There are a number of games in which the player has some control over the probability of winning or losing. Although such games involve skill, this does not necessarily mean that any given player has a better chance of winning. In fact, if a person does not have the requisite skill, he/she might be better off playing a game of pure chance (Turner & Fritz, 2002).
Games of skill fall into three categories:
- There are games in which there is some degree of dependency between trials. In card games, the cards that have been drawn change the odds of any remaining card appearing.
- In games such as poker and dominoes, opponents can use various strategies, such as bluffing and intimidation, to gain an advantage over other players.
- In games, such as horse racing, sports betting and stock market investments, the outcome is only partly random. The non-random elements of these games, such as the skill of the players, the speed of the horses, or the true value of an investment, are partly compensated for by a subjective estimation of the chances of a win. The subjective estimation is usually provided by a bookie, by the collective guesswork of the gambling public, as in parimutuel bets, or by the market forces of supply and demand. With stock market investments, a strong potential for future earnings or growth will drive up the cost of a stock. Therefore the future prospects of a stock are generally factored into its price.
The role of skill in these three types of games overlaps considerably. In all three cases, the estimation used to compensate for the non-random elements of the game is subjective and therefore less than 100% accurate. An astute gambler can find opportunities where the bookie has misjudged the odds or where the collective guesswork of the gambling public is mistaken. People who pay close attention to the game may find an edge. Moreover, knowledge of the true value of a bet is not distributed evenly. Outthinking other players plays a role in sports and horse betting, but the battle in these cases is not between individuals, but between an individual and the rest of the market. The play of poker and dominoes also includes factors that affect a player’s ability to win. In all cases, the key to winning in the long run is information. Armed with a lot of information (e.g., previous draws, odds and strategies, “tells,” or insider information), a gambler can make a profit, but only if few other people have the same information.
Systems for Skill Games
By definition these games require skill, so the optimal playing strategy should more correctly be called a skill, not a system. Nonetheless, the logic behind systems for luck games and skill games is often similar. Systems designed to spot biases and patterns in pure-luck games are based on a logic similar to card counting, where the changing distribution of cards left in the deck actually makes it effective.
The key to all systems or skills for skill-oriented games is information. Skilled gamblers know how to obtain information and how to interpret it. Less skilled gamblers either do not have the information or do not know how to utilize it to its full potential. The gambler also has to fight against what in stock trading is called the efficiency of the market. An efficient market is one in which information about a product is immediately absorbed into the price of that product. Once information becomes generally known, it ceases to provide an edge. No markets are truly efficient, but finding opportunities requires knowing something that the rest of the market is unaware of. The best opportunities come from insider knowledge, but just as it is in stock trading, using such information in gambling games is generally illegal.
Games of skill attract skilled players, some people even make a living as professional players. Many skilled players are as obsessed with their game as pathological gamblers. The key difference is that skilled players do not bet impulsively, but are very selective about their bets (Turner & Fritz, 2002). In addition to obtaining and interpreting information, emotional control is another key factor in games of skill. In all games of skill, successful players avoid feeling desperate when they experience a long losing streak and avoid feeling too lucky when they experience a long winning streak. Skilled players base their decisions on the odds rather than on hunches. They also practice self discipline and money (or bankroll) management (Warren, 1996). Many less-skilled gamblers also use the same strategies to varying degrees of success. Turner and Fritz (2002) discuss how even a skilled gambler can ultimately lose in the long run. A player can only win in the long term if he/she plays against less skilled players.
Gambling systems for games that involve skill are specific to each game. These will be discussed in parts 5, 6, and 7.
Back to Games & Systems