McHaffie: MCU lesson 085 / Last in first out

Note: Not at the old Poker1 site. A version of this entry was first published in Poker Player newspaper in 2006.

This is part of a series by Diane McHaffie. She wasn’t a poker player when she began writing this series. These entries chronicle the lessons given to her personally by Mike Caro. Included in her remarkable  poker-learning odyssey are additional comments, tips, and observations from Mike Caro.

Diane McHaffie index.

Diane McHaffie is Director of Operations at Mike Caro University of Poker, Gaming, and Life Strategy. She has traveled the world coordinating events and seminars in the interest of honest poker. You can write her online at

Diane McHaffie

Lessons from MCU

— With bonus content by Mike Caro (pending) —

Lesson 85: Last in first out

Today I’d like to discuss gambling debts and when you should expect to get paid. I’ve taken this lesson from a 1985 issue of the Gambling Times magazine. Mike’s column, Caro on Gambling, pertained to Last In First Out (known as LIFO).

At some point you are going to either borrow money from someone or someone is going to borrow money from you in order to play poker, fund a business investment, or to pay bills. How should you expect repayment, or be expected to repay? Would it be Last in First Out or First In First Out? The terms LIFO and FIFO are well-known to computer programmers and people who devise procedures for organizations. Let’s see how they apply to poker loans.

Borrowing money

If my friend Sybil came to me asking to borrow $200 to play poker, she’d be hoping that she would win. If she did, she could repay me, have some extra money, and perhaps give me a small share of the profit. If I made this loan, how would I expect to be paid? If she wins, then Mike says I should of course be repaid instantly. What if she doesn’t win? Well, that would be bad for both of us. I suppose that I’d have to wait a little longer for the money. However, knowing Sybil as well as I do, I wouldn’t have loaned her the money if I’d been in doubt as to whether I’d ever be repaid.

So, let’s say that Sybil feels badly about losing the money, and because of that she wouldn’t ask for another loan to try to win the loss back. She does, however, visits her friend, Sheila, and explains her dilemma of borrowing from me and losing the money and asks if she could borrow $400 from her to try to win the money back. Sheila realizes that normally Sybil is a pretty decent poker player who could possibly win back her money and my money plus more. So she loans Sybil the money.

First In First Out?

Mike states that Sheila did not loan Sybil the $400 thinking that Sybil would repay me first, and then pay Sheila off. I asked him why she wouldn’t pay me first; after all she had borrowed money from me before she borrowed from Sheila. Wouldn’t you naturally pay off the person that you had first borrowed money from then repay the second person, First In First Out?

He explained it like this in the magazine, “When you lend someone money to gamble with, your investment takes priority over all others that have come before. If this gamble succeeds, you must expect to be paid immediately.” He added: “If it fails, you must wait, expecting to be paid after anyone who subsequently backs Sybil, but before the first such investors. LIFO in action.”

Wow! I would not have thought of it like that. You see, I would have expected Sybil to pay me back first. Right? It just stands to reason. I would have been disappointed and perturbed had she not done that. I would probably have not been inclined to loan her any money in the future, especially if she paid Sheila back first.


But, now that Mike has explained it to me, I see his point. If Sybil had borrowed from me second, instead of first, I would have been upset if she’d taken her winnings and paid Sheila first, then me. Sybil hadn’t won with the money that she had borrowed from me. Instead, she had lost that money and had gone to Sheila for more money.

Sheila would not have expected Sybil to pay me back first with the money that she herself had just lent her. No, she would get her money first, and then I would receive mine. My priority was secondary. Now, thanks to Mike’s explanation, I fully understand.

Mike refers to it as Caro’s Great Law of Gambling Debts: Ethical payment of gambling debts should be LIFO. — DM

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