But what if you have a downswing that lasts three months and you only bring home one month’s worth of income during that time? In addition to your poker bankroll, you need to have at least six months’ worth of expenses saved up to protect against long-term downswings. Second, if you’re a $2/$5 (or higher) player, you can move down in stakes. But just being able to show a long-term profit isn’t enough to justify a career in poker.
Okay, you’ve got Uncle Sam taken care of and you’re protected in case of illness or disaster. The only downside is that the article was written in February 2011, so it’s from an online poker perspective.
But before I get into how to go pro, the first question to answer is whether you should.
Much has been written about the paperwork casinos prepare for tax purposes. I therefore recommend you purchase Disability insurance. And if you have a backer paying for your tournament buy-ins, the taxes are even more complicated. But I personally don’t recommend this route. To keep up with the legalities, and protect yourself against disasters, you will have to hire professionals to assist you. So realistically, you would need to make, on average, at least $31 per hour for it to make financial sense to leave your current position and pursue a poker career. The major difference is that you’ll have to pay pro-rated taxes on a quarterly basis in addition to the annual filing process. If you look for advice online, you’ll find a dozen forums to discuss strategy with others. Many of the online training sites, such as the ones I wrote about in The top 10 poker training sites online, provide articles, podcasts, and videos prepared by professional players who also offer coaching. To plan for retirement, you will also need a financial planner or investment counsellor.
An online search for additional material on this subject yielded a few gems. So if your bankroll has dropped to $3,000, you shouldn’t buy-in to a cash game for more than $150. But from what I’ve read, the swings are both longer and deeper than for cash game players. But in Oklahoma, the casinos only adhere to their reporting requirements. If any of you have, please leave a comment below.
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As for filing taxes, it’s not much different from what you’re doing now. Just be aware of it and don’t dismiss it. This will protect you no matter where or when the injury occurs, or if you suffer from a debilitating disease.
When it comes to life and health insurance, most players are tempted to cut corners. As a professional, you’re only making money when you’re playing.
How much do you make per hour at your present job? Add what you gain in benefits. Also, it’s hosted by Cracked (Mad Magazine’s long-time competitor), one of my all-time favorite websites.
Last but not least, we have to talk about education. What I’m going to describe here is a middle-of-the-road approach. And that’s for the privilege to (maybe) make what you’re already guaranteed to make now.
In the state of Oklahoma, if you intend to work as a contractor or consultant, the state requires you to carry, at a minimum, Workers Compensation insurance. Also, cash game players should adopt some hard and fast buy-in and quit rules. This first one is from a former online pro, Dennis Hong, who gives us 6 Reasons Professional Poker Is Way Harder Than It Looks. But the fact is that your expenses are ongoing regardless. This is a requirement imposed by the Bank Secrecy Act. There is no paid sick time, no paid vacation, no guarantee of income (in fact, some days you will pay for the privilege of working), no insurance, no retirement plan, and no tax withholding. This amount should be enough to cover all of your expenses: housing, insurance, taxes, transportation, utilities, groceries, clothing, etc. But now you’re a professional poker player and have to make your own. This can be accomplished in one of two ways.
The professional poker player is one of the least secure jobs anyone can pursue. He talks a bit about going pro, but also shares some hands he played and his thought process behind his decisions.
Another thing we have to address: the hours. But if you’re over 40, this is not a risk you want to take. Every professional I’ve ever known has underestimated both the importance and difficulty of putting in the hours; and if you go pro, so will you. How big does it need to be? There are many schools of thought on this, and many of them disagree. If you’re under 30 years old, and don’t have a family, perhaps you’d be just as well off paying for your health care on an as-needed cash basis. And if you win big, you should also have a predetermined quit rule for having a certain dollar amount (or number of buy-ins) in front of you. The two must-haves are an accountant and an insurance agent. Do yourself a favor and hire a professional.
How do you know if you can make this much? First, you must keep records. If you already have an agent for auto, home, or life insurance, talk to them about bundling all of your insurance together. And if you intend to move up in stakes to ultimately increase your income, poker study is extremely important. You can only work a shorter week if your hourly profit justifies it. So if you’re a risk-averse person, or someone who plays better without the worry of going broke, you would do well to have a larger bankroll than what is suggested here. While this requirement does not extend to poker players, not having some type of protection against the inability to work could be disastrous. Instead, I suggest you befriend and confide in other professionals, both locally and online, to discuss hands and strategies.
