A different way to think of your poker bankroll.

Okay, this may seem like a strange way of looking at things, but it's how I view my bankroll...

1) Your bankroll is capital for an investment. This capital may be capable of giving you a return, depending on your skill level, emotional stability, ect...

2) This capital is at constant risk while it is in earnings mode. By this, I am referring to institutional and economic risk, not just variance. In this case, theses cases represent a possible total loss of capital. Examples of this for US citizens are the DOJ action that completely shut down FTP, the US attempting to stop all payments from poker sites that service US customers, to simple site collapse.

I developed the following theorem for use in high-risk recursive investments. With recursive investments being investments with returns that can be immediately rolled back into capitol with little to no loss in the returns from the new capital level.

HLRA: Half-life of Risk Analysis

In order for a high-risk, recursive investment to be a break even proposition, returns equal to your original capital investment must reach safe-haven before the half-life probability of capital collapse is reached.

Translation: Get it in, double it, then get the original investment out as quickly as possible. Do not invest if you don't think that you can do this before a 50% probability of collapse is reached.

In poker, this is somewhat subjective. Many of us have had to invest in our knowledge, and in losing small amounts until we're proficient enough to actually play. This is not the capital I'm speaking of.

Instead, let's say that you deposited $100 on a site, and started working your way up. Let's also say that when you reach $200, it's not a significant amount of money to you so you keep working up through the 5NL, 10NL, and 25NL levels, finally reaching 50NL with a $2,000 bankroll, which is now significant, both in it's amount, and in the time it would take to start out on a new site again.

So you now set your HLRA. Your goal is to grind that $2,000 up to $4,000 and go to 100NL, right? Wrong! You set your goal to grind that $2,000 up to $4,000, then cash out $2,000 into a safe-haven. Then you can grind the remaining $2,000 up to $4,000 and start playing 100NL.

Wash, rinse, repeat.

But here's the tricky part. The other part of the HLRA is the half-life to failure.

By my estimate, the current half-life to failure for poker sites that service Americans is 4-6 months.

Why so low?

1) Active US government intervention.
2) When the problem is solved, it will most likely be the large American casinos that get the US green light for servicing American internet customers, causing a liquidity collapse in the smaller US servicing online poker rooms.

This gives the following table:

Half-Life:....Time:.........Probability of collapse:

1...............4-6m.............50%
2..............8-12m............75%
3.............12-18m...........87.5%


So, what is the minimum win rate that you need to have to double your bankroll within the first half-life?

Average hands played per day:....Needed win rate over 4 months:

1,000............................................. 1.667 BB/100
500............................................... .3.334 BB/100
250............................................... .6.667 BB/100
100..............................................1 6.667 BB/100
50................................................ 33.334 BB/100

($2,000/(limit level *2)/120=per day BB needed.

($2,000/(.50*2)/120= 16.67 BB needed or $16.67 per day.


Rule 2:

Once you have your money in safe-haven, the remaining returns are yours to do with as you please...until you go up to the next level.

So, If I have $2,000 in a poker site, with $2,000 in profit in safe-haven, then I can choose to withdraw or let it ride as I see fit. It's pure profit at this point.

If however, if I choose to double it and go up to the 100NL level, then the process starts over again, primarily because my minimum bankroll on the poker site, and it's brother in safe-haven need to be equal to ensure that I never have to drop down due to outside factors.


These are just my thoughts, choose to use or discard them as you please. It might help to know though, that I tested these theories to break-even effect against internet gold games, which are ponzi schemes with half-lives between 5 and 90 days, and are nearly impossible to break even with.

I've never seen bankroll management based on ponzi schemes.

This is definitely not the stupidest fucking thing I've ever seen in my life.

So you're saying there's an 87.5% chance any one specific US facing poker site collapses in the next 12-18 months?

You've put a lot of work into your post and it's to your credit that you think about poker this much.

Risk and uncertainty is so inherently subjective that you may render any half-life calculations redundant. Also, what if you set a target of 'withdraw $2k in 6 months' and your chosen site goes splat in 5.5 months? I'd rather leave X on a poker site, X being a value between:

- The minimum I need to play (say, 10 BIs. Not your whole roll)
- The most I'd be willing to risk losing if said poker site went all slide whistle on me.

So you have a floor and ceiling amount where you deposit or withdraw as it is reached.

Finally, variance. The only one of your target BB/100 winrates that is over 100k hands in the 4 month period is the first one (1k hands per day). Sample size isn't big enough to iron out natural variance and deviation.

Originally Posted by Pascal

So you're saying there's an 87.5% chance any one specific US facing poker site collapses in the next 12-18 months?

I'm saying that even since the DOJ action, there's been some serious risk in all of the US facing poker rooms. These include:

1) Loss of rule of law.

