Beyond Chance? The Persistence of Performance in Online Poker

Abstract:     
A major issue in the widespread controversy about the legality of poker and the appropriate taxation of winnings is whether poker should be considered a game of skill or a game of chance. To inform this debate we present an analysis into the role of skill in the performance of online poker players, using a large database with hundreds of millions of player-hand observations from real money ring games at three different stakes levels. We find that players whose earlier profitability was in the top (bottom) deciles perform better (worse) and are substantially more likely to end up in the top (bottom) performance deciles of the following time period. Regression analyses of performance on historical performance and other skill-related proxies provide further evidence for persistence and predictability. Our results suggest that skill is an important factor in online poker.

Number of Pages in PDF File: 32

Keywords: poker, online poker, no limit texas hold’em, online gambling, skill, chance, game of skill, game of chance, performance persistence

JEL Classification: C01, D80, K00, K34

working papers series