Bad Beat Jackpots

I’ve been away for a while —playing poker in Vegas. I went down for my annual pilgrimage to the World Series of Poker (WSOP) and didn’t get around to posting anything. It was an relatively uneventful trip — that translates as “I broke even.” I played in two “bracelet” events (that’s what the folks at the WSOP call any of the major tournaments that award the winner a gold bracelet along with the cash), three smaller events at various casinos around town (Binions, the Golden Nugget and Aria) and, alas, crashed and burned in all. It’s tough to make the money in one of these. They only pay some 10% of the field and, unlike a decade or so ago, those fields are full of good players. There’s not much “dead money” anymore — as the amateurs and inexperienced players are referred to.

I played in five STSs. An STS is a “single-table satellite” where ten players play till one has all the chips. In most of these the final two will “chop” the prize, usually along lines that mirror stack sizes. I won two of the five outright — that is, no chop with another player. In both we got down to heads-up and, having the bigger stack each time I offered what I thought was a fair chop. Both times my opponents turned me down. Both times I busted them. Cash games were also good. So, “uneventful trip = broke even.”

Back home I got up this morning ready to go again — at the local Saturday Special, a 150 + 15 buy-in tournament. I called in to register and was told that “all tournaments have been cancelled for the foreseeable future.”

“Huh?” I grunted.

“The Bad Beat Jackpot is over 700 thousand,” he said.

“Huh?” I know I sounded disbelieving.

“Every table is full with cash game players. All tournaments have been cancelled till someone hits it.”

I HATE Bad Beat Jackpots for many reasons — and this is one of them.

Bad Beat Jackpots, for those who may not know, are a gimmick that many card rooms have instituted. They are a lottery-like pot of money that can be won if something wildly unlikely happens and a very strong hand gets beaten by an even stronger one. The BBJ that’s being run here has the qualifier hand of quad 8s beaten by a better hand. That is just not going to happen very often.

The money in the BBJ is contributed by the players. Every hand with more than some threshold (usually $20) has $1 raked from it for the jackpot. The more players, the more games, the more money goes into the BBJ which continues to build until a qualifying hand happens. It’s easiest to give some examples of how this might happen. Suppose you have 6♥, 7♥  and are up against a player holding J♥, Q♥ and the final board is 8♥, 9♥, 2♦, A♠, T♥.  Your straight-flush is beaten by your opponent’s straight-flush. You, holder of the “Bad Beat” hand, win half the jackpot; the other player who held the winning hand gets one quarter and all the other players at the table who were dealt into the hand split the remaining 25%. Another: you hold K, K and get it all in against an opponent holding A, A and the board ends up A, 8, A, K, K. Your quad Ks is beaten by quad As. Note that in all cases both players must use both hole cards and all qualifying hands must have a pot over some threshold, usually something like 20 bananas. This latter rule prevents everyone from just sitting there checking down hand after hand and never betting anything, just waiting for the magic cards to appear.

Sounds cool, yes? Well, the vast majority of recreational poker players think so and, as I discovered this morning, flock to the casinos when the jackpot creeps up to these life-changing levels. But they are not cool, not in my view of this game. Here’s why:

First, they bleed money from the table. Let’s assume that there are 25 hands an hour with pots large enough to be eligible for the jackpot take-out. My local room has 18 tables. This means that when running full tables some 450 rutabagas are being pulled out of our collective pockets every hour. Now not every table is going every moment of the day but it’s a reasonable estimate that every day something of the order of 8,000 coconuts is being dragged out of our pots and being shifted into the BBJ. That is a huge rake. Put it in more personal terms to see the impact. Suppose you’re a professional poker player and you put in the standard 2,000 hours a year in live play. You will average roughly two rakeable pots an hour and each will be 1 banana smaller than if you were playing in a room with no BBJ. The result is pretty painful: your annual income has been reduced by 4,000 coconuts. If you’re a successful 1 -3 or 2 -5 grinder this represents a significant percentage of your annual income.

Second, the BBJ is a “game” with negative expectation. The house takes out an administration fee, usually around 10% and many will also pull out a “starter” chunk of change that is used as the base for the next jackpot after one is hit. Poker is a game that can be played with positive expectation by a skilled player. Inserting this secondary game reduces this edge and you have no choice about whether you wish to participate — especially if there isn’t a room without one in the vicinity.

Third, the jackpots are taxed. The IRS treats them like lottery winnings (which is precisely what they are). The local BBJ may be closing in on three-quarters of a million zucchinis now but if I were to hit it or even be just a winner of a minor share, I wouldn’t take home anything near the full payout. It’s worth noting that if you play in a country with a sensible, progressive tax code like Canada or the UK these kinds of bounties are classified as “windfall” income and not subject to income tax. Sensible governments appreciate that these pots of money have already been taxed because not all the money taken out is returned to the player(s). They also generally have progressive tax codes which do not penalize the lower income groups, reserving the higher tax brackets for the wealthy. If you take a look around the typical poker room you can get a pretty good sense of which tax bracket the average player is in. [This wasn’t supposed to be a blog about politics but, well, …., I just can’t help myself. FWIW, my local card room is in Canada but, as a US citizen, I am still liable for taxes on any income generated anywhere in the world.]

Fourth, the probability of hitting a BBJ is vanishingly small. There’s a reason that the current one is so high. How unlikely is having quad 8s beaten? I, frankly, cannot recall ever being in a hand which would have qualified, ever, in my life and I’ve been playing poker off and on for half a century. We’re in “don’t-hold-your-breath” land and, in my mind, we’re also in “don’t-play-at-casinos-with-a-BBJ” land.

Fifth, just having a BBJ going brings a lottery-like mentality into poker. The BBJ has virtually nothing to do with poker. It’s a damn crap shoot that rides on faint hopes and gossamer airs. It’s a side bet with near impossible odds and horrible value. It detracts from the game.

Sixth (and last), one of these damn BBJ frenzies got my local card room to cancel their regularly scheduled tournaments and that has me feeling more than a little ticked off.

Comments

[ZedRoyale]

Just like almost anything in life and poker, BBJs, have positives along with negatives you mentioned in your post.
Cash games become much juicier during the BBJ frenzy - there is so much more dead money for the smart player who isn't chasing the BBJ, but rather exploiting that "dead money" that is put into the pots by players who can't fold a hand because it's a "BBJ hand"...
IMHO, this factor may compensate quite a bit the BBJ rake.