The poker industry is built on many different things. It’s built on the game, its players, the fame that comes with winning, but mostly it’s about money. Money is what brings you into the game, what could make you famous if you win a lot of it, but it also can make your fall that much harder. Having a lot of money is one thing, but holding on to it is definitely a lot harder.
Just think about it.
Let’s say you enter the World Series of Poker Main Event on a satellite tournament and you end up winning millions of dollars.
What’s your move?
Your move is probably to go to the club, buy tons of bottles, fire off some money in the pit if that’s your thing, make your way to the local booty shaking bar extraordinaire, travel around and play a ton of high stakes poker tournaments.
Is this smart?
All the things stated above can be possible, but doing it within reason will surely help. The way poker has been portrayed is one of the reasons people like to believe that all poker players drive $200,000 cars, wear $50,000 watches and play $100,000-buy-in events like it’s you local $1/$2 game.
This is where top poker professional Faraz Jaka comes into play as he shined his light on the matter in a serious Tweets a few days ago. Out of nowhere Jaka posted the following Tweets, summarized in the following paragraph.
“People genuinely think successful poker players, athletes, movie stars, etcetera can just have no regard for budgeting and will get by okay. Seriously, stop watching so much TV and media content that shows celebrities with the fanciest cars, women and lifestyle. It’s all just a trick to condition you to try to emulate their spending, thinking it will lead to you having similar experiences as them. Most people don’t actually live those lifestyles and most who do either don’t last or are in bigger financial problems than you’d guess. #stepawayfromthetv”
$12,000,000 sure looks like a lot of money!
After talking a short breather Jaka continued on Twitter, and we recapped them.
“Take poker for example to show how the media fools you. You see players buying into a $100k event, win millions and post for pictures with models at the celebration party. In reality they only put up 10% of the buy in, receive 10% of the millions and the models were hired by the company to make the lifestyle look glamorous. It’s all a magic show folks! Oh I wonder how much they would hate me for saying that if I was sponsored!”
Jaka spoke some very strong words about the business, the industry and the companies trying to show off the glamorous side of poker. In the follow recap of his Tweets he explains why he posted this rant.
“Reason for the rant? I see many people conditioned to irrational behavior and I want to reverse it to make this a better place for all of us. I’m not criticizing players for having 10-20% of themselves in a $100k, it’s smart on their end. It’s media forcing them to look more “baller”. I’ve had PokerNews, PokerStars and WSOP interview me asking how I sold action, so not every single media is doing that, but some certainly are. Also, I’m not picking any bone with poker media; it’s media in general using poker as an example since many of my followers know poker. People in media aren’t consciously trying to misinform, people are just doing their jobs with interesting content. It’s the people pulling the strings. The people pulling strings often just see numbers and need to be reminded at what they cause on the surface level. The system is the problem, making people aware is the first step towards making a change, even if it’s one person at a time, until it spreads like wildfire.”
Jaka’s words caused quite a stir, and we gave the former WPT Player of the Year more than 140 characters at a time to speak his mind.
“This is the stuff I talk about with my close friends, I think about it all the time,” Jaka started his explanation on why he decided to rant on Twitter about the perception the world has on poker players.
“It actually all started when I Tweeted if I should wait to buy the 17” MacBook laptop when it comes out, since there have been rumors about it, or if I should open my new 15” laptop right now. A lot of people replied that I should just get both, because I won a bunch of money, “So what’s the big deal?” was what they were saying.”
“They just think we all have so much money and we can live this rock star lifestyle, just blow it all and not really budget.” Jaka said about the Tweeters replying to him to make the “baller” decision.
“People don’t realize that you can’t live that lifestyle. The people you see on TV they either don’t live that lifestyle, or they do and they are going to go broke and get into trouble. It gave me the urge to educate, share my experiences and the way I see it.”
“There are a lot of misconceptions from the way the public perceives things to be and the way they really are. It should just be more transparent, because it’s not like I hate the community or anything like that. To be honest, this exists not just in poker but in every other community as well. Poker is a community I’m a big part of and I’ve seen the high and low end of it. Therefore, I can use it as an example and the people around me can relate to.”
Jaka has cashed for over $3.9 in live poker tournaments and more than $2.8 million in online tournaments. Add these numbers up and you get to a whopping $6.7 million dollars. We all know that those numbers are just cashes, but it sure is very easy to forget about what the actual return is. Jaka explains it as following.
