What’s the Real Value of Money in Poker?

Money Is the Engine of Poker

Economic theory is based on people making decisions using logic and rationality. They don’t. It is based on the idea that a dollar is worth a dollar. It isn’t, as strange as that may sound.

Money also happens to be the engine of poker. It makes the game go.

Poker just can’t be played without money … although a game played for clothing has a certain allure.

So, do social scientists have anything to tell us about this essential element in the game? Or, perhaps, do poker players have any insights into money that might be useful to economists or psychologists?

I’m not sure what the answer is but it’s worth a bit of a ramble.

Money is Asymmetric

The first thing to appreciate is that money is ± asymmetric. There is a compelling asymmetry in the subjective worth of money.

A loss of a decent chunk of change, say $500, is a lot more negative than an equivalent win is positive.

Example:
Imagine sitting in a $2/$5 cash game with A K . You raise pre-flop and end up in a multi-way pot. You call a pot-sized bet on the flop, only to see your opponent turn over 10 10 when all the money goes in on the turn. You lose $500 in a single hand. For many players, this single setback feels more intense than several smaller pots they might have won throughout the evening, which is a concrete reminder that the emotional impact of losses can exceed the satisfaction of equivalent gains.

This effect shows up even when the money is imaginary. People asked to imagine various gains or losses and judge how this will make them feel report that even the thought of a large loss makes them feel uncomfortable.

Imagining the loss of $10k is very negative; imagining a similar gain is good, but not as good as the loss is bad. In short:

• A dollar isn’t always worth a dollar

The implication is that people are, for the most part, “risk-averse.” They tend to avoid risk because of the fear of being made miserable by a loss.

We are all risk-averse to some extent but those who find losses the most distressing avoid risk whenever they can.

I have a good friend who is smart and a very good game player. She is aggressive and ruthless in every game we’ve ever played. But she won’t play poker. Not because she won’t win. With time and experience she’d likely become a formidable player.

It’s because she is extremely risk-averse. Just the thought of losing even a small amount of money makes her unhappy. So, wisely, she doesn’t play.

Money Is Different in Poker

It’s also not hard to find folks at the other end of this spectrum. We all know poker players, sports bettors, high-rolling horse handicappers or, as we’ve all discovered recently to our collective pain, bankers, mortgage company CEOs and commodities traders who are at the other end of this continuum.

But we can discern patterns. For example, low-stakes players, for the most part, look different from those who play at higher stakes. Low-stakes games are very popular and filled with players who never move up.

These folks are almost certainly moderately risk-averse. They will have some measure of tolerance for loss; otherwise they wouldn’t be playing poker at all. But their aversion to a large loss keeps them from moving up.

Example:
Consider a skilled player who consistently crushes $1/$2 tables. Although she knows her skill level could generate steady profits at $2/$5, the discomfort of imagining a sudden $300 or $400 loss stops her from moving up. Despite a strong grasp of fundamentals, that risk-averse feeling locks her into lower stakes—a situation at odds with purely logical decision-making.

Interestingly, the negative emotions here often don’t have a lot to do with money. I’ve known players who have successful businesses but find losing $200 at poker so painful that they won’t play above the $2/$4 limit, even though $200 means nothing in the larger frame of their lives and they routinely risk far more in business dealings.

Note the lack of rationality here. Money in business feels different than money in poker.

Moreover, if we limit the discussion to poker their behavior still doesn’t make sense. The better players should, according to classic theory, move up. But few do, likely because of the negative emotions that accompany just the contemplation of a large loss.

Note that this asymmetry is one reason why you should work to lower variance. High variance gives you big wins and big losses. The wins don’t gain you as much, psychologically speaking, as the losses are costing you.

If you lower variance you diminish the emotional downside without having as much impact on the upside.

Money Isn’t Really Worth Anything

Then there are those who live at the far end of the spectrum. Internet star Tom “durrrr” Dwan once issued a million-dollar challenge. The details aren’t important (although they involve Dwan actually risking $1.5 million); you can find them here.

