Chapter 1: Video Poker - A Free Lunch and a Lot More

There’s good reason to raise your eyebrows when you hear about something that sounds too good to be true.You can’t help but look for the fine print that reveals the true cost of the free lunch.

You can get much more than a free lunch playing video poker, but there is a catch. To reap these rewards, you need one crucial thing -- knowledge. This book is about getting that knowledge in the easiest way possible.

There are easy ways and hard ways to learn things.For example, we all know that pictures can often make understanding things a lot easier.Our brains evolved to process pictures very efficiently -- quickly identifying the difference between a lion and a deer might mean the difference between eating lunch and becoming lunch. 

Of course, the right picture can makes things easier, but the wrong picture may make things more confusing. This book shows you the right pictures so that you will understand all you need to know aboutvideo poker.

Enough words.Figure 1 shows why video poker is rewarding with regard to something that is near and dear to most of us: money.

Figure 1

As you can see, unlike the other casino games, video poker offers a financial reward that is positive. That statement is worth repeating and emphasizing because it runs contrary to every expectation that you probably have about casino games. If you play video poker properly, then you are more likely to win than to lose in the long run. As Figure 1 shows, this is not the case with any other casino game.

While the best video poker offers an expected reward of about 0.7%, this does not include other compensation that you can get at the casinos. In addition to winning money from the machine, you can get cash back, free rooms, free food and free drinks. Figure 2 shows that the total financial reward can reach about 3% if you know how to work the system (see Chapter 4 for how to get the additional compensation).3% may not sound like a lot, but a weekend of play can generate $20,000 of action.3% of 20,000 produces about a $600 gain in a weekend.

Figure 2

But money is not the only reward of gambling.Gambling is supposed to be fun. If you were only interested in financial rewards, you could probably make more money doing something else.Therefore, you want to play a casino game that is the most psychologically rewarding.It’s time for another picture. Figure 3 shows the psychological reward for various casino games. 

Figure 3

While the financial rewards of casino games can be precisely determined, the psychological rewards have to be estimated. The estimate here is certainly a rough approximation, but it does use two factors that are known to have an influence on the magnitude of psychological reward of a game.

First, the psychological reward is greater for games in which the player has some control over the outcome.Therefore, blackjack and video poker get one point because the decisions of the player make a big difference on the outcome of the game.The other games (e.g., slots, craps, and roulette) are far less affected by the decisions of the players.

Second, and perhaps more importantly, psychological rewards are greater for games that have more variable payout amounts.Therefore, casino games with small variations in payout (e.g., blackjack) get 1 point, games with medium variations in payout (e.g., roulette and craps) get 2 points, and games with large variations in payout (e.g., slots and video poker) get 3 points.

If you hit a royal flush on a 25 cent video poker machine with maximum coins bet (which actually requires $1.25 per game), a person walks up and gives you $1000 in cash. This is a strange and wondrous thing. One moment, you are sitting there with $43 in your wallet and the next moment you have$1043 in your wallet.This has happened to me ten times in my life and it is still hard to describe the wonderful weirdness of the experience.I have a very good understanding of the statistics of video poker. I know that if you play as much as I do, then royal flushes will happen. Still, I am amazed when they do.

Suddenly, you realize that the new TV that you’ve been saving for is easily within reach (as long as you don’t put the $1000 back in the machine). How can this be? You’ve just earned in 5 seconds what normally takes a week or two of work to earn.

This kind of thrill is not going to happen in black jack, craps, or roulette (unless you bet a lot more). This thrill can happen in slots, but the financial reward for slots is horrible -- you are probably better off betting on pork belly futures.

Royal flushes happen very rarely, but there are many hands in video poker that pay out between $30 and $250 and these hands can occur once every hour or so. Other hands that pay $10 may occur approximately every 10 minutes.Of course, that elusive royal flush only occurs about once in 60 hours of play, but when it does, it will be relived in memory for the rest of your life -- I can remember each of my ten royals like they happened yesterday.

This is the beauty of video poker. It can offer great psychological reward and a profit. This sounds too good to be true. What’s the catch?

The catch is that you do have to know how to play. This is why you are reading this book. If playing video poker were completely simple, then everyone would win and the casino would lose money and video poker would become a thing of the past.

Luckily, there will never be a shortage of people who do not know how to play. This is a good thing for the knowledgeable player. Without these people to support video poker, smart players could not play with a slight advantage.

How much difference does knowledge make?Figure 4 shows how skill level predicts expected return for video poker. This graph is somewhat arbitrary, for it is hard to say what it means to be completely unskilled at video poker.Most video poker players have some sense of the fundamentals of video poker, but this fundamental skill level will still leave the player at a significant disadvantage when playing video poker. 