“When you look at a business’ numbers you realize that their revenue doesn’t mean much at all. You have to know what their expenses are because a company with a million dollars in revenue can make $50,000 or $500,000 depending on the margins. So people should understand that those numbers are revenue, because typically players are backed. In that case they only get 50% of themselves and they might have $50 to $100k in traveling expenses and a few hundred thousand dollars in buy-ins. On top of that you have to pay taxes in most countries.”
Who doesn’t dream of a “baller” hotel room?
That raises the question, how much does a million dollar score actually bring into your bank account in case you are getting backed? Let’s keep reminding ourselves that there are exceptions, but for the most part it’s not what it seems.
For instance, someone like Michiel Brummelhuis has to pay 29% in taxes over his November Nine cash, no matter what happens because he lives in the Netherlands. Marc MacLaughlin is from Canada and the US government immediately takes 30% out of his cash. Then there are the staked players, the ones that sold action and the ones who’ve been waiting for a score like this for years, like JC Tran who hasn’t had a six-figure score since August of 2009. Those players will be not seen complaining as they have a chance at almost $8.4 million, but it gives a little perspective on their success.
“If you win a million dollars in a tournaments, first of all, you still don’t have the bankroll to play in $10,000 events. You’re getting backed so you get $500,000, after expenses over the year you’re down to $400,000, after taxes you’re down to around $250,000 or even $200,000. So think about it, someone who wins a million dollars might only walk away with 200 grand. I think that puts things into perspective a little bit. You can almost divide people’s cashes by five when you seen them in many cases,” Jaka continued.
“I pretty much play all the major tournaments and travel full time. So for me, a pro who’s going to play every major event including EPTs, Aussie Millions, the bigger WPTs and the WSOP, the buy-ins add up to around $600,000 every year. That’s with me playing one $100,000 tournament,” Jaka says about his own spending pattern.
Traveling expenses are also a huge burden when it comes to coming out on top. Staying at hotels, taking taxis and ordering room service are not among the cheapest of options, that’s for sure.
“When it comes to traveling expenses most poker pros have no idea what they are spending, but for me it’s easily fewer than six figures. I see many others pros, and the way they travel, and they have to be way over that. It’s like my first year on the road, I was staying in nice hotels, ordering room service and taking taxis everywhere. I recorded every dollar I’ve spent for the last three years and categorized it. That’s when I realized how much I could save if I switched from room service to groceries, stopped dry cleaning at my hotel and do my own laundry and take public transport over taxis. Now, in each category, I’m saving five-figure amounts and on top of that, I started liking it better.
So while some poker pros, living on their cloud of success, might think that Jaka is overreacting, he also adds that it has helped him on many different levels, not just financially.
“I’m eating healthier too now and because I’m taking the train I’m seeing the culture better by meeting other people outside of poker. So on top of the money you save, you also get a much more realistic experience of the countries you visit. When you’re just living in hotels and taxis all the time, you’re kind of in a bubble just with these other poker players that live this expensive lifestyle. That blurs your reality of what reality is, and how other people are living, and what this world really is,” Jaka said.
Jaka knows many cheaper ways of transportation than taxis!
With the costs Jaka brings up it almost seems like there is no way of winning long term as a live poker player. But Jaka is not under the impression that poker for him, as a tournament player, is not a winning venture anymore.
“I still think there’s great money to be made, it’s just about managing it right. I play a lot more live poker than online poker these days, so it’s going to take a lot of time to get through the variance. Most people play a good balance of online and live poker to get that statistic large enough and then you can consistently make money. This is mostly for tournament players,” he adds as online cash game players have a better way of getting through the variance because they’re not depending on one or two huge scores to make their year a success.
“Lots of times it can happen that you have a huge year winning a million dollars, but the next two might be losing ones or break even. This still means that you’re averaging between $200,000 and $300,000 income per year even if you had three losing years and one really good year. It doesn’t matter how many winning years you have, it matters that you’re realistic about it when you do,” Jaka said as he adds some more truth to his cause of letting people know that success is never guaranteed.
“You should just know that not every year is going to be like that, and manage your money appropriately. Figure out what kind of variance you can hit if you run really bad, and try to see what your financial situation will be like if you lose for two years. You should be okay with that number, because it could happen. You should assume for the worst, and calculate the variance,” Jaka closes out with.
If there’s one thing we can learn from Jaka’s experience, it’s that managing your money, expectations and taking variance into account are extremely important. These things all seem very “standard,” as poker players like to call it, but rethinking your patterns can never be a bad thing.
Next week, in the second and final part, you can read about how Jaka thinks that wanting to be socially accepted is one of the main reasons for “baller” behavior. Also, he gives tips on how to save money and better your spending habits when it comes to flights, food and accommodation.