Podcast Summary
Poker is more than just luck: Famous economist Steven Levitt debunks the myth that poker is solely based on luck, revealing it as a game of skill and strategy
Contrary to popular belief, poker is not just a game of luck. The hosts of Freakonomics Radio on Marketplace were surprised to discover that Steven Levitt, one of the co-authors, is an avid poker player. Levitt shared that his father introduced him to poker at a young age, and he developed positive associations with gambling due to the rewards he received when his father won. However, Levitt clarified that poker is not a game of luck, but rather a game of skill. He explained that some players are good, while others are bad, and he and the hosts have even written papers on the subject. One paper looked at outcomes in the World Series of Poker, where the best poker players in the world compete. Despite Levitt's personal experience and research, some may still view poker as a game of chance. However, the evidence suggests that poker requires a significant amount of skill and strategy, making it a complex and intriguing game.
Impact of Skill on Outcome of Poker Games: Skill significantly influences poker game outcomes, but legal uncertainties surrounding online poker may limit opportunities for skilled players to earn consistent returns.
Skill plays a significant role in the outcome of no-limit hold'em poker games, as shown in a study analyzing 12 million hands of online poker data where hidden cards were available. However, the legality of playing online poker for real money remains a contentious issue, with some courts ruling it as a game of skill while others consider it a form of gambling. This legal uncertainty has resulted in the shutdown of major poker sites, leaving the future of online poker uncertain. Despite these challenges, the study emphasizes that those with the necessary skills can potentially earn positive returns from playing poker.
Government's Inconsistent Stance on Gambling: The government's stance on online gambling is inconsistent due to financial gains from state-run lotteries and casinos, despite moral objections and concerns over problem gambling. Regulated online gambling sites could potentially reduce the number of people turning to illegal platforms and help mitigate problem gambling.
The government's stance on online gambling is inconsistent and hypocritical. While they take a hard line against it due to concerns over problem gambling, they continue to operate state-run lotteries and approve state-owned casinos, which generate significant revenues for the government. This suggests that the government's primary concern is not moral objections to gambling, but rather the potential financial gains. If the government truly wants to control and monopolize gambling, they should establish regulated and secure online gambling sites, giving consumers a legal and safe alternative to unregulated sites. This could potentially reduce the number of people turning to illegal gambling platforms and help mitigate problem gambling. However, it's important to note that this is just one perspective, and the issue is complex and multifaceted, with valid arguments on both sides. Additionally, during the podcast, Stephen Lovett from Freakonomics.com discussed the inconsistency of the government's stance on gambling and raised the possibility that the research was being done to allow the hosts to play more poker. The next podcast episode will feature Steve Levitt discussing the psychological and economic reasons why people enjoy doing low-paid manual labor at home despite not wanting to do it for someone else.