Is poker a game of skill or chance?

Ask any of the ardent fans of poker and they will tell you how it is a game of skill, not just chance. There is luck involved in the hand that you get dealt, but what you do with it involves a good deal of skill and talent. Clueless folks like me might just see luck in there, but it takes a few turns at the game to understand the skills needed to play it well, I’m told.

So if you were to run a poker den as a business, could you get in trouble for illegally running a gambling racket?  This was the question posed to Federal Judge Jack Weinstein in the Eastern District Court of New York. The state brought in their expert witnesses to convict the accused claiming that this is gambling and there are strict laws around it. In a landmark verdict running into 120 pages, the judge ruled that poker was a game of skill not just of chance. You can read the full verdict here. “Game play in poker is influenced by both the cards dealt (determined by chance) and the decisions made by players (determined by skill). While players’ actions are influenced by chance events, their decisions are based on skill. Player’s decisions, in turn, affect game play, both in the hand being played and in subsequent hands.”

You can also read a good summary of the verdict here.  This will in all likelihood be reconsidered at a higher court, but for now poker fans can indeed rejoice. If upheld this could have serious ramifications in law in terms of online poker, hosting poker online across international borders and a host of other issues. I can already see the online gaming sites salivating over the possibilities.

Steven Levitt of Freakonomics fame has also done some work on this, and you can find that paper on the NBER site.If you cannot access the full paper there, you can also find it at Levitt’s website here. Notably, this was in response to the “Black Friday” indictments by the Justice Department in 2011 against a few online poker sites, accusing them of illegal gambling. Nate Silver of Five Thirty Eight fame has a detailed post about this on his New York Times blog. For those that have not reached plea bargains on this case, the recent ruling by judge Weinstein will provide new ammunition to continue their fight.