stretches
Be honest with yourself about your poker study habits when things are going well and when things are going poorly. I personally get a bit addicted to study when things are going poorly – which is good for getting out of bad stretches faster but not great for work-life balance.
Now that we’ve worked through the bummer stuff that nobody wants to talk about (but we all desperately need to think about), let’s get into some math. Remember, these are mostly my opinions and estimates and your situation may vary significantly.
First, figure out your monthly cost of living (COL). This is simply adding up all of the expenses you have in your life. This includes the basics like rent/mortgage and food shopping, down to the smallest of things like your Netflix and Red Chip Poker PRO subscriptions. BTW, you can usually write-off poker-related education like video training memberships when you file as a poker pro. For example purposes let’s say our COL is $3K.
Second, factor in things you are now accountable for. When transitioning from a 9-5 to a poker pro you usually pick up two major things: taxes and health insurance. Most people forget about both – so if your employer has been handling health insurance make sure to factor that into your total COL.
Third, estimate gross annual income (GAI). You did this way earlier in the guide…
Now, take GAI and multiply it by .75 (this accounts for an estimated 25% tax rate). Take that number and divide it by 12 (this is your monthly estimated income). Subtract your COL. If this number is negative, your plan looks negative as-is. If this number is positive, your plan looks profitable as-is!
Keep in mind, this is back-of-the-napkin math and doesn’t account for write-offs, unexpected expenses, increased income when you move up, etc. For a better and more personalized estimate, please speak with your accountant.
Whether or not your answer from above was positive or negative, let’s talk about eggs. Yes, they are a delicious breakfast food – but we’re talking about nest eggs as in cash that’s set aside for our transition. In order to go pro, I would want NO LESS than 6 months of cash stashed away. So multiply your COL (including estimated tax obligations) by 6 and have that amount of cash set aside. This is three-fold:
- It gives you a clear runway of cash
- It gives a buffer so that if your venture to pro starts poorly you don’t have to get back to your old 9-5 in a few weeks.
- It helps to have some mental buffer to lower stress levels
Along with your nest egg you also want a separate poker bankroll imo. So if you normally play $2/$5 live and you feel you need a $25K bankroll and your COL is $4K, you would only pull the trigger when you had $50K where half of that is set aside as a nest egg. Of course, this assumes that you will make enough on average from playing to pay for life.
The goal is not to burn through your nest egg – rather to save it and add to it overtime so that eventually you have 12-18 months of COL set aside.
The larger your nest egg, the lower your risk of ruin
Of course, you could set it up so some of your nest egg is ‘working for you’ through various investments – but we’ll save that conversation for another day. Just make sure you have enough liquidity in your nest egg so you can pay for life without dipping into your bankroll.
For the 90th time, speak to your accountant about this to create a personalized game plan. But as a general rule of thumb, the more people you are responsible for and the more your income is the sole income, the bigger nest egg you want. A single 19yr old needs FAR less nest egg than a family of 5 with a sole-income.
This economic term simply means the following: what other options are available at the same time and what are you giving up by missing out on them? A simple example of this would be passing up on a part-time job that pays you $250K/yr to take a 60hr/week job that pays $65K/yr. It’s an extreme example, but it highlights the concept nicely.
So before going pro, consider what other things you could be doing instead. Do you just hate your current job and thus poker seems so much better? If yes, what other jobs are available? How do those compare to playing poker in terms of both money AND how happy you are. If you end up playing poker for a year and then decide to dive back into the workforce, does that 1 year off create an issue? In most cases it doesn’t – but when there is licensing and education involved it might.
The worst thing I see is people trading a 9-5 for poker when the gross annual incomes are similar. Remember, at a 9-5 you cannot have a losing month (and hell, if you lost your job you’d have the perfect opportunity to try poker as a profession!) As a poker player you typically end up working (with both playing, studying, and decompression) much more than 40hrs/week. You are responsible for every hour of your life as a poker pro, whereas you get paid to socialize and goof off a bit in most 9-5s.
If you are single, skip this. If you have a partner, discuss EVERY stage of this transition with them. You 100% want your partner on your side, supportive, and comfortable with the decision.
Make sure to factor in dual-incomes when appropriate. If your partner can pick up the financial slack in case things go poorly on the tables, that’s an awesome spot to be! If your partner’s income covers COL, a large nest egg isn’t as important. Just make sure to speak to them about the idea and have a conversation with your accountant as well. (If you haven’t already explained your love for poker with your partner, have them listen to this podcast episode first).
Trial First, Trigger Second
If you still want to go pro, I suggest a trial first whenever possible. Most 9-5 jobs offer vacation days, and if you have some, use it – and all the better if it’s paid vacation! What’s the worst that happens? You love the pro idea, the trial goes well, and you quit. Or you hate the pro idea and you’re out some vacation days. Sounds like a great experiment to me!
Make sure the trial is at least 1 week, though 2-3 is better. You want to get a reasonable idea of how going pro feels, how it impacts your life, and get past the “shiny new toy” feeling that we all get when an idea is brand-new. Create a plan to play and study as many hours per week as you would when fully pro – and then execute.
could you take 2-4 weeks and do a trial run at full-time play?
During this trial, journal everything. How many hours played, how many hours you studied, how you felt after winning sessions and losing sessions, how motivated you were to put in your next study/play session, etc. After the trial re-read the entire journal to see how you did and how often you were hitting your goals.
If after all of these discussions, math sessions, and trials you still deem going pro as the best play – rock on and pull that trigger! But one quick tip I’m going to offer is this: treat this as an experiment.
Consider a scientist. If they make a hypothesis, run an experiment, and if it turns out their hypothesis was wrong – do they beat themselves up? No, of course not. But when someone claims they’re going to do something big (like become a poker pro) and it happens to fail, they feel awful and go back to the workforce with their tail between their legs. Just like a scientist, we make a hypothesis based upon assumptions, and in the end we do the best we can with the information we have. If you treat going pro like an experiment and a chance to try something new and exciting to you, you’ll feel far better whether it succeeds or fails.
Retirement (Added By Doug Hull)
If you look out to the horizon, you can see an old man walking towards you. That old man is you and you two are going to meet someday. You want to be able to give him something to retire on. Just like taxes, will you be able to save up for yourself? The most important factor in retirement planning is time, and the most powerful force in the universe is compound interest. Will your poker pro plan include putting money away now that can grow into a big pile for that old man to roll around in?
You very well might be able to make a survival wage at poker, but what happens when you decide not to play anymore? Is your retirement plan “Bink the WSOP Main Event“? For many people, the most sustainable poker pro plan is actually to work a regular 9-5 job, build up your life roll and then retire into poker. The majority of my students are near retirement age, and want to have a fun hobby that makes them a little bit of money. The life roll they have built up is a massive security net and poker is more of a retirement job that gives them as few or as many hours as they want.
Taking on poker as a career is empowering, exciting, but it does not come with a 401k, or a pension. You must make your own so that you do not find yourself in a career where there is no exit strategy.
In most situations, going pro is not the best decision imo. Playing poker professionally is quite stressful for most people, and that stress tends to lower motivation and work ethic. Sure, things are great when they are going well – but running bad is part of the game and it WILL happen to you. It’s not a matter of ‘if’, rather ‘when’ and ‘how will I handle the runbad?’
That being said, for a select group of people going pro can be the best decision and creates an ideal life for them (even if only for a season of their life). Regardless of which decision you choose, I wish you the best. Just remember to be a scientist and you’ll do just fine =)
If you have any questions about this guide or want to add your own thoughts/experiences, join in the forum – I’d love to hear from you!