Where does your profit come from in poker? This week, Ed Miller explains why most players get the answer to this question wrong. And don’t worry, he shares the right answers too. This episode will get you out of your comfort zone and into the strategic concepts that are actually responsible for you taking money off the table in the long-term.

Featuring: Ed Miller

Links from this episode:

Where Does Poker Money Come From? – Free Article

Where Does Money Come From In Poker – PRO Video (membership required)


Ed Miller: Where does the money come from? We’re trying to learn to win consistently at poker, which basically means you sit in poker games, and over time money accumulates in your stack. My question is, where does that money come from? The answer is not obvious I would say. Or at least what I consider to be the most useful answer to that question is not obvious. Here’s the main problem, is that poker is a negative sum game. Even in a good rake structure like Las Vegas, approximately 10 to 12 dollars per hour is going to leave the table per player. That doesn’t change too much, depending on whether there’s a rake that they rake from every pot, or whether there’s a time charge, or however they take the money. Roughly that much money per person, per hour leaves the table. In other places, the rake is much worse. In Europe and home games, and a lot of different locales, a lot more money can leave the table per hour. But let’s just talk about the Las Vegas level. That’s the area I play in, and in some ways, it’s the most straight-forward to win at.

If poker were completely luck, everyone would lose roughly 10 to 12 dollars per hour. In other words, you would lose exactly what comes off the table that the house takes. Now, that’s if poker were completely luck. I’m telling you right now, it’s not completely luck, not even close. Now if everybody played the same strategy, so this is a little different, this is everybody taking the same approach to the game, again, everybody is going to lose roughly 10 to 12 dollars per hour. But not everyone loses at this game. Some players win. Some win a whole lot. Those wins are not due only to luck, or running good. A lot of them are consistent, long-term winners, year over year over year. Again the question is, where does their money come from?

This is a question I actually ask every time I take on a new student for coaching. I always ask my students this question, “Do you think you’re a winner?” Maybe half of them say yes. Half of them say no. But the half that say yes, they think they win at their current level. I say, “Well, why? What do you do? I mean, you have to do something active to win money at this game. So what is it that you do that puts money in your stack over time?” Again, these are people who consider themselves winners, and I think many of them probably are winners.

These are the answers I get. These are the top three answers. I pretty much never get almost any other answer than this. The first one is that they play tight. This takes several different variations. They’re patient. They know when to fold. They get away from hands. They don’t chase. They don’t tilt. That kind of thing. But it all focuses around this idea of they fold. That’s the bottom line is what they’re saying is that they fold really well. They fold pre-flop. They play tight. They fold when they’re beat. They don’t get bored, all that stuff. So that’s number one answer that people give for where the money comes from, is that they fold.

The number two answer I get is they make money because they make hands, and they get paid. So they make a flush, and they bet it, and someone pays them off, and that’s where the money comes from. That’s answer number two. Answer number three I get is that they are good at game selection. Some students cite their game selection to explain their winning. So presumably, if they did not do this, they would not win. Or they would not win very much, at least according to them. But if they are good at limiting themselves to playing in only the best games, and that is what causes them to win money.

Here’s what I have to say about those answers. I pretty much disagree with those answers. Or at least those are not the answers I would give to why I make money, and why I think they make money also. I’m going to kind of debunk each one. One is, playing tight is that you do not win money by folding ever. If you fold, you do not win money. Money does not go in your stack. There is no way that you can fold your way to riches. Now I’m not saying that folding isn’t an important part of the game. If you can fold in the right spots, that’s very important. However, that does not explain why more money accumulates in your stack. It just doesn’t. No one ever won money by folding, so there’s something else going on. That’s kind of what I want to get at, is I want the people who say, “Oh, I fold,” I want them to say, “Okay, but then where does the money come from.” That’s really my question.

The second is, okay, they make hands. They make a flush, and they get paid. The problem with that answer is that that’s exactly what everyone at the table is trying to do. They’re trying to make hands. If you play in a 1/2 or a 2/5 game in a card room, and you said, “Hey, what are you doing? Why did you play that hand? Why did you do that that way?” You’re going to get the answer, “Well gee, if I make a flush, then I can bet a bunch and somebody is going to pay me off.” I mean, that’s what everybody is trying to do. This is not a unique strategy. So if you play like everyone else, you are going to lose 10 to 12 dollars per hour. So making hands is actually not what puts money in your stack either, because that is exactly what everyone else is trying to do.

