Examining luck vs. skill in casino games

April 05, 2016 3:08 AM
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Video PokerNumerous times I’ve written how I consider video poker more than a game of luck. Twenty plus years ago, my father wrote about a court case in which a judge determined video poker is a game of luck, despite Dad’s testimony to the contrary. This topic was the center of a conversation I had with some very knowledgeable people in the industry.

There seemed to be two trains of thought. First, a game of skill requires some form of physical skill and mental acuity is not considered skill. I didn’t have much response to this. By this definition all traditional games in the casino don’t qualify. To be clear, I do not agree with this definition, even less so that using ones brain is not a “skill.” Suffice it to say, I believe we should put MORE emphasis on brain power than we currently do as a society.

The second train of thought goes to the degree skill plays a part vs. luck. If the game must simply have any amount of skill, then any game with a strategy qualifies. This leaves out only a handful of games – slots, Big Wheel, keno, etc. I’m not really sure where this leaves roulette and craps. These games don’t have strategy per se.

With the exception perhaps of the poker room, nothing in the casino approaches the point of being more skill than luck. But, I don’t think a game must be 51% skill to be a game of skill. However, this train of thought is more accurate than the need for some physical component. Casino games were not meant to be physical.

So, how much strategy is required to make a game into one considered to be one of skill? I think there are two components to this. The first, the amount of strategy; the second, the impact of not following this strategy. They are usually tied together, but not always.

Let’s start with the game that has one of the simplest strategies in the casino, Three Card Poker. There is one rule for the strategy: Play Q-6-4 or higher. What happens if you forgo any strategy and never fold? This will nearly double the house advantage from 2% to nearly 4%. This is a significant increase, but how devastating is it? In percentage terms it increases the house advantage by roughly 100%.

So, we have a game in which the strategy is very simple to follow and if you choose to ignore it the house advantage doubles. Yet, I have a tough time calling Three Card Poker a game of skill. One aspect of my determination is also how obvious is the strategy. To someone who never plays casino games, probably not all that obvious. To someone more familiar with games, but who has never played Three Card Poker, the notion of following the dealer’s lead (i.e. dealer doesn’t qualify with less than Queen High, so maybe I should fold) is not unusual. I simply don’t think it takes much skill to play.

In video poker or blackjack, we find far more complex strategies. It is much harder to state the absolute impact of not following the strategy because no two people not following it will do the same thing. One might not know when to double on soft hands in blackjack, another might hate splitting altogether. Then there’s the strategy to “follow the dealer’s lead,” which completely backfires in blackjack. Hitting until you bust or get to 17 is very bad strategy.

The house advantage in blackjack (paying 3-to-2) is a mere 0.6%. Ignoring doubling, refusing to split, not knowing when to hit/stick, can easily change the house advantage to 4-5% or more. The net house advantage might be similar to our prior example of Three Card Poker, but as a percent increase, it is more in the 1,000% range. Between the combination of complex strategy and the impact it has on the house advantage, I put this game into the game of skill. As final confirmation, I don’t believe most people would find the strategy the least bit intuitive.

All of this is not to imply luck doesn’t play a significant part, at least in the short run. In the long run, a player will most definitely feel the impact of playing 95% vs. 99.4% or even 96% vs. 98%. The luck aspect will matter less and the skill portion will become dominant as the long-term odds develop. But, most don’t keep track of their lifetime gambling ledger.

In some cases, even the long-term is affected a bit by luck. If, over several years, you play a variety of video poker games at a variety of denominations and sometimes play max-coin and sometimes not, then luck might play a bigger part of your lifetime ledger. The math has no idea what game you are playing. Hit a Royal when you have 1-4 coins in instead of 5 and you will pay a price, so to speak.

A Royal will show up once every 41,000 hands or so. Unless you are a very heavy player, you might get through a few cycles every several years. Hitting the “right” number of Royals is important, but hitting them when you’re playing max-coin quarters instead of max-coin nickels is just pure luck. As a case in point, this morning I sat down at a 100-play machine, where you get a single deal and play the resulting draw 100 times.

When you play for one penny, you are really wagering $1 per hand. I was nearly down $20 when I was dealt four 4’s (without the kicker). My draw netted me 25 kickers and 75 non-kickers for a win of about $100. Hard to win much more playing video poker wagering $1. I could’ve just as easily been playing max-coin nickels with a single hand and won much less.

The skill component of this only comes in, in the fact that because I was playing the right strategy, I still had a couple of dollars left on the meter. If I had played incorrect strategy, I might have run out of money before I ever got to this hand. This is a part of the impact of skill that is very difficult to measure. So, is video poker a game of skill? I think so, but others might have a different opinion.

Elliot Frome is a second generation gaming analyst and author. His math credits include Ultimate Texas Hold’em, Mississippi Stud, House Money and many other games. His website is www.gambatria.com. Email: ElliotFrome@GamingToday.com.