New Study in the Economist Argues that Poker is a Game of Skill,

Posted by Adam Grunwerg on May 20, 2011 Posted in Poker News | No Comments »

The most crucial and life-threatening element of legalised online poker in the US is whether poker is can be considered a form of gambling or a game of skill. For years the PPA (Poker Players Association) and online poker players have argued that poker is a game of skill.  After all, try telling the top 1% of online poker players who earn over $100k per year that their income is 100% luck-based.

However, a new study in the Economist (World News, Politics, Economics and Business Magazine) has found that the $6 billion online poker industry is in fact a game of skill, not chance.

Over the last century, the US government and state attorneys have concurred with the historical 1910 Louisiana ruling that poker is a game of skill.  But a new study by economist Steve Levitt (author of “Freakonomics”) and Thomas Miles (Chicago University) undertaken at the 2010 WSOP shows that those poker players classed a “high-skilled” made a remarkable 30.5% average return on investment, compared to the other 32,000 entrants who made an average loss of 15%.6.

Levitt and Miles used data and final rankings from the 2009 WSOP in order to categories the 32,000 entrants at the 2010 WSOP into two groups: “high-skilled” and then “everyone else”.  If poker was a game of luck then one would expect the $185 million prize money to be equally distributed between all of the entrants.  However, the differentiated winning results of “high skilled” and regular players at the 2010 WSOP could be used to prove to the US government and the rest of the world that poker is truly a game of skill.

Economists say that similar tests of ROI have also been used to detect mutual-fund manager’s expertise.  In contrast to poker however, these studies have failed to show any sizeable link between expertise and return on investments.

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