The Poker Life Cycle

Posted on Feb 04, 2010 by Gugel in General

People are born, grow up, grow old, and die.  Businesses are born, mature, and die.  Most businesses that were around 100 years ago arent around today technology gets outdated, CEOs die off and the corporate bureaucracy stifles adaptation. Poker, like any other business, has a finite lifespan.

Take a look at the graph below. The most of amount of profit potential is in the development and introduction phase.  Starting a business in these two phases, however, carries a phenomenal amount of risk.  A lot of industries look like theyre in the development and introduction phase before stalling.  The growth phase is where you wanna break into the industry.  The early pioneers have proved that the industry is profitable and they have developed successful strategies that you can imitate and improve on.

Industry Life Cycles

Industry Life Cycles

So where is poker in the industry life cycle?  Notice the remarkable similarity between the general industry life cycle graph above the number of WSOP entrants as visualized in the graph below:

Poker Industry Life Cycle

Poker Industry Life Cycle

In my opinion, nows not the time to get into poker.  If you didnt start playing before 2006-2007, I think youll be trying to squeeze into a much narrower window of opportunity.  Thats not to say that someone just starting poker now cant make it big.  They can.  It will just require more blood, sweat and tears to get there.

There are 3 main reasons why the poker industry has declined.

  1. Natural maturity of the industry is responsible for 70% of the decline.  Just like any other business, a big profit margin quickly attracts competition and that competition eventually drives down the profit margin. The profit margin of every industry always moves towards  (but never reaches) zero.
  2. UIGEA is responsible for 20% of the decline.  Passed in 2006, the legislation made American poker players jump through hoops to get money online and Party Poker withdrew from the U.S. market.  If the UIGEA is repealed and poker becomes regulated in the U.S., the industry will rebound but it will never return to anywhere near 2006 levels.
  3. The global recession responsible for 10% of the decline.  Fish have less money to deposit.

For the record, Im friends with the guys at DeucesCracked and PokerTableRatings, but Ive tried to remain unbiased in my evaluation.  Im on the fence if theyve hurt or helped the poker economy, but either way, I think theyre making a relatively minor impact in the grand scheme of things.

  1. Online training sites The availability of great coaching resources has made the competition tougher.  Its also much easier for you to get better at poker.  It balances out.
  2. Online databases On one hand, online databases make bumhunting easier and limit action.  On the other hand, it lets you table select much more effectively and increases your profit margin.  Also, the guys at PTR use their data to help prevent cheating scandals (like UB/Absolute) from harming the industry.   It balances out.

The main reason why poker is tougher these days is the natural maturation of the industry.  But is online poker dead?  Of course not!  If you have the right mix of dedication, talent, intelligence, and guts, you can still be really successful.


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10 Responses to The Poker Life Cycle

  1. jimsbets

    05. Feb, 2010

    Regarding the online training sites, it doesnt balance out. Turning an idiot into a breakeven player hurts your winrate more than the same amount of training would help your winrate. Its easier to correct their huge mistakes than your smaller ones and those huge corrections make more of a difference.

  2. jimsbets

    05. Feb, 2010

    if it helps clarify, think how much easier it would be to coach someone from -3ptbb loser to breakeven than it would be to coach them from a 3ptbb winner to a 6ptbb winner.

  3. Gugel

    05. Feb, 2010

    @jimsbets
    You make a good point, but you also have to consider that it still takes an extraordinary amount of work to become even a breakeven player.

    If the training sites didnt exist, a -3PTBB loser would still become a breakeven player because he has the dedication and the competition would be softer. Now that the training sites DO exist, a -3PTBB loser has better resources available to help him improve, but the competition is tougher. Either way, it still comes down to his dedication, talent, etc.

  4. The Poker Meister

    05. Feb, 2010

    Good, informative post, as always! Nice writeup, Gugel!

  5. Joe

    06. Feb, 2010

    I think you may be right on about the maturity of the poker industry. However, I am not sure it translates into timing for an individual starting to play. With the exception of there being less inexperienced players at the tables than there was a few years ago when they were coming in droves, I dont think the number of players in the industry has any affect on the success of an individual player.

    If you are correct that the poker industry has reached maturity I think it is poor time to open a card room or an internet poker site. The reason is when the market is growing you can gain market share without having to steal customers (or players in the case of poker rooms) from other businesses. After maturity of a market entry is difficult because there are few new customers so the only way to grow is by stealing customers from competitors who are already established.

  6. Jason

    15. Feb, 2010

    If you didnt start playing before 2006, nows not the time? Why, because beating up on easier competition is the path to success? Without that valuable experience, its going to be a tough road to hoe? Or are you saying that everyone that was playing before 2006 are millionaires now, so theyre set for life? What exactly is the logic here?

  7. Gugel

    15. Feb, 2010

    @Jason

    Lets say you were trying to build a search engine. Do you think it would be easier / more profitable to break into that industry now or in 1998?

  8. Ken Stephens

    12. Apr, 2010

    I dont think the industry is in decline at all, poker is still a vastly popular game and theres no reason why this wont continue indefinitely.

    As for players getting better, its not that anyone is teaching poker beyond a level that cant be exploited by the good players, as always.

  9. Michael Josem

    28. Apr, 2010

    The claim that PokerTableRatings helped to detect the cheating at Absolute Poker and Ultimate Bet is simply untrue.

    The cheating was detected by the players in the game who looked at their own Poker Tracker databases and records.

  10. Gugel

    28. Apr, 2010

    @Michael Josem

    I didnt mean it like that, but I see how it could be misinterpreted :)

    I meant that its POSSIBLE for PokerTableRatings.com to use their data to detect/confirm cheating. The UB/Absolute scandal was an example of such cheating, but PTR didnt have anything to do with that specific case.