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Freakonomics Economist Proves Poker a Skilled Game

11 May 2011 by admin

steve levittIs poker a game of skill or chance? It’s a question people have been debating for some time. Why they continue to debate it I don’t know, because it seems like a pretty simple question. It seems obvious to me that poker is a skilled game that also has an element of chance. Luck determines what card you and others draw, but skill determines everything else.

It’s an important question, because in some jurisdictions whether or not poker is considered a skilled game determines whether or not it is legal. Various courts have ruled on the subject, including the ridiculous Swedish Supreme Court, which said that poker involves skill as long as you’re not playing a cash game.

Most of the debate about the skill of poker has used logic, but it rarely uses scientific data to actually prove it. Steven Levitt is doing his part to change that by releasing a scientific report that purports to prove that poker is a game of skill. Levitt is an economist best known as co-author of Freakonomics. He likes to teach economics using odd examples and comparisons. In this case, he released a report called “The Role of Skills Versus Luck in Poker: Evidence From the World Series of Poker.”

Levitt studied the results of the 2010 World Series of Poker for his report. In the study, he determined whether players were considered to be players of “high skill” or whether they were average or unskilled poker players. His research showed that, on average, players assumed to be skilled earned a 30% return on their “investment” wager. That’s better than most people do on the stock market, folks. The other players didn’t do so well, losing 15% of their wagers.

Even if you excluded the players in the Main Event from the data, since they are the crème de la crème, the “skilled players” gain an average of $350 per tournament. The rest of the players, on average, lose $400 per tournament. You can see that there’s a big difference between the results of the most skilled players and everyone else. Things get more interesting when Levitt compares poker to baseball.

From 2007 to 2010, Levitt found that the number one factor in a team making the playoffs is beating up on weaker teams. During that span, playoff teams won 55.7% of the regular season games against teams that did not qualify for the playoffs the previous year. By beating inferior opponents, they were able to win enough games to make it to the postseason. Likewise, Levitt found that in the World Series of Poker, the skilled players won 54.9% of the matchups against players with less skill.

All of that shows that the more skill you have, the better your chances of winning at poker. That makes poker a game of skill. Sure, there is chance involved as well, but that is also the case for baseball. No one would say that baseball isn’t a skilled game, but there is a lot of luck involved. You can hit a ball perfectly on the sweet spot and have the line drive hit right at a fielder, who catches it for an out. You can get jammed and hit a weak pop-up that drops for a hit between the infield and the outfield. Pitchers have good pitches hit for home runs and sometimes get a strikeout on a bad pitch. Players can reach base or score on a fielding error. There is a lot of luck in baseball, but because there is a high level of skill involved, and because in the long run you need skill to win, it is considered a game of skill. The same should be said of poker.

One Response to “Freakonomics Economist Proves Poker a Skilled Game”

  1. Mark says:

    It’s about time someone proves there is skill in this game and therefore it is not strictly gambling, perhaps that will help with legislation.