The Texas Hold'Em Craze

June 27, 2005


Poker and specifically a variant called Texas Hold'em has swept the nation, but what is this game, why is it so popular, and why should you care? Many people have played poker, usually five card draw, for pennies or clothing, but more and more are playing Hold'em for real money. Texas Hold'em has been around for many years, and serious pros have played it in Texas back rooms and Las Vegas casinos, but only recently has it become widely known and played.


Most trace the explosion of poker to the innovation of card cameras in television coverage, as used on the World Poker Tour and ESPN's World Series of Poker coverage since 2003. The card cameras made it possible to see players cards during the action, making the televised accounts much more interesting and creating an audience for spectator poker. Gambling in general has grown rapidly in recent years, as much as 20% annually, to a total US revenue of $47.3 billion in 2004. The explosion of online casinos has also made it easy to find poker games anywhere at any time.


The 2005 World Series of Poker is currently underway, and it's the largest poker tournament in history. The World Series is a month-long series of events, culminating in the "main event" the $10,000 No Limit Hold'em tournament starting July 7. The main event is open to anyone willing to buy in; many novice players now make their entry fee from smaller satellite tournaments, where the winner gets in to the main event. It's estimated that over 6,000 players will participate this year, for a total prize pool of $60 million, and the tournament will last 7 days.


Why has Texas Hold'em in particular become so popular? Much of the reason is in the game itself. Hold'em is a game which involves both luck and skill, just like Monopoly or Backgammon. In gambling theory, it's a game of high "variance", which measures how much randomness is in the game. A better player will win in the long run, but lesser players can win a lot of hands. The professional players like this, because it keeps the "fish" (novices) in the game. In the long run, your net wins or losses will be dictated by your skill, but in the short term there can be large fluctuations.


In poker, of course the best hand wins a show down, and a novice can make a big hand just as well as a professional. The skill comes in deciding what action to take with your hand. At each step, you can fold, call, or raise, and by choosing wisely, you can manipulate the game. Professionals will win more with their good hands, and lose less when they're beat. They can also use bluffs and betting to take away pots from their opponents.


Catching good cards is like winning the lottery it's an exhilarating piece of good fortune than can make you a lot of money. Novices love to tell the story of making a full house or a straight flush. Bluffing and intimidating your opponents feeds a macho urge for competition and exerting your alpha male superiority. Aside from all other factors, it's simply a fun game to play with your friends; it provides many opportunities for drama and tension. It's also one of the few games where people of widely different skill level can play against each other and all enjoy it.


Hold'em also has an outlaw allure. Poker is associated with cowboys and mobsters, playing in back rooms with guns under the table powerful men with nerves of steel risking fortunes on a hand. It doesn't matter that this is mostly myth; this sexy image makes it cool to get together and play poker with the guys unlike most games, which are considered geeky. Hollywood movies like "Rounders" and poker celebrities like Amarillo Slim have helped to further this image.


Poker greats have become celebrities thanks to television, and anyone who puts up the money can play against them. Lots of rich amateurs play in the major tournaments simply to be able to face their idols. It's like being able to put down $10,000 to be able to play in the US Open of Golf with Tiger Woods and because of the variance in poker, you actually have a chance of winning. The randomness of poker creates the illusion that you're not just throwing their money away. Not many people would pay $10,000 to pay chess against Gary Kasparov they know they would just lose but people will play poker with top pros, and lose even more money.


If you want to start playing Texas Hold'em, there are many resources on the internet, and many books on the game to get you started. It's important to start with cheap games and make sure you can win at them before moving to more expensive games. All poker players should keep accurate track of their winnings and losses to make sure they aren't developing a costly gambling addiction. If you just want to play for fun, you should do so cheaply; if you want to play for profit, it's a very serious endeavor which requires difficult study and effort.


The poker craze is also providing financial opportunities that even non-players should be aware of. The top professional players are certainly doing very well as a result of poker's popularity more than twenty top professionals have made over a million dollars each already in 2005. Poker authors are also doing very well poker book sales grew 84% last year and are now one of the best selling non-fiction categories in all book sales. Some major books include Doyle Brunson's "Super/system" , Gary Carson's "Hold'em Poker" and David Sklansky's "Hold'em Poker for Advanced Players".


The best bet you might make on poker is to put your money in a poker-related stock. As with most gambling, the house always wins, in poker it's by taking a rake from every hand played. The big growing market for this is online. There are currently around two million active online players, with about 50,000 playing online at any moment. Most players now prefer online play, because it's easier to find a game, you can play more hands more quickly, and the house rake is much lower. It's also a better deal for the house, because the cost of running an online game is near zero once the system is set up each poker hand is pure profit.


The biggest player in online poker is PartyGaming, which is based in Gibraltar and is going public on the London Stock Exchange this week. The IPO is expected to raise around $10 billion dollars. PartyGaming runs PartyPoker as well as other non-poker online casinos. Revenues for PartyGaming are expected to reach $1 billion for 2005. All of the online poker sites are based outside of the US because it's illegal to provide gambling services over a wire in the US. Other major sites are Pokerstars, based in Costa Rica, and Paradise poker, acquired by Sportingbet Plc in November 2004, another British company which is a major player in all types of online gambling, with $2.4 billion in revenue in 2004.