11/30/2006

11-30-06 - 1

The problem with poker as a profitable gamble is that you can't just up your bet when you find an edge. You find a good table or you're beating a certain limit - you can't just throw your bankroll at it, because to gamble bigger in poker you have to move up in levels, which is a harder game. Roughly the difficulty is proportional to the level you play, which makes it hard to roll big.

In sports betting, you can generally go big when you find an edge. (that's not completely true because books will identify you as a sharp and start giving you bad lines or setting limits, but I'll ignore that for now). The problem with sports is that you get very few gambling events and they're very high variance. If you're a good capper you win 55% or so of your bets. That's good EV, but in the NFL you only get maybe 30 bets a year. The variance on that is huge. In contrast, in poker you will often be getting 55% shots, if you play a lot you might get 10,000 a year, which means your profit is much more regular. Even if you go to something like the NBA where you can get your money on more games, it's still only a few 55%'s a day, whereas in poker you'll get maybe 100 a day.

The third option are the financial markets. There's tons and tons of opportunities to trade so you can smooth out your variance. The return generally doesn't decrease with investment (for my money scales, it does if you're getting into huge monies). So, that's the best of both worlds. The only problem with finance is A) high transaction costs, and B) the markets are much more efficient so the edges are smaller.

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