Friday, December 24, 2010

The Concession

I have officially thrown in the towel on my multi-sport daily fantasy sports challenge with Buffalo66, and he has graciously accepted. Buffalo66 is without any doubt in my mind the best overall daily fantasy sports player alive and really dominated me throughout the challenge. I put up a strong effort with expansive player projection models for all sports, but was edged out in Fantasy Baseball, and thoroughly dominated in Fantasy Hockey and Fantasy Football. His scoring average against me in Fantasy Football was ridiculously high, and was often one of the few players beating me at the site we were playing at. Overall, I won a decent chunk of change during the challenge against other players with my challenge teams, but shipped a good portion of it over to Buffalo66 in our $25 leagues. You can see a recap of our challenge here in the Rotogrinders Forum

I wanted to use the challenge to step up my daily game and see if there was money to be made out there. Also, it was great experience to play on a competitive site, and see daily from the player's perspective. Ultimately, this will lead to improvements at Fantasy Sports Live. As far as making money in daily fantasy sports, it can be done, but requires good table selection skills as well as a high level of dedication each time you play. Even with a good player projection model, it can still take an hour or so to nail down an ideal line-up considering all of the other outside factors. When table selection was easy in fantasy football, I was making some good money, but it got tough pretty quick where we were playing at, and has never been very good for the other sports there. After the challenge, I still think FSL is the place to play if you want to profit. We have much lower rake which makes it much easier to profit long-term. We also tend to nurture the newer players with beginner leagues and in many other ways before sending them out for slaughter against the best of the best. The site we were playing at is just a giant blood bath for beginner players and tends to send them packing before they can build up some confidence. It would be nice to find a site with a ton of action and lots of new players around all the time, but it does not appear to exist yet.

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Thursday, December 23, 2010

Income Inequality?

When did income inequality become a bad thing? It is actually a huge virtue of capitalism. It is not a problem no matter how large it gets, and the government needs to stop trying to balance things out through “wealth redistribution”. If you want income equality you want communism plain and simple. The reason that capitalism creates so much more wealth than communism is because it incentivizes wealth creation. As a result a much bigger pie of wealth is created and available to those who would like to go out and work for it. This tends to drag up the quality of life for everyone, except the ultra-lazy. Ultimately the income inequality “problem” is the result of government meddling, and it will not be fixed through additional government meddling.

Let’s take the highest paid CEOs as an example. Let’s say they are making $25 million a year while the lowest level employees are making $25k per year (1000x). In a pure capitalist economy, this does not really make much sense unless the CEO is bringing 1000x the value to a company as the lowest level workers. While, I would like to believe this could be true, I simply don’t believe that it is. So, there must be something not pure capitalist about our economy that allows for some individuals to be paid much more than they are actually worth. I am going to point to government regulation of the economy as the cause of these inflated CEO salaries. In a pure capitalist economy, there should be ample competition. If a company is making enough money to pay their CEO $25 million/year, surely there is a smaller company out there who pays their CEO less that $1 million per year that has a much lower cost structure. Normally you would expect these smaller, more nimble companies to attack the big and bloated $25 million CEO companies across many fronts with much success. They can undercut on price with a lower cost structure. They can be closer to the customer than a giant corporation can be. For some reason this is not happening now. What has happened is that large companies send large armies of lobbyists to Washington, who have a large influence on the industry regulations that are written. The complex regulations end up favoring the big established companies by creating huge barriers to entry via endless red tape that small businesses can’t afford to deal with. As a result consumers don’t get real competition, and end up subsidizing a fat CEO paycheck through higher prices. Rather than just jack up the tax rates on the CEO you just need to lower the barriers to entry by eliminating the overregulation of businesses.