The third answer is game selection. Now game selection, this answer is … I’m not going to debunk it quite as much, because game selection is obviously very valuable. But again, just sitting in a game, which is what game selection is, does not put money in your stack. So again, this doesn’t really answer the question that I’m asking, which is how does that money get into your stack. If you can game select, how are you sure that you’re picking the right games? If you don’t exactly know what causes money to go into your stack, if you can’t articulate that clearly, then are you 100% sure what you are looking for, when you are game selecting? That’s I guess, a rhetorical question about that. But I feel like very few people actually have, in my opinion, a clear idea of what causes money to get into someone’s stack.

What is my answer? Where do I think the money comes from? Here’s what I would say causes you to make money at poker. The money comes from … it’s a three part process that puts money in your stack. The first part is that players are playing weak ranges. What I mean by that is that the overwhelming majority of live no-limit players play too many hands. When I say too many, I’m talking about too many compared to what a perfect robot strategy would play, given the size of the blinds. The size of the blinds is what causes you to play any hands at all. That two and the five dollars. This is theoretically true of course. I’m not talking about how live games actually work. I’m talking about in robot math world.

In robot math world, the only reason to play a hand is because you can attack that blind money. In robot math world, and that blind money is not very much, as anyone who plays live will attest to, so you don’t play very many hands. There’s not a ton of incentive to play hands in this game, mathematically speaking. But the fact is that when you sit and play live, most people play way more hands than you would play if you were the robot math person. In fact, this is everybody. This is not just recreational players. This is pros. This is pretty much everybody who sits at a live game, plays too many hands. I play too many hands, and I play tighter than almost everyone else that I play with. I still play too many hands. Again, compared to this robot math person.

The other insight about this, that everybody is playing too many hands, is that all these extra hands are weak. That is by definition, because if you’re only going to be playing say 10% of hands at some point, then if you play 20% instead, all of the hands that you’ve added, that 10% to 20%, they are all weaker than the original 10% that you were quote unquote supposed to play. So the fact is that everybody in these live games is intentionally putting extra money in the pot with weak hands to begin with. That’s the first place the money comes from. That’s how it enters the galaxy of your ability to win it, is that people are just plain playing too many hands.

The second thing they do is because they start with too many weak preflop hands, they have to get rid of those weak hands. Those weak hands do not get better on the flop and turn, proportional to what the strong hands do. That’s why they’re weak. So you end up with a bunch of junky hands on the flop, on the turn, and so forth, if you start off by playing too many hands. What players do, is they compound the errors they make postflop, trying to get rid of the weak hands. So not only are they making money available preflop with too many hands, but they compound this error after the flop, as they try to deal with this problem of having too many weak hands. That’s the second place money comes from.

Then the third place the money comes from, and this is a three-step process I would say, is so now we have people who are playing weak ranges and are making errors that compound over their original error to play the hand. The errors however, just make the money available. It just puts the money on the block, up for grabs. But in order to get that money into your stack, you have to do something specific. You have to do something intentional. That is, that you have to use an accurate counter-strategy. You have to intentionally craft a strategy while you’re playing that is designed to capture this money that is available. That is where the money comes from. The money is available, based on the errors that players make playing too many hands, and then compounding them after the flop. But you don’t actually put that money in your stack, until you formulate a counter-strategy to your opponent for their specific errors, that takes their money. That is where the money comes from.

The reason I went through this, is because most people don’t think of it that way. If you don’t think of it that way, it puts a cap on how good you can get at this game. It’s a pretty low cap, because if you don’t think in these terms, then you are only able to gather the money that your style naturally counters. In other words, most players have a style. They have a way that they play. Then other players make money available by playing too many hands, and making these errors. Then their style or strategy naturally counters some of the errors their opponents make, but not most of the errors their opponents make. They make a small amount of money, and that’s it.

