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Poker skills could sway gaming laws

 04 April 2009 by Celeste Biever
 Magazine issue 2702.

IS POKER a game of skill or luck? For regular players that's a no-brainer, but showing that skill wins out
has proven surprisingly difficult for mathematicians. Now two studies that tapped the vast amounts of
data available from online casinos have provided some of the best evidence yet that poker is skill-
based. Many hope that the results will help to roll back laws and court decisions that consider poker
gambling, and therefore illegal in certain contexts.

Most players insist that poker is predominantly skill. "I depended solely on that skill for my food and
rent," says Darse Billings, a former professional player who co-founded the Computer Poker Research
Group at the University of Alberta in Edmonton, Canada. In many jurisdictions, however, poker websites
and organised games are heavily regulated or even banned under gambling laws, partly because
chance is considered the dominant factor.

Previous attempts to quantify the relationship between skill and chance have involved building
theoretical models or playing software bots against each other. However, Ingo Fiedler and Jan-Philipp
Rock at the University of Hamburg's Institute of Law and Economics in Germany argue that these
methods fail to reflect real games, and this may explain why some courts and lawmakers have yet to be
swayed by them. So over three months, the pair recorded the outcomes of 55,000 online players
playing millions of hands of poker's most popular variant, "no-limit Texas hold 'em".
They reasoned that if skill dominated, this would eventually show itself over many hands, so they chose
two factors to define this threshold. Firstly, they measured how much each player's winnings and losses
fluctuated: the higher this variance, the greater the role of chance. Secondly, they measured the
average value of a player's winnings or losses: highly skilled or terrible players would do noticeably
better or worse than would be expected by chance alone.

Based on these factors, they found that the threshold at which the effects of skill start to dominate over
chance is typically about 1000 hands, equivalent to about 33 hours of playing in person or 13 hours
online, where the rate of play is brisker. So although chance plays a role, they suggest that because
most players easily play this many hands in a lifetime, poker is more a game of skill (Gaming Law
Review and Economics, DOI: 10.1089/glre.2008.13106). "Our results should have greater impact on the
legislators than the results of other studies; they refer to reality," says Fiedler.
However, Sean McCulloch, a computer scientist at Ohio Wesleyan University in Delaware, says the
results may fail to sway a judge or jury. "If you want to use a mathematical argument as the basis for
legislation or court decisions, it has to be easy to explain, easy to follow and intuitive," he says.
McCulloch used an alternative method to explore skill and chance in poker, also based on real games.
Together with Paco Hope of the software consultancy Cigital of Washington DC, he looked at 103
million hands of Texas hold 'em played at the PokerStars online site and calculated how many were
won as the result of a "showdown" - in which players win thanks to their cards beating their opponents'
cards - versus those that were won because all the other players folded. They argue that the latter
hands must be pure skill, because no one shows their cards. Their analysis, released on 27 March,
revealed that 76 per cent of games did not end in a showdown, suggesting that skill is the dominant
factor.
John Pappas of the Poker Players Alliance (PPA) in Washington DC says both studies are badly
needed to help properly define the law. In many US states, judges and juries use a so-called
"predominance test" to gauge skill and chance, based on the opinions of expert witnesses. Although
courts in Pennsylvania, Colorado and South Carolina have all ruled this year that poker is a game of
skill, not all courts do. "It would not be wise for any of us to rest on our laurels," Pappas says. The PPA
expects the Cigital study will now be used as evidence to fight appeals against court rulings that
decided poker is a skill game.

However, Preston Oade of law firm Holme Roberts and Owen in Denver, Colorado, who worked on a
separate poker case in Colorado, cautions that the studies still may not persuade juries, as this is a
"moral, political and social issue", as well as a mathematical one.

Pappas hopes the studies will help to persuade the US Congress to grant poker an exemption from the
Unlawful Internet Gambling Enforcement Act, due to come into force in December 2009. The act will
make it illegal in some states for banks to process transactions from gambling websites.
Poker: a game of skill for the few and of luck for the rest
ARE online poker players playing a game of skill or chance? It's a contentious issue, as the so-called
"predominance test" - a measure of whether skill or chance is more dominant - is used in many US
jurisdictions, and others across the world, to settle whether poker should be treated as gambling. In
many places, this is what determines its legality.