2) Ongoing changes caused by loss of players. This is both good and bad, as many players were disenfranchised, which was a plus to some of the small poker networks who picked them up. But now they're skittish of more changes.

3) Danger of further US intervention.

4) Danger of severe structural changes in the industry damaging the current small networks. (That whooshing sound when and if Harrah's or PokerStars gets greenlighted to serve US internet players.) Good for the general community, but could cause a severe inability to pay out on the part of the smaller poker networks if too many of their customers left at once.

5) (Biggest right now) Ongoing check issues. This one is constant and highly variable. As far as I know, it's only a payment issue right now on some specific networks. But...slow paying is a classic sign that the money going in hasn't equaled the money promised in returns, especially when you consider promotional monies + operating expenses, that may have exceeded rake. This could be just a case of the US making it hard to cash out though, so I'm giving it the benefit of the doubt, and trying to go with more trusted sites. (One of the reasons I like Bovada, with the sterling reputation of the Mohawk Group.)

So...Basically I'm saying that there's a very high probability of significant news happening within the small poker networks within the next 12 months.

I normally don't like to bring these issues up, because I don't want anyone scared off of putting money into the online sites that have stood behind us as players in spite of our own government's stupidity. But the reality here is that we now have a greater institutional risk to deal with then before, and when I see institutional risk + difficulty getting a check out, than I go to my strictest rules: Get in, double up, get the original amount out, and then let the remainder work for you.

Yes, my 4-6 month half-life may be waaaaaay too conservative. And it may be for significant news as an industry as a whole, rather than a single site. You might choose to set 6-8, or even 8-12 months on your risk multiplier, but it is most certainly there, and should be considered.

And the 87.5% figure is a way of showing that you're red-lining your risk, it's not any more certain than flipping a coin three times is without coming up heads on any of the three flips.

Originally Posted by spoonitnow

This is definitely not the stupidest fucking thing I've ever seen in my life.

Awwwww, love you too spoon!

Will read through your post properly but what do you mean by "loss of rule of law"?

Originally Posted by Lucothefish

You've put a lot of work into your post and it's to your credit that you think about poker this much.

Risk and uncertainty is so inherently subjective that you may render any half-life calculations redundant. Also, what if you set a target of 'withdraw $2k in 6 months' and your chosen site goes splat in 5.5 months? I'd rather leave X on a poker site, X being a value between:

- The minimum I need to play (say, 10 BIs. Not your whole roll)
- The most I'd be willing to risk losing if said poker site went all slide whistle on me.

So you have a floor and ceiling amount where you deposit or withdraw as it is reached.

Finally, variance. The only one of your target BB/100 winrates that is over 100k hands in the 4 month period is the first one (1k hands per day). Sample size isn't big enough to iron out natural variance and deviation.

All sensible suggestions. I'm just suggesting an alternate method to prevent what happened to a lot of players on Black Friday.

And you can't completely avoid risk. If your variance doesn't work out within 4 months, you keep plugging on. Or, if you believe that you reasonably have 6 months to work in and you don't, you pick yourself up and start over. Your skill level in poker can't be taken away by site issues, and you bankroll is only a tool until you get some of it out in profits.

Originally Posted by Pascal

Will read through your post properly but what do you mean by "loss of rule of law"?

Specifically, since it's technically illegal to host US players, we've lost the support of the Attorney General's of our states in dealing with fraud issues. And if action is taken, it's more likely that it will not be in our favor. (Read check blocking or site shutdown). So the threat of them losing US business due to attracting negative government attention is gone. They're already ignoring US law by hosting us.

In other words, who you gonna call? Not the US courts or government.

Originally Posted by davisrei

Specifically, since it's technically illegal to host US players [...]

This is not true. Do a google search and find the summaries of the relevant federal documents. Unless I've grossly misunderstood them (Dammit, Jim! I'm a physicist, not a lawyer) there is no federal law pertaining to online poker.

Summary of the UIGEA:
[It] "prohibits gambling businesses from knowingly accepting payments in connection with the participation of another person in a bet or wager that involves the use of the Internet and that is unlawful under any federal or state law."

As you can see, it is not saying online poker is illegal, it is saying IF it is illegal for the player, then it's illegal for the financial institutions assisting the player.

There is no federal law criminalizing online poker. It is up to each individual state, and there are a lot of states (like more than a couple dozen, I'm told), so you might want to look up the laws in the states near you.

Cliff notes: Don't keep all of your money on poker sites.

poker money is never real money.

money isn't real george.

Originally Posted by Pascal

So you're saying there's an 87.5% chance any one specific US facing poker site collapses in the next 12-18 months?

Maybe not quite 87.5%, but all US facing poker sites are definitely on a DOJ hotlist.

So more like 86%?

edit: fuckin' lol'd at the tags