ACADEMICS DETERMINE POKER TO BE A GAME OF SKILL

School Books Apple SmallA report by three academics in Holland has added further weight to the argument that poker is a game of skill.

PhD candidates Rogier J.D. Potter van Loon and Dennie van Dolder and Associate Professor of Finance Martijn J. van den Assem of Erasmus School of Economics in Rotterdam, Holland analysed more than 400 million player-hands between October 2009 and September 2010, across low, medium and high stakes levels. There results will be welcomed by a poker community frustrated by outdated notions about luck.

“Our results suggest that skill is an important factor in online poker,” said van den Assem, who explained that the report was intended to inform those around the world debating the legality of poker and the taxation of winnings.

The 86-page paper, which has now been submitted for academic scrutiny, defines skill as “anything that affects a player’s performance other than chance”. The report will now undergo a lengthy double-blind review with the intention of being published in the future.

The report examines 76.7 million different hands, with an average of 5.4 players per hand, producing 415.9 million different observations involving 500,000 players. From that a figure of 32 is produced – the percentage of players posting a positive result after rake.

“The results provide strong evidence against the hypothesis that poker is a game of pure chance,” the report concluded. “For a game of pure chance there would be no correlation in the winnings of players across successive time intervals. In our large database for three different stakes levels, however, we do find significant persistence in the performance of players over time.”

The report concludes by detailing how players in the top per cent across a six-month period were two times as likely to remain in the top ten per cent in the next six month period, with that figure being 12 times as likely for the top one per cent. In addition, those with a tight and aggressive playing style performed better than those using loose and passive play.

“This finding can indicate that better players choose to play more and that players learn from playing. Differences between players explain an important share of the differences in their performance”.

To read the full report, visit http://ssrn.com/abstract=2129879.