In 2009, Ingo Fiedler and his colleague Jan-Philipp Rock at the University of Hamburg, Germany,
reasoned that while each individual hand has elements of both skill and luck, over time winnings or
 losses due to chance should cancel out, whereas those due to skill, or a lack of it, should be consistent
and accumulate. He tracked how 55,000 online players' winnings and losses varied over time and
calculated that a typical player, who loses overall, would have to play around 1560 hands, equivalent to
about 22 hours online, before their winnings or losses were more a result of their skill - or lack of it -
than luck. The pair called this point the "critical repetition frequency" (CRF).
Now new figures reveal that most people play less than 5 hours over the course of 6 months - not
enough for their skill level to become the dominant factor. On the other hand, Fiedler discovered that
professional players - those who regularly win - have a much higher CRF. It turns out that far more
hands need to be played for skill to show through than a lack of skill. That is because skilled players win
less per hand than bad players lose. Or to put it another way, it is much easier to throw your money
away than to win other people's.

Professionals play so many hands, often by playing on multiple tables at once, that they easily pass
their CRF (click here to see how professional and typical players differ). "They are playing a game of
skill," says Fiedler.
The predominance test is misguided because of this difference between the two types of players, he
says. "The legalisation of online poker should not depend on the degree of skill of the game, but the
potential for addiction," he says, something he hopes the kind of data he has gathered will shed light on.

Data gold mine lifts veil on world of online poker

 03 October 2011 by Celeste Biever
 Magazine issue 2832. Subscribe and save
 For similar stories, visit the Mental Health Topic Guide
Software has provided a mass of statistics about online poker, one of the world's biggest draws, and
could help pinpoint problem gamblers
When 4 million people worldwide checked into some of the world's most popular poker websites and
played an estimated billion hands, software was watching.

The results reveal patterns in play that could help inform how poker is regulated and uncover a wealth
of information about one of the internet's most popular pastimes. "It's a data gold mine," says
economist Ingo Fiedler at the University of Hamburg in Germany. "It is interesting for regulators,
academics and also for the treatment of problem gamblers."
Fiedler gathered his data on the 4 million players between September 2009 and March 2010. To do so,
he turned to the poker-market spectatorPokerscout.com. Its software logged the locations of players,
game outcomes, the date and time, and the commission paid to the operator by people playing on the
two biggest sites worldwide at the time - Pokerstars and Full Tilt Poker (the latter has recently been shut
down amid allegations of financial irregularities) - as well as smaller operators, Everest Poker, IPN
Poker and Cake Poker.
Altogether, that amounted to 4.6 million different online-poker "identities" worldwide, which Fiedler
reckons equates to about 3.9 million different players; some players play under different screen names
on several different poker sites. As those websites accounted for about two-thirds of the market at the
time, he used the data to extrapolate a figure for the total number of people playing online poker
worldwide: 6 million. Click here to see the geographic spread of poker players and current legal status.
But this information, which first appeared in a book co-authored by Fiedler and released earlier this year
in German called The Market for Online Poker: Player origins and gambling habits, also reveals
patterns in play, painting a picture of a few dominant players who play a huge amount, and a majority
who barely play at all. Fifty per cent of people played for less than 5 hours in a period of six months,
while 6 per cent played for more than 100 hours. "Very few people account for a lot of the playing
volume," says Fiedler.
Although he did not capture the amount of money exchanged between players, Fiedler can still get
some idea of how much money is changing hands. He recorded the average rake - the amount of
money paid to the poker site by a player - per hour (Click here to see amount paid by players to online
poker sites). Generally, the higher the stakes being played for, the higher the rake.
Fiedler says the next challenge is teasing apart which of the people who play intensively are
pathological gamblers as opposed to professionals - perhaps by finding ways to use the data to
measure their gambling patterns. Impulsive betting, for example, is one way to tell a problem gambler
from a professional.

Kahlil Philander, who studies gambling policy at the University of Nevada in Las Vegas says that this
could help further our understanding of gaming behaviour. "Online poker is a relatively benign activity
for 95 to 99 per cent of its users, but is very intense for a handful of professionals and potential
pathological gamblers," he says. "Further distinguishing between those two groups is the next challenge
for player-analytics software, to help determine which players may be at-risk gamblers."

When this article was first posted, the first sentence read: "BETWEEN September 2009 and March
2010, software watched as about 4 million people worldwide checked into some of the world's most
popular poker websites and played an estimated billion hands."