Figure 4

Let’s look at the left side of the curve. The picture shows that when you know nothing, then learning just a little can increase your reward quite bit.The picture also shows that the more you know, the less important it is to know more. This is so because the curve flattens out as your skill level increases. The far right side of the curve is especially important because the curve pretty much flattens out at skill level 10, Importantly,the reward at skill level 20 is only very slightly higher than the reward at skill level 10 even though skill level 20 would require a lot more effort. The key to video poker is learning just enough to get you near the flat part of the curve.Skill level 10 is a great place to be because you can get there without too much stress, you can play at that level without a lot of effort once you have trained yourself, and you still are more likely to win than lose.

This picture also shows why video poker can make big money for the casinos even though you can win if you know how to play. The vast majority of the players are not very skilled and so the casino enjoys a nice return on these machines even though a small portion of skilled players might win on them. 

The picture also suggests why the casino might not lower the payout schedules (i.e., the amount paid out for each hand) to make it impossible for anybody to gain an advantage. If the casino lowers the machine’s payout, then the unskilled players may not win enough to get them hooked (to play more and eventually lose more).

Once you have learned how to get to the flat part of the curve, then you are one step away from reaping the financial and psychological rewards of video poker.Of course, getting to the flat part of the curve will require some effort. However, the good news is that playing video poker becomes a lot easier over time. As a beginner, you will have to consult a strategy card (i.e., a card which tells you how to play) quite often. But with some practice, the strategy becomes so automatic that you can play with very little effort.

Figure 5 shows how the level of difficulty will decrease over time with practice.

Figure 5

Playing video poker is like driving a car with a manual transmission (i.e. a stick shift). At first, driving a stick shift requires a lot of conscious effort.You have to focus on when to let the clutch out while you simultaneously shift. With practice, this becomes so automatic that it seems to require hardly any effort at all. Video poker is no different.At first you will be likely to think , “I will never be able to remember this stuff”; but over time, you will think, “This is really pretty easy”.

While video poker games are available in a number of denominations, the most widely available and popular games are 25 cent machines.All of the strategy information presented here can be applied to more expensive ($1, $5 or $25) or less expensive (5 cent) machines,but the figures in this book which refer to dollars (e.g., expected rewards) are based upon playing 25 cent machines. The great majority of video poker players play these machines because you can win quite a bit, but not lose too much if you know what you are doing.

You can bet from 1 to 5 coins, but you should always bet 5 coins. This is because almost all machines pay far less for a royal straight flush when you bet less than 5 coins. If you cannot afford to play 5 coins for a long time on a 25 cent machine, then you should find a 5 cent machine or play the 25 cent machine at a slower pace. Playing less than 5 coins will diminish your reward by 1 to 1.5%. The royal straight flush provides about 2% of your total return if you play 5 coins. But if you play 4 coins or less, you will only get about .6%. Even if you play the best machines with expert strategy, it will be hard to recover this 1.4%.

There are several different versions of video poker, and each version can have different pay tables. A pay table simply indicates how much the machine pays out for each type of hand. These pay tables vary a lot, but this book provides you with all the information you will need to spot the best machines. The best machines are called “Full-pay” machines, and the lower paying versions are called “Short-pay” machines. To make things even easier,a report is provided(in Chapter 11)for Las Vegas casinos which offer the full-pay versions for the three most popular video poker games.

Full-Pay versions will not be labeled as “Full-Pay”, and Short-Pay versions will not be labeled ad “Short-Pay”. Identifying the Full-Pay versions requires the knowledge of which pay tables constitute “Full-Pay”. For example, a Full-Pay Jacks or Better machine will pay 9 bets for a full house and 6 bets for a flush. Short-Pay versions will often pay 8 bets for a full house and 5 bets for a flush. This book will provide you all the knowledge you need to identify the Full-Pay versions of the most popular games.

Knowing which machine to play is as important as knowing how to play. Playing short-pay machines is equivalent to throwing money out the window. Strangely enough, one casino will often have full-pay and short-pay machines right next to each other. Most casual players are ignorant of this fact and will happily play the short-pay machine even though it may cost them tens to hundreds of dollars to do so. In fact, the majority of the video poker games offered by casinos are short-pay.It is certainly possible that casinos may offer only short-pay games in the future, but full-pay games will probably be around for a number of years.

Figure 6 shows how crucial machine selection is to your financial reward.

Figure 6

As Figure 6 shows, playing a very short-pay machine with perfect strategy will yield less financial reward than playing a full-pay machine at only a moderate level of skill.The links section contains a link to the VP-Insider,which is a pay service ($20 for a three month trial) that provides a map of the full-pay machines in Las Vegas. Even if these full-pay games are eventually eliminated, knowing the optimal strategy will always be crucial to maximizing the financial return. 

Let’s summarize. Video poker is a rewarding game because it offers a large psychological reward (e.g., a lot of excitement)with an expected financial gain. How many other activities can you think of where you can get paid to have fun?The catch is that you need to use your head a bit.If you are willing to make an investment to learn, you will be rewarded.