Poker Is a Game of Skill Part 1 – History and Legality

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Through this two-part series, we will delve into the history and legality of poker, why it’s a game of skill, and in the second article explain how using poker skills can improve your personal and professional life. Contrast to popular belief, there is more to it than keeping a good poker face.

Poker is a unique card game for many reasons. First, it is very social because you’re playing with a group of people. Unlike other card games with the dimension of betting, like blackjack, there is the added psychology of playing against others people rather than the house. Poker is a game that challenges players regardless of their knowledge or skill level. As the old adage goes, poker takes only 15 minutes to learn, but a lifetime to master.

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It’s hard to tell where poker originated, but it has roots in other card games throughout Europe from as early as the 16th century. French settlers brought a game called Poque to Louisiana in the 1700s which later become translated to the English word Poker. By the 1800s, the game spread north and adapted to accommodate a 52-card deck.

At the start of the 20th century, Texas Hold’em, gained popularity in the south. It wasn’t until 1970 that Las Vegas introduced the game, when it hosted the first ever World Series of Poker (WSOP) at Binion’s Horseshoe. The tournament aired on television in the late 70s, but wasn’t much to watch until the innovation of hole cams in 1997.

Hole cams allowed for viewers at home to see the player’s cards, exponentially increasing the interest and entertainment value. Around this same time, online poker was catching on only to explode in 2003 when an amateur poker player and accountant from Tennessee, Chris Moneymaker, won the WSOP.

The impact of Chris Moneymaker’s success on the popularity of poker was so profound it was coined the “Moneymaker Effect” where people believed, “if this average Joe can do it, so can I”. Poker’s popularity steadily increased until 2006 when Congress passed the Unlawful Internet Gambling Enforcement Act (UIGEA).

Much controversy surrounds this legislation because, at the last hour, it was tacked on to the SAFE Port Act, a must pass law regulating port security. This legislation sent shockwaves through the online poker industry, causing some of the major sites to pull out of the US market. Those who remained in the game had a decent run until April 15, 2011, what is known in the poker community as, Black Friday.

On Black Friday, the Department of Justice shut down the remaining larger websites, and froze billions of dollars of players’ money, much of this remains frozen. This affected millions of people, including those who relied on it as income, and those who played for fun or as a hobby. Five years later, online poker has started to slowly come back state by state, but it’s still an uphill battle.

You may be asking yourself why online poker is illegal. Like most political issues, there are multiple perspectives to every argument. One reason has to do with regulation and taxability, but I submit that much of the problem is the improper categorization of poker as a game of chance, rather than as a game of skill. A game of chance is essentially like rolling dice or the roulette wheel, where the outcome is completely unpredictable.

To illustrate this point, according to the Montgomery County, Maryland’s government website, “a game of recognized skill” is not considered gambling. For those of you not familiar with the game, you may not initially see the distinction between poker and roulette, as they are both games in a casino.

To answer this question, Steven Levitt, the economist and co-author of the best-selling book Freakonomics, researched the role of skill and luck in poker. Levitt studied “highly skilled” poker players and found the difference in their return on investment was significantly better that those not identified as “highly skilled.” The “highly skilled” group yielded a ROI of over 30% compared to -15% for the other players.

Make no mistake, poker is a game of skill, meaning there is strategy involved that can be learned, producing better results over time. Levitt is not alone in finding skill critical to the game of poker. For example, in 2010, the International Mind Sports Association (IMSA) accepted poker as a “mind sport,” just like chess. And, in 2012, the Brazilian Ministry of Sport officially recognized poker as a game of skill, noting it as “a fun game that requires concentration, training and study”.

In the next part of this series we will be diving deeper into why poker is a game of skill and how those skills can be honed to excel you in your career and personal relationships. Poker, like life, requires assessing risk, people, and opportunities in order to make the best possible decision with the information you have while detaching emotionally from the outcome. Stay tuned…