Jacking up the income tax rates on the rich has never worked anyway. A change in the tax rates does not equate to a change in tax collections. This is a fact that is completely ignored by the CBO and those in power today. The “cost” to extend the Bush tax cuts is widely reported at $4 trillion over 10 years, with $700 billion over 10 for the top tax rate alone. Where does that number come from? It does not come from reality that is for sure. Reality would look at income tax collections before and after the Bush tax cuts were implemented to see what the “costs” actually were. The Bush tax cuts were implemented in 2001 and 2003. In the latter part of the decade through 2008 income tax collections were up substantially over what was collected before the tax cuts were implemented. While there was a brief reduction in collections, immediately after the cuts, the economy recovered to the point where record income tax collections were possible and happening once again. The ten year “cost” of the Bush tax cuts when they were first implemented will be less than zero after 10 years have expired. Claiming that extending them out another 10 years would cost $4 trillion is an estimate that is wrong by more that $4 trillion. It is a complete joke that completely ignores what actually happened. Raising taxes does not equate to higher tax collections. Income tax collections have held steady at around 19% of GDP over the last 60 years regardless of tax policy. Letting the Bush tax cuts expire would likely damage the economy so much that income tax receipts would fall. Not extending them would have a cost, while extending them is free.

Income inequality is what makes America great. It is the incentive for anyone including the poorest of the poor to work hard and earn a better quality of life. If you take it away, you remove all incentive to work hard. The classic example is a real example from an economics class where the students were pushing the idea that socialism was a more just economic system. The professor said that if the whole class agreed to it, he would use a socialized grading system. He would average the student’s grades and give everyone in class the same grade. The students agreed, and for the first exam the best students worked hard, and the worst students did not study, and the class got an average C+ on the test. This discouraged the top students who tried less hard for the next test, and encouraged the worse students to not try at all. The next exam the class got a D+, and by the end of the semester the entire class got an F. The real economy is no different. If you incentivize laziness, and de-incentivize hard work, everyone loses. Income inequality is the incentive system that keeps America strong.

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Thursday, December 16, 2010

The Rise and Fall of Beginner NL Holdem at MGM

I’m back from back to back weekends in fabulous Las Vegas. As usual I like to play my live poker the MGM poker room. The first weekend after putting my name in at the usual $1/$2 level, I noticed that they were spreading something called beginner NL holdem. I asked what it was, and they said it was a $20 to $50 max buy-in $.50/$1 game. Now the 10% max $4 rake is a bit tough at the $1/$2 level, so at $.50/$1, it might be a bit tough to overcome unless the competition is really bad. I thought about it a bit and figured this really would attract the beginners, and with the small stacks they would be less afraid to get involved in pots. Seemed like a goldmine to me so I signed up. They were only running it at three tables. The wait was a bit long, but I sat down and figured if I could get a quick double up, I would have some chips to do some damage. I dropped about $20 early, and re-bought back up to $50, when I caught TT the next hand and built a decent pot preflop. The flop came 755, and I got right to work building a pot. I caught a nice T on the river and ended up getting all in three way for more than a full triple up and I was in business. The game is played with dollar chips so the mound of chips reminded me of dragging a massive pot in the old days at $3/$6 limit. From that point on I just grinded away a nice profit, while slamming all the free drinks I wanted.

Fast forward to the next night, and I am back at a beginner table with even worse players. The two guys to my left were folding preflop out of turn every hand, and the dealer did not seem to care. I got another easy double up and played for several hours and another nice profit.

Fast forward to the blogger gathering last Friday night at the MGM. The blogger table wait was too long to deal with, and bloggers were spread out around the poker room as a result. I put myself on the beginner list and hung out with the bloggers near the sports book bar for about 30 minutes as I moved up the list. When I found my seat, dollar signs were flashing in my head. I had a guy on my left playing out of a full tray of $1s. To his left was an agro kid pushing the table around on nearly every hand, but showing down pretty much crap. I had a lady to my right who had never played before, but had watched her son play. A bunch of other fish filled the table. This time the fish were getting a little luckier, and my stack was yo-yoing up and down a bit. I never really got into the hand I needed to double through and walked away with my stack down 20% (-$10). Ouch, but cost effective for the number of free drinks. Well there is always tomorrow night.

Fast forward to Saturday night, and they are no longer spreading beginner NL holdem. To bad, as it was probably more profitable than $1/$2 for a decent player. The rake was probably too low to take for the house. A bunch of small pots would go un-raked post flop, and the play was a bit slower due to the beginners. I thought that it was more of a loss leader type idea to get people to move up to where they make good money, but the MGM probably got tired of giving up the extra $20 or $30 per hour vs. a higher stakes table. Overall, I liked the concept, and hope some other poker rooms try it.

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