If you’re primarily a tournament player, I don’t have sufficient personal experience to qualify me as an expert. As for tournaments, the casinos will have you fill out a tax form W-2G if you win any amount of money in a freeroll tournament. And they’ll do the same if you win a large tournament where your prize is over a $5,000. When you achieve a 6-month span where you have exceeded your target hourly rate, you may consider becoming a professional. When it comes to cash games, the casinos do not keep track of your buy-ins or winnings. Also, if you intend to carry insurance on yourself or your family, say goodbye to the group rate you’re currently paying. But these documents do not take into account the tournaments you play wherein you finish out of the money nor the cash games where you lost your buy-in. Published just two months after the USDOJ shut down online poker, it’s less an exposition on how to prepare yourself to be a professional and more of a humorous look at the difficulties a professional must endure. If you play $2/$5 NLHE, then your bankroll should be $25,000, for 50 buy-ins of $500 each. The quarterly requirement is little more than writing a check to the IRS and state revenue department, in the amount of one-fourth your expected tax liability for the year. This is your safety net; you can’t maintain a poker career without it.
First, you could buy-in short. Having a professional also means I don’t have to spend time reviewing any changes in the law with regard to gambling. Poker is not a static game. At the end of the year, you’ll receive a 1099 showing the amount of your reported winnings. Let’s say you earn $20/hour and your benefits add another $5 per hour to that, for a total of $25/hour. Please refer to yesterday’s article, Keeping records, for an example of how to go about this. I therefore recommend a bankroll of at least 100 times your average tournament buy-in, and to never buy-in to any tournament for more than 2% of your total bankroll.
One of the perks of writing a poker column is the many opportunities it gives you to discuss the subject with people of disparate opinions. So if you’re a $1/$2 NLHE player, your bankroll should be $10,000, given an average buy-in of $200. While you may look at it as a step down, if you find yourself playing on an insufficient bankroll, playing smaller stakes protects you against the risk of going broke.
In addition, I suggest you sign up for coaching from a professional with years of experience who can help you through tough times from the perspective of someone who’s been through it. When we started this, we had a job making $20/hr and someone else determined our schedule. The peace of mind and time savings alone are worth it to me.
For a cash game player, an average bankroll would constitute 50 buy-ins for your current stake. With my e-mail address displayed in the footer of every column I publish, people often write to ask questions. But you should also shop around annually and ask your agent to match the savings you’d realize by switching providers.
A number of books are available for futher reading. These sites also have forums and host blogs by other professionals which can be both instructive and reassuring as well.
Now let’s address the bankroll. This protects you against injuries you may suffer while on the job. If you worked a 40-hour week at your regular job, you also need to put in a 40-hour week at poker. As a self-employed individual, your taxes will increase based on the self-employment tax alone. If you aren’t affected by the implications of risk, you could operate your poker business with a smaller bankroll than what is suggested.
Next up is a blog post from Andrew Neeme, who posts on the Pokerati website. Just keep in mind, the bigger your bankroll, the lower your risk. I’d rather have an accountant working on my behalf to ensure that my losses are applied properly. You’d have to play a little tighter until you doubled-up, but you limit your losses in the case of an early bad beat or cooler. Buying-in for $100 in a $1/$2 NLHE game, or for $300 in a $2/$5 game. A short form must be prepared to go with your payment. Keep this amount in a saving account separate from your bankroll. Using the analogy of a $3,000 bankroll, let’s say you have an amazing run of cards and wind up with $1,200 in front of you. You need to continue to improve your game to stay ahead. You can save up to 40% by getting your insurance from one place. How much then would you need to earn from poker, as an average hourly rate, for it to make sense to be a professional poker player? If you think it’s $25/hour, think again. If you intend to be a tournament professional, you’re better off with 12-months of savings. That money represents more than 25% of your entire bankroll, and you should definitely quit the game no matter how well you’re playing.
I’ve heard good things about The Mental Game of Poker by Jared Tendler and Barry Carter, but I haven’t read it. Some professionals use this strategy even though they are sufficiently bankrolled. As for quit rules, you should set a limit on how much you can lose in a given session, as either a dollar amount or a number of buy-ins. I know a few people who do this for themselves, but I’m not one of them. If you must dip into it to cover any expenses, future profit must be applied to paying back your savings before being used for anything else. Of course, you want to protect your bankroll if you experience a downswing. So you have to put in the hours. This is especially true when going through a downswing. Much of the advice offered is from amateur players who can steer you wrong. You should not buy in to a cash game for more than 5% of your total bankroll. They will only fill out paperwork if you cash out more than $5,000 during a single visit. One of the most common has to do with what it takes to go pro.
Finally, here’s one by an amateur that gives good advice: Five tips for Becoming a Pro Poker Player by Cory Albertson. Strategies and plays constantly change and evolve. The smaller your bankroll, the bigger your risk. The biggest mistake new pros make is not putting in the hours. However, the only one I recommend is: Treat Your Poker Like a Business by Dusty “LeatherAss” Schmidt.
. To afford these additional costs, I suggest you add 25% to your current hourly rate
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