The Poker Face of Wall Street

50 ♠ THE POKER FACE OF WALL STREET

often the player who will call the first bet will call a raise also, and how often a player who won’t call a raise won’t put any more money in the pot on the next round, anyway (unless, of course, she improves enough to beat you). You also lose some hands you thought were safe. Finally, if this is the only time you call, other players will know it indicates a stronger hand than a raise. The other two calling situations won’t be confused with this one. So if you do this, you also have to call with weaker hands for deception. I know that sounds weird— that the natural call is with the strong hand, so you have to call with marginal ones to keep from being predictable—but it’s true.

The nonreason is actually the most common reason to call in poker. Because it so seldom makes sense, you do it precisely because there’s no reason. It’s more important to be unpredictable in poker than it is to always have a sound mathematical reason for your actions. But remember that you can play good poker and never call, but you can’t play good poker and always call.

TAXES

I’m including a brief sketch of gambling income tax law because it has a tremendous effect on the organization of poker in the United States. When one person gives money to another, generally it is treated one of two ways. If it is an economic transaction—a sale or a wage or anything else done for consideration—the recipient owes taxes on the money as income. It may or may not be deductible to the giver, depending on a lot of complex rules, but the basic idea is that money spent to make more money is generally deductible (the government likes you to make more money because you pay more taxes), whereas money spent for most other things generally is not, except for certain basic living expenses and a laundry list of other stuff.

However, if the money is treated as a gift, it is never taxable to the recipient. In certain extreme cases it can trigger gift taxes to the giver—these are basically estate taxes assessed early to prevent people from giving away all their money before they die.

In principle, we could treat gambling either way. We could call it an attempt to make money, in which case winnings would be taxable



	50 ♠ THE POKER FACE OF WALL STREET often the player who will call the first bet will call a raise also, and how often a player who won’t call a raise won’t put any more money in the pot on the next round, anyway (unless, of course, she improves enough to beat you). You also lose some hands you thought were safe. Finally, if this is the only time you call, other players will know it indicates a stronger hand than a raise. The other two calling situations won’t be confused with this one. So if you do this, you also have to call with weaker hands for deception. I know that sounds weird— that the natural call is with the strong hand, so you have to call with marginal ones to keep from being predictable—but it’s true. The nonreason is actually the most common reason to call in poker. Because it so seldom makes sense, you do it precisely because there’s no reason. It’s more important to be unpredictable in poker than it is to always have a sound mathematical reason for your actions. But remember that you can play good poker and never call, but you can’t play good poker and always call. TAXES I’m including a brief sketch of gambling income tax law because it has a tremendous effect on the organization of poker in the United States. When one person gives money to another, generally it is treated one of two ways. If it is an economic transaction—a sale or a wage or anything else done for consideration—the recipient owes taxes on the money as income. It may or may not be deductible to the giver, depending on a lot of complex rules, but the basic idea is that money spent to make more money is generally deductible (the government likes you to make more money because you pay more taxes), whereas money spent for most other things generally is not, except for certain basic living expenses and a laundry list of other stuff. However, if the money is treated as a gift, it is never taxable to the recipient. In certain extreme cases it can trigger gift taxes to the giver—these are basically estate taxes assessed early to prevent people from giving away all their money before they die. In principle, we could treat gambling either way. We could call it an attempt to make money, in which case winnings would be taxable