62 – March 3
“Experience is a good teacher, but she sends in terrific bills.”—Minna Antrim
“Do you ever gamble, Fred?” the player in seat two asked the dealer, a handsome black man with a bright smile.
“Oh, noooo!” he exclaimed, shaking his head with a grin as he shuffled the cards. “I go to Gambler’s Anonymous three times a week. I lost $85,000 in one year, the house, and the wife. I don’t gamble any more.”
Whenever I read an article or watch a television program about gambling, it is usually filled with stories like the one above. There are many of them. So why is gambling a $500 billion industry? Why are new extravagant hotels being built every year in Las Vegas? How can people continue to take these kinds of risks?
Gambling has been a part of human experience since the dawn of time. Archaeologists have discovered gaming dice among the ruins of many ancient civilizations. (Cheating has existed just as long; a recent discovery at an ancient city site was a die with two fives on it.) With all of the negative press, the horror stories of terrible losses and the railings of anti-gambling forces in every era, gambling persists. Why?
Because some people win.
And win big! For every story of loss and heartbreak, there is a story of the person who put two dollars in the slot machine and bells clang, whistles blow, lights flash and they’re an instant millionaire. Because we are all at the bottom of our souls eternal optimists who love the idea that one day we may hit the big time, that Lady Luck will smile on us, and maybe it’s our turn today! Our hearts pound, the adrenaline rushes, we hold our breath in fear of the outcome, yes, yes, oh, no, we lost, curses, depression, tears…but maybe next time, we’ll win and scream and yell and life will be great! I bet! It’s an adventure, and, bottom line, it’s fun.
Fun. That means that this is on the entertainment portion of your budget. It is not a job-related expense, it isn’t your retirement plan, it isn’t a charitable contribution, rent, school, or a tax deduction of any kind. It’s part of your spree money, movie money, extra splurge entertainment money. Keep track of your expenditures in this area and notice if this really is your priority for spending your money. If the amount of money you’re spending on entertainment is okay with you, then there’s no problem. But if the amount gets too large, and you find you’ve gambled away the rent money, you may want to join Fred at Gamblers Anonymous.
“I have a wonderful budget for fun and entertainment!”
People often wonder why I like playing poker so much. “You’re a financial coach and you gamble?” they ask incredulously.
“And what part of life isn’t a gamble?” I retort. “The stock market? Going into business for yourself? Taking a new job? Moving to a new city? Getting married? Getting divorced? You take your life in your hands when you get behind the wheel of a car, jump on an airplane, or just walk across the street.
“You’re playing the odds every day of your life, calculating the risks versus the rewards of any given action. Putting money in a savings account has low risk but also low reward, investing in a new business has a higher risk but a potentially much greater reward.”
Playing poker is a fun game to play, but in addition it has helped me develop many useful skills that have helped me in my business. Do you have a hobby that is fun, teaches you valuable skills, and can make you money too? Here are some business lessons I learned at the poker tables:
- Patience. A poker professional once said, “To teach people to play poker, my first lesson would be to tell them to go outside and watch the grass grow for two hours. My second lesson would be for them to go outside and watch the grass grow for four hours.” Sigh. When the cards aren’t falling your way, you can’t make them come. You have to wait for the right cards, right position, or right situation. I thought about that when the economy turned south and the public stopped buying…well, just about everything. So you wait it out, knowing the shift will come. It always does.
- How to read people. You’ve heard about people having a “poker face”? That means they have the same facial expression whether they are happy or sad, strong or weak. Poker players are trying not to show their excitement when they have a strong hand, or to look strong when they are weak. Most people never school their expressions, and everything they think is writ large across their faces. When I talk with someone or teach my classes, I can see on their faces whether or not they agree with me – they smile and nod their heads, or they frown and shake their heads. When I teach teleclasses and don’t have the visual clues, I’ve been blown away to discover how clearly facial expressions show up in the voice! This skill alone has helped me improve my teaching skills and my ability to help others.
- How to figure risk/reward ratios. Poker players with math skills have an advantage in the game. If the pot has $5 in it and somebody bets $20, there’s now $25 in the pot – but you’ll have to pay $20 to win $25. Not a good bet. Even if you have the best starting hand and the best odds, you can still lose, so this is not a great investment of your $20. The guy who bet $20 has given you “bad pot odds” to call. Many players get caught up in the thrill of the game and ignore the odds. Similarly, it always amazes me how many business owners aren’t regularly counting their money and figuring out their profitability on each sector of their business.
Poker is a game of making good decisions, and so is business. Use your money wisely, when the odds of success are with you, and the reward is worth the risk.
What’s a gamble you took that paid off?