Does Skill Work?

Does Skill Work?

Randomnessindependence of events and house advantage are important concepts in gambling that you should, by now, be familiar with. There are a few types of games where skill can also play some role, but in most games, skill plays absolutely no role. Let’s look at where skill does, and doesn’t, come into play.

Games Based Purely on Chance
(No Skill Element)

Most forms of gambling fall into this category.

  • Lotteries
  • Scratch tickets & break-opens
  • Spinning reel games on slots and VLTs
  • Roulette
  • Mini-baccarat
  • Craps
  • Keno
  • Raffles

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The results of these games are produced purely by chance – skill plays absolutely no role. There is nothing players can do to become “better” at these games. Each result is chosen by a random generating device, such as a roulette wheel or a random number generator on a VLT, and each result is completely independent from all the other bets.

The Bottom Line for Purely Chance Games (no skill element): If you play these games, remember: the only things you can control are how much you bet, how fast you play and how long you play for. Treat these games as forms of entertainment and plan to spend money for the fun of playing.

Games Based Mostly on Chance
(Some Skill Element)

Most of the games that fall into this category are card or sports-based games:

  • Blackjack
  • Pai Gow poker
  • Casino-based poker games (3 card poker, Caribbean stud, Texas hold 'em bonus, etc.)
  • Sport Select®
  • Sports pools
  • Horse racing

In these games, there is some room for players to apply their skill. While skillful players may be able to keep their cost of play to a minimum, the gambling operator will still always have a house advantage.

The reason that skill can play a role in these games is that players must make decisions that can affect the outcome. Players who make bad decisions will win less often than players who consistently make good decisions.

It's worth noting that when gambling operators calculate the house advantage on a game, they base the calculation on perfect play. The house advantage figures listed in our Cost of Play Chart are also based on perfect play. Anyone who plays less than perfect strategy will experience a higher house advantage than listed.

Let's look at a couple of these games in more detail.

Blackjack

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Blackjack is a good example of a game where skill can play a role. While the shuffling of the cards produces a random deal, there's still an element of decision-making that can affect a player's results. Players who make good decisions will have better results over time than those who make bad choices in how they play their cards. Two strategies that some blackjack players use in an effort to maximize their results are explored below:

Basic Strategy in Blackjack: Blackjack is one of the very few casino games in which players can minimize the house advantage they face by using what is known as "basic strategy." Basic strategy is a set of rules that tells players the statistically best way to play a hand based on two factors - the up card of the dealer and their own cards. Basic strategy doesn't ensure a player will win every hand. Using basic strategy does give a player the best possible chance of winning and will help minimize the cost of play over time. Remember, using basic strategy does not eliminate the house advantage - it merely minimizes it. Many casinos actually distribute basic strategy cards that players can use while they are playing. During a hand, players can also ask the dealer what decision they should make (hit, stand, etc.) based on basic strategy.

Card Counting in Blackjack: Players using a card counting system in blackjack try to keep mental track of the dealt cards, then alter their play based on the remaining cards. Before a player can even attempt to use a card counting system, he or she must know basic strategy for every situation. Using a card counting system does not guarantee a player will win every hand (or even most of the hands) because the cards are still random. In theory, using a card counting system can enable players to tip the long term advantage just slightly in their favour, meaning that, over time, they could come out ahead. In reality, casinos take steps to significantly limit the effectiveness of card counting systems (using multiple decks, shuffling often, etc.) and make it nearly impossible for most players to gain any advantage by card counting.

Sport Select®

Sport Select is a form of legalized sports betting in which players can bet on the results of a variety of different types of sports, including hockey, football, baseball, basketball, soccer, tennis and golf. There are three different games offered under the Sports Select banner; Pro-Line, Over/Under, and Point Spread, each with their own rules of play. Players must pick between 2 and 12 games depending on which Sports Select game they are playing. This type of sports gambling is usually referred to as parley betting, as players need to correctly pick all games to win their bet.

While sporting events aren’t truly random like most types of gambling, the outcomes are uncertain because the action is so complex and chaotic it creates a great deal of uncertainty. This uncertainty is then combined with the game odds being set by the operator who takes into account a number of factors such as: location of game, recent playing trends, head-to-head play between teams, travel, scheduling, injuries and more. Further The operator then ensures a difference between their perceived actual odds (true odds) for a game, and the payoff odds for that game, by what they refer to as a buffer. Sports Select works with an 85% buffer on every available game.

Here is an example of how the buffer works: To keep it simple, we will use a two outcome event (no ties available) and where the teams are perceived to be perfectly equal by the odds setters. The true odds would be 2 for 1. That is, each outcome would pay 2 times the wager. To set the payoff odds, the true odds are multiplied by an 85% buffer meaning the payoff odds become 1.7 for 1. That is, each outcome would only pay 1.7 times the wager. The difference between the true odds and payoff odds is the operators’ house advantage.

But don’t forget, players are required to play more than one game so this buffer gets multiplied by each additional game. Keeping with our above example, if we have two evenly matched games (as perceived by the odds setters), the true odds would be 4 for 1 - that is, correctly predicting both games would pay 4 times the wager. However with the 85% buffer on each game the payoff odds become 2.89 times the wager – meaning the operator now has a house advantage of about 28%. If we keep going with this scenario by game six the true odds would be 64 times the wager, while the payoff odds would only be 24 times the wager, creating a house advantage of about 62%.