Let’s move on. Let’s find this money. How do we get more of this money, which is the question I want to answer? The perfect strategy at no-limit holdem, that’s going to be our reference point. Poker is a math problem. Theoretically there is a perfect strategy. The perfect strategy is the one that makes no money available for you to win no matter what you do. In other words, if your opponent is somehow playing this perfect strategy, then literally no matter what you do, no matter how you choose to play hands, you will not be able to win money against this player ever over the longterm. You can win over the short term. You could make eight sets in a row, and of course you’re going to make money. But what’s not going to happen, is that you are not going to consistently accumulate money against this player over the longterm.

Now you can visualize this perfect strategy as a pyramid. That’s what I’ve been using lately to represent what this strategy looks like. This is not literal. This is just a symbol, so you can think of it. Each level of the pyramid is going to represent the hands that you play on each betting round. What you do is preflop is when you play the most hands. Then at each step in the pyramid, you’re going to play fewer and fewer hands. You’re going to give up hands, based on what your opponent risks. So if your opponent bets at you, you’re going to call with some hands and fold with other hands. But the hands that you give up, you only give them up to the extent that your opponent has risked money to compensate you perfectly for what you give up. In other words, let’s say there’s $100 in the pot, and your opponent bets $100, that $100 bet … your opponent has put $100 at risk. He’s buying for that $100 at risk. The perfect strategy is such that the amount that you actually fold is worth exactly the $100 that he put at risk, if that makes sense.

I don’t know if that idea makes sense for you, but that’s kind of what the perfect strategy look like. It’s when you bet, you’re buying folds. The risk that you put up to bet has to be commensurate with the number of folds that you get. That’s a characteristic of the perfect strategy. It’s not really that important. I don’t want to get into that further, because it’s not that important for what I’m going to talk about going forward. But just the idea is that there is such a strategy. It is perfect. It makes no money available for you to win.

However, real players don’t play anything close to perfect. Literally not even in the same ballpark as this perfect strategy. They start with way too hands, as we talked about. This is something I don’t believe will ever change in live poker, because live poker is just plain too slow. The motivation for people to go to a casino and play live poker will never coincide with what the actual right preflop strategy is. It is my opinion that this is forever going to be true that people will play too many hands in live poker. When they do that, they have to spend the rest of the hand trying to figure out how to hide or dump all the extra bad hands they get.

You can see in my pyramid, the pre-flop section is bloated, because they’re playing too many hands. Now once they move onto the flop, turn, and river section, they have to somehow get rid of these extra bloated hands, and it creates flaws in the pyramid. These are where your opponents are making the money available. The problem is that whenever your opponent hides these hands successfully, you win no money from them. In fact, you can lose money to somebody who plays extra hands, but who hides them successfully. However, there is no foolproof way to hide these hands, so your goal in the game is to predict how your opponent is going to dump all of his bad hands. You’re going to try to catch him in the act. That’s what makes you win.

Just to reiterate, what you’re going to do is, you’re going to try to predict … so you know your opponent has all these extra hands, your goal is to predict, and we’ll talk about this in a second, how your opponent is going to try to hide or dump, or bury these bad hands that he’s got. Once you predict that, you’re going to try to catch him with the bad hands. He’s hiding. He hid all these bad hands in the corner, and then when he looks up you’re like, “Ah, got you, with you and your bad hand.” I mean that’s kind of literally what you’re trying to do, is you’re trying to corner your opponent into a situation where he’s stuck with all these bad hands, and then the money goes your way. That’s the framework, or the basic idea.

There’s three ways that your opponents will try to get rid of their bad hands. The first way is that they will try to fold them. This is the easiest way. It couldn’t be easier. I have a bad hand. My opponent bets. I throw it away. This is the favorite play of the nit. Every player type uses all these three strategies to one extent or another. But their preference for one over the other is what gives them a player type. The nit’s favorite play is to try to fold the extra hands. Yeah, I missed the flop. I just fold. Yeah, oh I just flopped bottom pair. Oh, he’s betting a lot. I’m just going to fold. That is the nit way out.

Again, every player is going to use all three of these types sometimes. Nits prefer obviously to fold. Another way to do it, is to call these hands. This is where you’re just going to call down. Your opponent bets, and you’ve got middle pair and you know what, instead of folding it, instead of bluffing with it, you’re just going to call down with it. This is obviously the standard calling station move. They’re going to call down with weak hands. Everybody is kind of familiar with that concept.

