The Poker Life Cycle

People are born, grow up, grow old, and die. Businesses are born, mature, and die. Most businesses that were around 100 years ago aren’t around today — technology gets outdated, CEOs die off and the corporate bureaucracy stifles adaptation. Poker, like any other business, has a finite lifespan.

Take a look at the graph below. The most of amount of profit potential is in the “development” and “introduction” phase. Starting a business in these two phases, however, carries a phenomenal amount of risk. A lot of industries look like they’re in the “development” and “introduction” phase before stalling. The “growth” phase is where you wanna break into the industry. The early pioneers have proved that the industry is profitable and they have developed successful strategies that you can imitate and improve on.

[caption id=”” align=”alignnone” width=”366" caption=”Industry Life Cycles”]

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So where is poker in the industry life cycle? Notice the remarkable similarity between the general industry life cycle graph above the number of WSOP entrants as visualized in the graph below:

[caption id=”” align=”alignnone” width=”475" caption=”Poker Industry Life Cycle”]

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In my opinion, now’s not the time to get into poker. If you didn’t start playing before 2006–2007, I think you’ll be trying to squeeze into a much narrower window of opportunity. That’s not to say that someone just starting poker now can’t make it big. They can. It will just require more blood, sweat and tears to get there.

There are 3 main reasons why the poker industry has declined.

1. Natural maturity of the industry is responsible for 70% of the decline. Just like any other business, a big profit margin quickly attracts competition and that competition eventually drives down the profit margin. The profit margin of every industry always moves towards (but never reaches) zero.
2. UIGEA is responsible for 20% of the decline. Passed in 2006, the legislation made American poker players jump through hoops to get money online and Party Poker withdrew from the U.S. market. If the UIGEA is repealed and poker becomes regulated in the U.S., the industry will rebound but it will never return to anywhere near 2006 levels.
3. The global recession — responsible for 10% of the decline. Fish have less money to deposit.

For the record, I’m friends with the guys at DeucesCracked and PokerTableRatings, but I’ve tried to remain unbiased in my evaluation. I’m on the fence if they’ve hurt or helped the poker economy, but either way, I think they’re making a relatively minor impact in the grand scheme of things.

1. Online training sites — The availability of great coaching resources has made the competition tougher. It’s also much easier for you to get better at poker. It balances out.
2. Online databases — On one hand, online databases make bumhunting easier and limit action. On the other hand, it lets you table select much more effectively and increases your profit margin. Also, the guys at PTR use their data to help prevent cheating scandals (like UB/Absolute) from harming the industry. It balances out.

The main reason why poker is tougher these days is the natural maturation of the industry. But is online poker dead? Of course not! If you have the right mix of dedication, talent, intelligence, and guts, you can still be really successful.