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Introducing “Live Poker tournaments”: A government house game in the casino.

Posted by Vinay Suchede on 2013-02-03 at 12:00 AM

Now the title should have been ‘Live Poker tournaments in India’. These are now subjected to 30% “non-deductible” TDS (Tax deducted at source). This essentially means your cash out is deducted by 30% and it is paid to the government by the organizer, and it is known as TDS. You are at a later stage provided a certificate, which confirms that you have paid the tax. Many businesses are subjected to this TDS but they get a refund for the expenses they have incurred. In poker’s case, there will be no refunds on your buy-ins (i.e. your expenses). For poker players, this is akin to 30% rake (taken by government).

Poker tournaments are, over the world (online or live), a credible but tough way to make living off. There are skilled professionals who only play poker tournaments and make money. Professional tournament player is a very recent job title in the poker world. Tournaments have huge variance. To overcome this variance and for skill to show through in results; one needs to put a lot of volume i.e. play a lot of tournaments. This was only possible once poker went online and players could play 50 tournaments in one day.

Poker tournaments were still played earlier (before online poker happened). These were essentially for two reasons. One was poker player’s wanted to find out who the best among them was. In fact the first WSOP winner, Johnny Moss was voted by his peers to that win in 1970. Second and the most important one was to gather players for the cash games at a single venue/city rather than players going from town to town looking for poker games. We all know now, a single tournament win (or a bunch of clumped up run good wins) is never good enough to determine how good a poker player one is.

So the direct aim of poker tournaments was never to make any serious money. But it became so in recent years due to advent of online poker and the number of live tournaments happening.

In Goa tournament circuit, as per my rudimentary calculations of travel and lodging expenses, a ‘out of town’ skilled player having a decent edge over the playing field could have made money playing only tournaments. I can’t provide exact math but I think certain below conditions should also be met:

– Your total buyin’s over a tournament weekend should be approximately 100,000 Rupees or over.
– You should play in tournaments where there was rake only on initial entry (of not more than 10%). Not on rebuy/addon/reentry.
– There should be at least 50 players playing every tournament in that series.
– If it was rake free or you were comped a hotel stay or there some decent POY awards, your chances of making money over a year improve.
– If your edge over the field were high, it would also help.

The difference in skill levels is what one calls ‘an edge’. This brings me to why I have said poker tournaments in Goa as a Government house game. A casino house game like Blackjack or Roulette always gives an edge to the house (casino) so one can never win at these games in the long term. Blackjack has a house edge of around 0.5%. Roulette has a house edge of approximately 5%.

Now let’s take poker tournaments with 30% TDS. Edges in Poker tournaments are calculated on base of ROI (return on investment).
Top poker players in the online world clock around 35-40% ROI over long term after rake. Thus when they invest 1 million in buy-ins over a year. They expect to cash 1.4 million and profit around 400,000.

Compare this with Goa tournaments. Lets say you have a similar edge/expected ROI over the rest of the field. You play 10 months of 100,000 buyins worth of tournaments every month. Thus your investment is 1 Million and your expected cash out is 1.4 Million. All your cash-outs are now subjected to 30% TDS. So 1.4 Million – 30% (420,000) = 980,000. We are in the red. Thus even after being a skilled player having 40% ROI, we are actually giving edge to the government of 2%!!
Now let’s add 20,000 to your travel and lodging expenses per trip. 10 trips x 20,000 = 200,000. This makes it 980,000-200,00 = 780,000. We are 220,000 in the hole playing to the best of our abilities.

So playing tournaments for profit is now not possible till we fight and are able to reverse this ridiculous 30% ‘non-deductible’ TDS. Players intending to play only tournaments, you might as well play blackjack. I was shared the TDS poll data by PokerGuru site developer Mr. Jan Hlobil in return for writing a blog. Since the poll was anonymous, the data cannot be completely relied upon but it seems that there are still some people out there who feel not bothered by TDS and its implications. Thus in a way, I felt compelled to write this blog.

I am not suggesting that tournaments should be stopped. They are important for the second reason that they started in the first place i.e. they enable players all over the country to congregate and ply their wares in the cash games at single venue. The tournaments however should have lower buy-ins so that not much poker player money is flushed out to the regressive tax from the poker ecosystem. They should also be rake-free like the recent IPC one. The organizers can/should get their due from the cash game action and rake that they generate. I would suggest that the organizers only do micro-series (with main events of 10kish) till the time this tax is made deductible. For players looking for high action, they could have separate last longer prop bets/side pools.

Please feel free to correct/drop in suggestions in the comments below.

Cheers!!

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Vinay Suchede

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