Here’s what interests me. Tom is young, 22 to be exact. One million dollars is a lot of money. The average annual income for a family of four in the United States is around $40k. Tom is putting on the line what the average family makes in 25 years, for a game of poker.

To understand poker played at these levels we need to realize that here money isn’t worth anything.

I don’t know Tom, but I’ve known more than a few with this style. What I suspect he is really putting up is the challenge, the desire for action, to take risks, to be considered the best. In short: ego.

As British essayist and poet Al Alvarez noted in his brilliant classic, The Biggest Game in Town, the chips aren’t “really” money; they’re just the way to keep score.

My last example here is John Myung. John’s an old adversary who once hit a one-outer to knock me out of a tournament three spots from the money.

A couple of years ago he took down the Showdown at the Sands for $1 million. He took the cash, bought a house and invested the rest to guarantee an education for his kids.

That’s John’s notion of what money is worth. I’ll be very interested to see where Messrs Myung and Dwan are in 10 or 15 years.

The Color (and Feel) of Money

Like most of you, I really like money. Oh, not just the stuff in a bank or an investment fund or tied up in a mortgage. The real stuff, the paper.

I love the feel of it with its slightly raised surfaces rich with ink, embossed with faces, slogans, monuments to greatness past and imagined. I love its smell; I love the texture of the stacked edges laid side by side.

I love the sound of counting out stacks of hundreds each slipping off the other with a gentle swish. I’m a guy. I’m a gambler. I’m a poker player and a horse junkie.

Money Is Addictive

Then I ran across an article in the journal Psychological Science and I smiled. It turns out that not only is my fascination with wads of hundred dollar bills fairly common, it has a straightforward, though somewhat surprising basis to it.

Money, indeed, acts like and has many of the properties of an addictive drug.

Xinyue Zhou at Sun Yat Sen University in China and Kathleen Vohs at the University of Minnesota and her colleagues (if you’re curious, check out Vohs extensive and fascinating research) have discovered some rather amazing facts about money, especially paper money.

We know that rejection and physical pain are unpleasant. Zhou and company found that the simple act of handling money reduces both physical pain and the psychological distress of rejection.

And it isn’t just the act of handling paper with similar shape and feel. The effects are dependent on it being real bills.

Professional poker player Roy Brindley, in his book Life’s a Gamble, goes on lovingly about the “cash in the pocket” life style. I thought it a bit odd at the time but now it makes sense.

Zhou and colleagues also found that having money in your pocket increases confidence and improves mood. Even more remarkable, these effects have symbolic features. Simply being reminded of money spent or money lost increases psychological distress and imaging oneself having money reduces social anxieties.

Poker Players Carry Cash

The message for poker players? Simple. Carry cash. Carry it in rolls that are easily touched and can serve as reminders of its presence.

If you go bust, go get more cash. Fat rolls are best. If you’re short on hundreds, get a bunch of tens or fives.

Fold them over in a wad, wrap an elastic band around them and, when you get the chance, sit down and count them, smell them, let the loose symbolic taste of money penetrate your brain.

It is a drug. It is stimulating the release of endorphins, of dopamine. Your nucleus accumbens is dazzling with activity. And you will feel more confident.

Your game will improve and you will win more money and need a bigger elastic band.

More poker strategy articles from Arthur S. Reber:

• “Good” Players vs. Winning Players

Advanced Reflections

Many seasoned players learn to handle the emotional swings of poker by recognizing how subjective money can be. While risk aversion tends to hold many players back, it can also serve as a useful safeguard, reminding us that money is more than just chips on a table. For competitive players, the challenge is balancing these instinctive hesitations with reasoned aggression—pushing for maximum edge while minimizing ruinous emotional fallout.

In modern poker theory, especially as we adopt concepts similar to Game Theory Optimal (GTO) frameworks, the ability to detach from the short-term value of money can help players make correct decisions, even when those decisions involve significant risk. Still, the human element remains crucial, and ignoring the emotional side of the game can be just as detrimental as ignoring pot odds.