The final way is that your opponents are going to try to bluff their way out of the bad hands. This is the trickiest way that players try to get rid of these weak hands, is that they try to pick spots, and they bluff with them. This is characteristic of a LAG player. LAG is a loose aggressive player. This is somebody who is loose and plays too many hands, just like we’re talking about. They’re go-to move to get rid of these weak hands is going to be to bluff with them. Those are the three ways out.

Now as I said before, if you allow your opponent to successfully execute their way out, if you let them bluff, if you let the LAG bluff successfully, or you let the calling station call down successfully, or you let the nit fold, or you don’t make them fold very often, you don’t make them fold every time you could make them fold, then you don’t get the money. Because it’s not the just the playing too many hands that makes you the money. It’s the catching them in one of these behaviors that makes you the money. That’s what makes you the money. If you let these happen without specifically trying to punish them, or catch them in the act, then you don’t actually get the money. The money doesn’t end up in your stack.

How do you plan your counter-strategy? First is you’re going to try to predict, well what is my opponent going to do with his extra hands on this hand, on this particular hand. I’m playing against … this guy is kind of a nit. This board is kind of this way. I think he’s going to fold then. You’ve predicted, I think my opponent is likely to try to fold all these extra hands. So what do you do? Now that you’ve predicted that, you have to do your counter-strategy. For that strategy, for the folding, your counter-strategy is to barrel and bluff, often with 100% of your bad hands. What you’re going to do is every time you have a bad hand, and you predict that your opponent is going to fold his bad hands, you just bet and don’t stop betting. That’s the bottom line. You’re going to bet the flop. If he calls, you’re going to bet the turn, at the very least. That’s the basic counter strategy for you if you’ve predicted this behavior.

Now if you predict the calling station behavior, if you predict your opponent to try to call down with his weak hands, obviously you’re going to bluff less often. But you’re going to bet all your top pair and better hands more frequently, and for bigger bets than usual. We’ll talk later in some of the later videos about how much you can bet top pair hands for value, how much you can bet certain hand types. But the thing is, if you decide that you think your opponent is likely to try to call down with a bad hand, then you should shade all of your estimates for how many times, and how much you should bet top pair and better hands much bigger. You should bet them more often. You should bet them maybe on all three streets, instead of one or two, and you should make bigger bets with them. That’s the counter-strategy for this player.

The third player type is when they’re going to try to bluff away their bad hands. If you expect an opponent to try bluff with his bad hands, you do specific behaviors to attempt to induce the bluff, which usually means you’re going to show weakness of some type intentionally. Then you are going to call down pairs or better. In other words, you’re going to try to induce a bluff. Then you’re going to try to call it. That is the counter-strategy to an opponent who you think is bluffing to get rid of bad hands.

How do you win? Here’s the summary. You play tighter pre-flop than nearly everyone else at the table. That’s the first step. This is going to put you in the natural position to catch your opponents with weak ranges. Again, just playing tighter will not make you money, but it gives you a good foundation to start with. Now the next thing you do, is that you use player tendencies, you use board textures, use live reads, and you predict how your opponents are likely to try to dump or hide their weak hands in each pot. Now this changes from pot to pot, so you have to reevaluate all the time. You can’t just assume, oh this guy’s a nit, he’s going to fold. He’s going to fold. He’s going to fold. He’s going to fold. He’s going to fold every time, and just don’t even go from there. Or even have less … oh, this board is a certain type of board. This is the type people call down on. Don’t, it’s not that simple.

You have to think about it at each hand. Gee, how is my opponent going to get rid of their weak hands this time? Then, once you make your prediction, you want to use the appropriate counter strategy to try to catch them in the act. Again, you will not win just by playing tighter preflop than other people. That does not win money. You must think about and apply counter-strategies, and do so accurately if you want to get the money. That is the basic idea. Now this involves guessing and estimation, or prediction. Predictions and estimates are wrong sometimes. That’s part of the deal. You’re going to be wrong. You’re going to screw up. It’s going to blow up in your face sometimes, and that’s: A) part of the game; and B) it’s part of the learning process. Again, you have to go through this. You have to push yourself, and you have to let things blow up in your face so that you can learn and move forward. But this is what you have to do if you want to really learn how to win at this game.

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