The end result is that Sports Select games have historically kept about 44% of all money wagered (which means approximately 56% of all money wagered was returned in prizes). Sport Select tends to appeal to people who follow sports closely. Some players mistakenly believe that they can use their knowledge of sports to make money over time in this game. The reality is that with the payoff odds in these games being set as they are (using an 85% odds buffer on every game) even the most knowledgeable sports fan will likely lose money over time.

 

Does Skill Count in Horse Racing?

Horse race betting is one of the few forms of betting that offers players the possibility to use their skill in handicapping (see below) to possibly improve their chances of winning. This is an example of a pari-mutuel form of wagering, meaning that players are essentially betting against each other and not against the house. The house takes anywhere between 18 and 22% of all the money wagered right off the top. To make money, players have to outsmart most of the other gamblers and also overcome a hefty house advantage.

The term "handicapping" in horse racing refers to the process of picking horses that a player thinks have been misjudged by the betting public, thus providing an opportunity to make money. Handicapping can be an enormously complex process because a host of factors can come into play, including the length of the race, the quality of the competition, the weather conditions, the jockey's skill and how the horse feels on that particular day - to name just a few. Even taking all these things into consideration, predicting outcomes with any degree of certainty is very difficult. Few bettors have the ability to outwit the rest of the gambling public and also overcome the 20% take out rate by the track.

The Bottom Line for Mainly Chance Games (Some Skill Element): If you play these games and consistently make good decisions, it will end up costing you less than someone who consistently makes bad decisions. You should still treat these forms of gambling as entertainment and expect to spend money.

Games Where Both Skill and Chance Can Play a Significant Role (Skill Element Present)

Most of the games that fall into this category are forms of gambling where players play against other players and not against the house:

  • Playing competitive sports for money (i.e. pool, golf, etc.)
  • Texas hold 'em and other forms of poker

Playing Competitive Sports for Money

If two people decide to play a game of pool for money, clearly the person who is a better pool player will have an advantage. In competitive sports, players can develop their skills and thus directly influence their chances of winning. The results are not left purely to chance.

Texas Hold 'Em

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Texas Hold 'Em is also a game where a player's skill can improve his chances of winning. Playing poker well involves a using variety of skills, including calculating odds, reading opposing players and not letting other players read you (i.e. keeping a good poker face). Of course, even very good players will experience losses; however, over the long term a skillful poker player will end up winning more than other less skillful players.

Texas hold 'em and other poker games are played in a variety of venues, including casino poker rooms, licensed establishments, informal private games and on the internet, as described below:

Casino Poker Rooms: Most people who play in casino poker rooms have played Texas hold 'em informally with friends and family long before they ever venture into this type of card playing atmosphere. Many different reasons can draw someone to play in a casino poker room. Some may see it as a new challenge or as a chance to win money, while others may merely want a professionally run game with a dealer and clearly defined house rules. In general, casino poker players will have a higher skill level. The game operator also makes a profit either by taking a rake from each pot, charging an administration fee for tournament play or charging a flat table rate from players. A player who hopes to make money playing poker in a casino has to beat the other players and overcome the casino take.

Licensed Establishments: In Manitoba, the Manitoba Gaming Control Commission can issue a license to eligible charitable and religious organizations to conduct and manage Texas hold 'em tournaments to raise money for charitable purposes. There are often entrance fees associated with these tournaments, and there can be a wide range of skill levels.

Informal Private Games: This type of Texas hold 'em is usually where people first learn how to play and is probably the only type of poker most people will ever play. Home games usually involve relatively low stakes or no money at all. Player skill levels can vary considerably, and the lack of a house advantage usually allows for a more risk-free atmosphere. It is important to note that some private games can have very high stakes and can present a considerable financial risk to players. It is illegal in Manitoba for an unlicensed game to have a rake, charge a flat table rate or charge an administration fee.

Internet Texas Hold 'Em: Over the last few years, this type of Texas hold 'em play has seen considerable growth in popularity. The internet offers players a choice of playing on free sites, where there is no real money involved, or on pay sites, where real money is wagered and the operator makes a profit through a rake of pots. Real money games can vary from relatively low stakes to very high stakes, and skill levels can also vary considerably. Players from anywhere in the world can be playing on a site at any given time. A particular risk to internet play is that there is no imposed time limit to play, as games operate 24 hours a day and you never have to leave your house. Another risk factor, particularly for younger players, is a belief that there is the real possibility of becoming a professional poker player, especially because it is quite easy to make "money" on the free sites, where people generally don't play very skillfully. In truth, for every person who makes a living off poker, there are thousands who spend money to play.

KEY GAMBLING FACTS

  • Most forms of gambling involve some kind of house advantage, meaning that over time it will cost you to play.
  • Most forms of gambling are random, making it impossible to accurately predict results.
  • Skill plays little or no role in most forms of gambling.
  • The things you can control when you gamble are how much you bet, how fast you play and how long you play.
  • Always set a reasonable budget before you start gambling and stick to it.

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