A German court has ruled that poker is a game of skill, as Levitt has argued before (and which a U.S. court has recently confirmed). The ruling is in response to poker player Eduard Scharf‘s claims that his poker winnings shouldn’t be taxed because poker is a game of chance, and “anyone can win a game of poker.” The court disagreed, ruling that “[H]e had to pay income tax on his winnings saying they counted as commercial income as they were linked to his personal skills.” (HT: Sven Seuken)
In our latest Freakonomics Radio podcast, Steve Levitt visits with Marketplace‘s Kai Ryssdal to discuss his poker research and his personal poker history. The episode is called “Why Online Poker Should Be Legal.” You can download/subscribe at iTunes, get the RSS feed, listen via the media player above, or read the transcript below.
In case you haven’t been following the long-running legal story, here’s the gist. Online poker was growing fast in the U.S. until Congress passed the Unlawful Internet Gambling Enforcement Act of 2006, which pretty much shut things down. The ruling was based in large part on the government’s reasoning that poker is predominantly a game of chance as opposed to a game of skill. But is this classification correct?
Steve Levitt has a new working paper: “The Role of Skill Versus Luck in Poker: Evidence from the World Series of Poker,” with University of Chicago colleague Thomas J. Miles.
Using data from the 2010 World Series of Poker, Levitt and Miles found that high-skilled players earned an average return on investment of over 30 percent, whereas all other players averaged a 15 percent loss. This finding has serious implications on the legality of online poker, as that debate is heavily dependent on whether the game is based on skill or luck.
I was outraged a few weeks back when the U.S. government cracked down on internet poker. It took me a while to figure out why.
One of the most important roles of government is establishing a set of rules under which society will operate. Governments determine property rights and coordinate the provision of public goods. Some frowned upon activities are deemed illegal (e.g. homicide); other favored activities are encouraged through subsidies (e.g. home ownership, education).
“[T]he best ‘poker face’ for bluffing may not be a neutral face, but rather a face that contains emotional correlates of trustworthiness.”
Newspapers trumpeted a landmark event last week: a computer program beating professional poker players head-to-head at Limit Hold-Em. Parallels have been drawn to Big Blue‘s victory over Gary Kasparov roughly a decade ago. Those parallels are not very meaningful. First, heads-up Limit Hold-Em is a very simple version of poker — exactly the kind of game that a computer should . . .
Many people know about the World Series of Poker from the television coverage on ESPN. Mostly they just show the “Main Event” on TV. Hoa Nguyen from worldseriesofpoker.com. The main event has a $10,000 buy-in and lasts for two weeks. Leading up to the main event, there are dozens of other tournaments, some of which are going on right now. . . .
We recently solicited your questions for poker man Phil Gordon. In his answers below, he discusses (among other things) variance, sunglasses, and why he’s not a gambler by nature, but rather “a strategic investor.” This is a really good and smart Q&A (although he did neglect to mention a certain beat-down he once suffered). Thanks to Phil and to all . . .
As a Valentine’s Day present to my wife, Jeannette, I flew her to romantic Council Bluffs, Iowa, and bought her an entry into the High-Heeled Poker Tour event being played there over the weekend. These are women-only events, with the winner taking home the coveted “high-heel” necklace. Just so she understood that this truly was a Valentine’s gift to her . . .
Ian Ayres is an economist and lawyer at Yale and the author of Super Crunchers, which we excerpted here. He has agreed to write occasional guest posts on our blog, which delights us, since he has a lot of compelling interests and insights. Ian is not the only notable guest blogger who will turn up on this site in the . . .
Video It is fairly well known by now that Levitt has more than a passing interest in poker, and he’s occasionally shown some promise. (His blackjack skills, meanwhile, are subject to debate.) It is also well-established that, as a parent, he’s less interested in reading a standard bedtime story than in teaching his kids to think creatively and strategically — . . .
[Addendum appended.] A few weeks back I blogged about allegations of cheating at an online poker site called Absolute Poker. While things looked awfully suspicious, there wasn’t quite a smoking gun, and it was unclear exactly how the cheater might have cheated. A combination of some incredible detective work by some poker players and an accidental (?) data leak by . . .
Let’s say you discover an old lamp and rub it, and out comes a genie offering to grant you a wish. You are greedy and devious, so you wish for the ability, whenever you play online poker, to see all the cards that the other players are holding. The genie grants your wish. What would you do next? If you . . .
We’ve blogged quite a bit about Phil Gordon. The other day, I finally picked up his Little Blue Book. I read just about any poker book that comes out, although not with the gusto I used to have. I am glad to say that I am experiencing rapidly diminishing returns from this activity, which perhaps shows that I have actually . . .
Those of you who’ve been reading this blog for a while, and especially those of you who play poker, may remember a research project called Pokernomics, which is meant to determine what makes a person a good (or bad) poker player. Lately, the question has become more than an academic one. As explained in this morning’s Wall Street Journal: The . . .
Two days ago I taught my two older daughters how to play seven card stud. That night we played a few hands before they went to bed. Last night we played a few more hands. Tonight I got home from work and one of my daughters, Amanda, was particularly eager to play poker. So eager that she had already dealt . . .
Who doesn’t love a good prediction market? The Economist does and so does Wired — and we certainly do too, as evidenced here and here. Here is a new blog about prediction markets and here is the famous Iowa Electronic Market, which will be a very busy place as the upcoming elections unfold. And who doesn’t love a good poker . . .
A few months ago, after someone claimed I was a celebrity, I offered to test that hypothesis by giving $100 to anyone who identified me spontaneously over the next 30 days. (In the deal I excluded the U of C campus area, because people know me there just because I am a professor.) It was an easy bet to make, . . .
Big poker tournaments are a zero-sum game. The competitors pay to enter and those entry fees are returned as prize money. It is common practice for a player to be sponsored by someone else, i.e. a third party pays a player’s entry fee in return for a share of the profits earned. This is true in professional golf as well. . . .
Patri Friedman, who is among other things a high-stakes poker player and a relative of Milton Friedman (I think), has an interesting interview with Tim Harford at the blog catallarchy. Patri’s webpage is pretty amusing as well.
I’m undertaking a project on poker. I’ve set up a website, www.pokernomics.com, for people to download their hand histories. Using these hands, I hope to study what differentiates good and bad poker players. The response has been overwhelming. I think we’ve got over 7 million poker hands already. (For those of you who sent hands, but don’t have your Freakonomics . . .