What are the Sklansky dollars?
If you play no limit Texas Holdem poker on a regular basis, you have heard of the Sklanksy dollars. But what are they exactly and what is their use?
Sklansky Dollars is a concept created by David Sklansky in his well-known book "The Theory of Poker". It is a mathematical concept helping to objectively evaluate the quality of your poker despite short-term variance.
The Sklansky dollars represent the money you should expect to earn at each pot based on your equity at a given time. Sklansky dollars are a measure of the objective value of your actions. They correspond at each street to the increase in pot equity resulting from the betting minus the money you put in the pot. If this sounds a bit complicated, let's clarify with an example.
You play in a no limit Hold'em $0.50/$1.00 and receive black rockets in the big blind. Everyone folds to the small blind, who raises. You obviously 3-bet, he 4-bets, you shove and he calls. He shows a pair of red jacks. You each have a full $100 stack. The board comes 737TJ and you lose your stack.
This is the type of situation that triggers tilt for most players, or at least triggers the early stage of a potential tilt. This is bad luck as you lost 100BB, and the way to avoid tilt is to somehow put the hand in perspective. This is what the Sklansky dollars do, calculating a statistical dollar value for the situation you just faced.
Sklansky dollars = (pot * pot equity) - amount you bet at this street = (200 * 80.47%) - 100 = $60.94, as the aces have slightly over 80% chance of winning versus jacks when all 4 suits are represented. So even though you lost $100 in real dollars, you won nearly $61 in Sklanksy dollars.
What are Sklansky dollars used for?
However enticing they may be, Sklansky dollars are purely imaginary. They will never pay for your rent. So in the short term, knowing your Sklansky dollars will not make you richer. But the point is that they tell you that you make the right statistical decision and that if you keep on playing this way, you will make money in the long run, as variance will decrease and your profit will converge to its expected value.
In other words, the concept is relative to each situation and helps you not to worry too much about your short-term results in real money. If you make sure to consistently make money in Sklansky dollars, then sooner or later you will show real profits in real dollars.
The calculation of Sklansky dollars is primarily used to assess your results without the variance. Whoever has faced a bad beat and if you are reading this article you must be familiar with this concept, so whoever knows about bad beats can benefit from using as they let you know if you made the right decision or not.
One of the tenets of good poker often mentioned by the pros is to focus on making the right decisions, not to focus on the short-term results. So the Sklansky dollars will help you move in that direction.
Sklansky Dollars and the fundamental theorem of poker
David Sklansky considered by many as the best poker theorist is also famous for his "fundamental theorem of poker" which is quoted below for reference.
"Every time you play a hand differently from the way you would have played it if you could see all your opponents' cards, they gain; and every time you play your hand the same way you would have played it if you could see all their cards, they lose. Conversely, every time opponents play their hands differently from the way they would have if they could see all your cards, you gain; and every time they play their hands the same way they would have played if they could see all your cards, you lose."
This central concept in poker is closely related to the Sklansky Dollars. Anytime your opponents make mistakes, you earn Sklansky dollars. Each time you make a mistake, you lose Sklansky dollars. Sklansky dollars are a direct measure of how the theorem unfolds with your real hands.
In conclusion, Sklansky dollars are a measure of what your profit should be if there was no variance. Focus on making Sklansky dollars, and in the long run they will become real dollars. Because in the long-term, variance decreases and luck evens out.