A Proper Balance of Luck and Skill

I thought I would post this here to see if there's anyone interested and possible discussion. I consider this the most important idea in my book Cardrooms: Everything Bad and How to Make Them Better; An Analysis of Those Areas Where Poker Rooms Need Improvement.

Mason

.......................A Proper Balance of Luck and Skill

This is not a statistics text book and to read and understand it you’re not expected to have a background in statistics. But there is an idea that comes straight out of the world of statistics and statistical theory that deserves its own introductory chapter and has already been mentioned. And that idea is what I call “the proper balance of luck and skill.” So, without getting into any heavy statistical theory, here’s an explanation of the proper balance of luck and skill in (I hope) easy to understand language.

It turns out that in games like poker which are grounded in statistical theory (that includes probability theory) there are two parameters that drive the success of the games: The success (or lack of it) of the best players, and much of the enjoyment of the recreational players who, while losers in the long run, will still come back to play again and again. These parameters are luck and skill. And both are required in the right proportions for poker games to be successful in the long run.

First, let’s address skill. You’ll often hear that poker is a “skill game.” But this isn’t exactly true. A better statement is that poker is a form of gambling that has a strong skill element. And this skill element allows the expert players to win money in the long run. And since they win, they’ll come back to play again and again including helping to start games and to keep games going.

Now this idea is very important. Without winning players who act as game starters and help to keep games going, it’s doubtful that poker would be a successful casino game. But there’s also more to it.

In addition, there’s also a problem. If skill was the only parameter, these expert players would never have losing sessions, which means that the non-experts would never win, and if this was the case, there would probably be no poker games.

So, this means that there needs to be a fair amount of short-term luck in poker for the games to exist. And what this short-term luck does is that it’ll allow the recreational players to also have some winning sessions, and on those nights where they end up loser, they’ll be able to think about when they were ahead, and this short-term luck is the hook that keeps these people playing. However, it’ll also mean that the experts will have some losing nights, and many recreational players love beating the experts.

To be specific, David Sklansky and I feel that the proper balance of luck and skill will allow a strong player to win two out of three four-hour sessions, and the moderately weak player to win one out of three four-hour sessions. So, that’s a rough guideline when this book talks about a proper balance of luck and skill. And for a poker room to be successful, this idea of a proper balance of luck and skill can’t be stressed enough.

But there’s another important point that statistical theory tells us. It’s the fact that over time the short-term luck factor will dissipate and the expectation (win rate for the experts and loss rate for the recreational players) will dominate, and this is exactly the way it’s supposed to be.

But when saying “supposed to be,” I’m also referring to those games in which the expectation of the experts and the luck factor is in sort of a balance. That is, to say it again, the experts will be sure of doing well after a reasonable amount of playing time, and the recreational players will have their winning sessions to remember. And when this is the case, you can expect the games to thrive in a well-run poker room. Furthermore, games like this are the type of games that the poker room management should strive for. It’s also the type of games that the experts should want to play in to maximize their long-term success, even if it means that their expected win in their current session might be lower.

In this book, this idea of a proper balance of luck and skill will frequently come up. So, keep this chapter in mind, and if needed, please read it again to make sure that what is written is understood. Also, if you’re a cardroom manager, this idea should guide many of your decisions. To see why, please keep reading.