understanding roi in texas hold'em

ROI, or return on investment, is a common calculation used to determine success in business. Business owners want to know the ROI they are getting on their marketing efforts; investors of course are obsessed with ROI on they can get on a particular stock option, index fund, and so on. But savvy poker players also know that ROI can be used to determine how well they are doing at Texas Holdem.

The average or beginner poker player probably never thinks of this, because it makes this fun and exciting game sound too much like "business". But let's remember, businessmen stay in business because they find it fun--they aren't all grumpy old men from Nouveau Riche white families! If you approach your Texas Holdem game like a business--albeit quite a fun business, if I do say so myself--you will have more fun than you are now if you aren't doing that, because we are all here to win. Losing, at least losing all the time, is no fun. You're playing poker because you want a fun way to make some money. If that's not why you're playing poker, do yourself a favor and quit.

Return on investment for poker players who are in cash games is usually determined over a certain number of hands--and that number is usually some multiple of 100. Now, the reason we calculate ROI over a large number of hands is to mitigate against the streaks and the profitable "dumb luck" streaks that can come over the course of just five or 10 or even 20 hands in a row. We want a realistic picture, and the only way to get that--just ask any successful market investor, or any professional athlete--is to look at the long run, not the short run.

So, let's say that you play 1000 hands of cash poker and, after you figure in your buy-in amount at the start, you come away with $750 in profit (profit, of course, is all the money you clear and can put in your pocket and go do whatever you want to with after you have paid all necessary expenses--such as your buy-in). If you use the standard measure of cash game ROI, you have a 75% ROI per 100 hands. ($750=75% of 1,000, then divide each by 10 to get down to 100 hands). This is quite an astounding ROI, and most investors would love to see that as their annual return! (Frankly, so would most poker players.)

Of course, you want to keep re-calculating your ROI every 100 or every 1000 hands so that you stay real about how well you are playing.

It's even handier to calculate your Texas Holdem return on investment if you are playing lots of sit n go tournaments. With sit n go tournament play, you divide you total profits by your total amount of entry fees, then calculate that by 100 to get a percentage. So, if you enter a tournament where the entry is $40 + $4, and you end up winning first prize of $200, your profit is $156. 156/44 = 3.54. Turn that in to a percentage and you have made an utterly amazing 354% ROI!

Now, to keep things sober...taking into consideration a 2005 poker professional study of 100,000 SNGs, new U.S. legislation introduced in the last couple of years, and the growth of online poker training sites and poker software tools, the professional consensus bad beat is that the following should be poker tournie winnings expectations for good players:

• 11s - 20% ROI
• 20s - 15% ROI
• 33s - 10% ROI
• 55s - 8% ROI
• 109s - 7% ROI
• 215s - 6% ROI

How can you improve your SNG ROI (or your cash game ROI), in addition to just continuing to study and practice poker strategies?

• Choose online gaming tables with lots of fishies. Also, try to play several tables at once, and look to playing Turbo SNGs.
• Be extra attentive to the bubble
• Play at higher levels. Yes, that's right, stop being a coward!

So, there you have it. Get better at Texas Holdem and raise that return on investment! Make playing worth your while. Losing sucks, personally and financially.

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