Do poker players look at rake and tipping in an unrealistic way?

[AKQJ10]

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It's all in how one chooses to account for line items.

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Precisely. Early on I decided that I was going to not count tips in my standard calculations of my winrate for precisely this reason. I don't want hurting my winrate to dissuade me from tipping people customarily. Since it's not linear with the stakes anyway my net win doesn't help me determine when it's time to move up.

Now, I do keep track of tips and try to run the numbers both ways, because it is a cost of "doing business" or just having fun there -- but so is my 90 mile drive each way to the nearest B&M, hotel if I decide to spend the night, or anything extra I have to spend for lunch because I'm not eating a sandwich at home.

Bottom line for me: Like most even on this forum, I'm not literally playing B&M poker as my "day job". I just think it's more fun to make $14 an hour and not feel like a cheapskate than $15 and feel like one.

[Clarkmeister]

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clarkmeister,

take out a reasonable salary for the player. how are your profit margins now?

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The profit IS the salary.

[Clarkmeister]

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You missed the server tipping expense.

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No I didn't. I counted comps as $1/hr. That basically is a conservative estimate of the free food value, with the drinks being a wash (a $1 tip is worth about what most non-alcoholic drinks are worth, so I called it a push).

[slavic]

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I just don't know of any other business where people literally complain and whine that their 75% pre-tax margin isn't higher. It's a business, and one with a pretty reasonable overhead structure.

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I do. Software development, if as a company you aren't pushing a 90% profit margin you aren't likely to make it for the long haul. The development cycle is to long and the hit or miss nature of the industry is to volatile. Sound like anything else you have heard of?

I think clark's post makes a great point, and certainly a pro should have no problem paying the overhead to get a good game. In the past years the internet has offered a cheaper game and sometimes better game, but the juiciest play is still live.

[redfisher]

Your post significantly misses the mark on how business operate. Businesses try to have the highest margin in their industry, but the actual margin doesn't really matter. The key metric is return on capital employed. If you can move a billion units at $1 profit/unit with only a $1,000,000 in capital, you've got a great business. If you can move 100 units at $1000 profit/unit with the same capital, you need to find a new business.

If you assume that you're playing 30 hrs/wk, 50 wks/year then you're grossing $60K in earnings. I'd imagine that you'll end up paying about 50% in tax on that, so you're net earnings are $30K. If you carry a 500 BB bankroll and 6 mos net earnings as your capital, then you've got $30K in capital employed. You're making a great return on capital employed (100%), but if this is your sole income source how do you grow it? You need to grow your bankroll so that you can play 20/40 or 30/60. You're paying $3/hr in discretionary spending that could be used to increase your bankroll and grow the business. To go to 20/40 you need another $5K in bankroll. You're tipping $3/hr * $1500 hr/yr. If you eliminate tipping within one year you can be rolled for 20/40 if you make no other changes.

I always thought that pros not tipping was kind of crappy, but if the guy's a real grinder trying to make a living at poker I can see why tipping is just really not possible for him.

[Easy E]

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but the point I was trying to make, is that there are some very real "additional" expenses associated with playing professional poker that many don't think about. Health insurance, retirement plans, vacations, and social security, are but 4 significant issues.

I don't disagree with the OP. In fact, I am a very big advocate of tipping dealers, etc. I am also fortunate enough to be playing high enough limits to where many of my expenses (such as air fare, hotels, etc.), are but a small proportion of my overall earn. But at the 15-30 level (live play), many of these expenses (not travel, but health insurance, vacations, sick days, etc.), are a substantial slice of earn. Yes... These expenses are not easily covered by many other "small business" entities, which is where I got off track. But I wanted to point out to those considering pro play and other wannabies, that there is more to it than showing up in the card room and playing.

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I agree 100% with your post.

[Milo]

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last night i played some 6/12 and told the dealer that if i won the pot she was getting 10%. of course i cracked AA with my T9o and she got $30. i guess there is no point to this post other than to say that i am great.

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I was sitting on Bob's left at this game, and helped him count out the pot. Maria the dealer was quite pleased with the tip. He failed to mention, of course, that I took over 80 BB out of this game in the three hours we sat there (probably because this dwarfed the 30+ BB he won in the same period). It was a good game. As with Bob's post, there is no point to this other than to say that Bob is great and that I am greater still.

Also, I consider $1/pot to be the "fee" I pay the dealer for his/her skills and service. I have no problem with this. The alternative is for the house to pay the dealer more, which would mean more rake. This system would also remove much of the motivation for the dealer to run the game briskly and competently. I have no proble with paying for the service.

[Cactus Jack]

Which is the way it's supposed to be. Reward good service, not just service. I realize a lot of people out here depend on tips and do a lousy job and don't deserve a reward for it, but many of us do a good job and get stiffed 1/3 of the time. If half your income derives from gratuities and you're not getting them a significant percentage, it makes you become like so many here--jaded and uncaring. You get what you pay for. Want better service?--tip, tip often and tip well.

Just a view from the front seat.

CJ

[bobman0330]

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I'm specifically talking about the pro player.

The poker pro is running a business, just like any other business. The pro's business is playing poker, and turning a bottom line profit.

Let's take a live game 15/30 player making $40/hr. This person is paying about $12/hr in rake (3hands @ a full $4/hand), $3/hr in tokes ($1/hand won), and getting back about $1.00/hr in comped food/beverage.

That's about $14.00/hr in net costs on gross earnings of $55.00/hr. That's a profit margin of about 75%. For any business that would be considered an outstanding pre-tax margin. Heck, 20% is outstanding margin. For a mere 25% overhead, this person is receiving the benefits of advertising, trained dealers, a place where all players can safely come, and oh yeah, a place to actually work.

Seems like a pretty dang amazing deal to me. Online play is obviously even more amazing.

I just don't know of any other business where people literally complain and whine that their 75% pre-tax margin isn't higher. It's a business, and one with a pretty reasonable overhead structure.

This is inspired by people whining about toking dealers $1/hand, but it's obviously a broader concept. Anyways, stop whining, we've all got it pretty good.

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You make a good point that poker players have a better profit margin than business owners. However, a professional poker player's profit margin is much worse than the profit margin of a person who finds buried treasure in his yard. So that suggests that poker players should be able to whine. And if we compare a player's profit margin to oranges, we can see that we have twenty juicy and delicious Valencia oranges as opposed to only fifteen percent profit margin. So, all these analogies seem to cut in different directions. I don't know what to think!

[adios]

Actiually Sklansky as well as others have discussed how to factor in living expenses for determining your bankroll. M is right on the mark in this thread. Basically one needs to subtract their living expenses from their win rate to properly compute their bankroll. If a player makes has living expenses of $10 an hour and they're hourly rate is $25 an hour, their bankroll needs to be predicated on a win rate of $15 an hour. If a player makes $15 an hour playing poker and has $10 an hour in expenses they need to predicate their bankroll on making $5 an hour. The fixed expenses make a monstor difference and I think it's easy to see that tipping is a much bigger deal to some players.