Video Poker Blues - Vanishing Edge

Meet my good friend John Doe a video poker player whose experience is not in any way unusual. He lost 12k in 2012, he lost 12k in 2013 and he won 30k in 2014. Looks like he has a nice edge. But he had to give back 10K of his 2014 win in taxes. Most states will get some too in addition to the Feds. He has a theoretical edge but he has lost money. Welcome to the real world Johnny. He is not allowed to carry forward gambling losses from prior years to offset a gambling win from the current year. He cannot claim a net gambling loss for any given year. He can only use gambling losses to reduce or offset a gambling win for the same year. The Government is doing to him what Bill Clinton did to Gennifer Flowers. This is a common occurrence that I have not seen any gambling writers who write about video poker point out. Happy April 15 everybody.

You're not playing the game, you're playing against the casino marketing departments. Almost all VP is negative expectation, you should expect to be a loser at the end of the year on the game and make back what you lose with coupons and cashback. All gambling, not just VP, is subject to the negative IRS treatment of gambling losses. If you want to be a professional gambler it's something you'll just have to find a way to deal with.

When I had losing years at VP I really only had myself to blame. I was either needlessly chasing losses or just simply playing too much at the wrong places or places that were a bad fit for my bankroll. Only recently did I discover that full pay games aren't always the best play. Trying to win at VP is often the worst thing you can do to maximize your annual income stream.

it's true that all gambling is subject to the same tax law but I believe you come out much worse in v.p. because of the greater variance. the example I gave happens much more often.

The key is not to play too much otherwise the variance and -EV of the game will outrace the coupons and cashback. As with many AP endeavors, information is king so that you're not wasting your time and money doing probing plays everywhere and getting shafted by casinos.

Remember, it's all about making your earnings potential look bigger than it actually is.

...you read that kind of pornography???

Cobbson