Is Gambling About Skill or Luck and Random Chance?

Gambling, by definition, involves risking something of value on an uncertain event. This can be a roll of the dice, a turn of a playing card, or the outcome of a sporting event.

In that respect, gambling always involves a certain degree of luck.

But when you start examining the role of probability and decision-making in gambling, you can see that skill becomes an important aspect of gambling, too.

In fact, if there were no skill involved in gambling, the casinos wouldn’t be able to make consistent profits.

So is gambling a skill or based on luck and random chance? This post examines the role of both skill and luck in various types of gambling.

Everyone knows that the winner of the World Series of Poker or the World Poker Tour wins because he outplayed the other rounders. In fact, everyone knows that poker is a game of skill.

But poker is also a game of chance.

What’s the difference?

Short-term versus long-term thinking is the difference between luck and skill when it comes to gambling of all kinds.

Let’s say you’re playing at a table with nine players, and you have pocket aces. In a no-limit hold’em game, you’d want to go all-in and hope that all the other players also went all-in.

You’ll win this hand only 1/3 of the time. Most of the time — 2/3 of the time, in fact — the other players are going to draw out on you.

But look who’s going to win the most money in this situation.

Assume that every time you do this, you have $100 in front of you.

With nine players at the table, you’ll win $800 on three out of nine occasions, or $2,400.

You’ll lose $100 on six of those hands, or $600.

That’s a profit of $1,800 over nine hands, or an average of $200 per hand.

Most situations in poker aren’t that cut and dried, but it’s a perfect illustration of how skilled play means you’ll profit in the long run.

But in the short term, some of the time — even most of the time — someone else will win.

It’s all about long-term expectation.

All casino games pay out bets at odds lower than the odds of winning. The classic example is roulette, where you get paid off even-money on a red or black bet.

If the probability of winning that bet were 50%, you’d break even in the long run.

But the real probability of winning that bet is 47.37%. That’s because only 18 of the 38 numbers on the wheel are red. (18 of them are black, too, but two of them are green.)

All casino games have a gimmick that gives them this edge over the long run.

In the short run, say half an hour or an hour, it’s relatively easy to walk away from a game like roulette as a winner.

But if you keep playing long enough, eventually, the house edge will win out.

In this example, the skill doesn’t involve being good at predicting which number will come up. THAT is a matter of pure chance or luck.

It also doesn’t involve changing the size of your bet based on what happened on previous spins of the wheel.

And it doesn’t involve the casino having any means of controlling where the ball lands.

The skill is simply in recognizing the mathematical inequity.

Games like roulette are strictly chance and luck-based, but they have a long-term edge for the house.

You’ll often see gamblers or gambling experts quoted as saying that blackjack is the one game in the casino where a skilled player can get an edge over the house.

This is not entirely true.

If you play PERFECT blackjack, making the mathematically perfect move on every single hand, you’ll reduce the house edge to a low percentage — less than 1%.

But the house STILL has an edge.

In a low-volatility game like blackjack, a low house edge means that you have a closer to 50% probability of having a winning session than you would in higher-volatility games or in games with a higher house edge.

That probability, though, is still less than 50%.

There’s an exception, though.

If you count cards in addition to playing with perfect basic strategy, you can get an edge over the house.

Here’s the thing about that edge, though. It’s a long-term edge.

In the short run, even a skilled card counter can lose lots of money. And by short run, I’m talking about a single session, several short sessions, or a single casino trip.

The long run doesn’t really kick in until 1,000 hands, and even then, your results can be off by 1% or more in either direction.

To be confident that you’re looking at your actual long-term results, you need to get in at least 10,000 bets.

Even if you’re playing heads-up against the dealer and getting in 200 hands per hour, you’re looking at 50 hours of play before you can be confident that your results are truly long-term.

If you’re playing at average tables, where you’re getting 50 to 100 hands per hour, you’re looking at between 100 and 200 hours of play.

Everyone knows that you can bet on sports, but it’s tough to pick winners the 53% or more of the time needed to generate a profit.

But what if you’re the athlete?

Some people participate in darts tournaments, for example. If you’ve ever played darts with someone who’s good at it, you’ll understand that it’s a game of skill.

But no one throws a bullseye every time he throws a dart, either.

The outcome is uncertain, especially if you’re dealing with someone of the same skill level. Often, handicaps will be involved when playing darts in a tournament.

This same line of thought applies to games like billiards and shuffleboard, or even in more sporty endeavors like touch football or soccer.

Yeah, you can shoot pool in a bar with someone for money, and yes, it’s a game of skill.

Some of the skills involved might be more involved than just putting the balls in the pockets, too. Some psychology might be involved.

Watch a couple of movies like The Hustler or The Color of Money to get a clearer idea of how that works.

You can gamble on some games where luck is the sole factor. Slot machines and the lottery are both examples of these kinds of games.

When you play a slot machine, not only are you unable to use skill to improve your probability, but you can’t even choose one game over another. Identical slot machine games might be programmed with entirely different probabilities.

For example, you might play a game where you have a 1 in 2000 probability of winning the top jackpot of 1000 coins, but the identical machine right next to it might only give you a 1 in 2200 probability of winning that same amount.

Modern slot machines use a random number generator (RNG), which is a computer program that generates the results on gambling machines. This random number generator can be set to provide whatever kind of payback percentage the game designer and the casino prefer.

It’s entirely random, still, but the house gets an edge because of the discrepancy between the payout odds and the odds of winning.

The lottery, on the other hand, is a game where you can calculate the odds of winning. In fact, if the jackpot gets big enough, you could be playing a game where your mathematical expectation is positive.

With Mega Millions, for example, the odds of winning are based (at least in part) on the number of tickets sold. If the jackpot gets between $220 million and $260 million, you’re looking at a game with a break-even expected value.

The bigger the jackpot gets beyond that point, the higher the expected value becomes.

The problem is that the odds of winning are so small that expected value becomes irrelevant.

If you bought $150 million worth of tickets, you might have a 50% probability of winning the jackpot and showing a profit. But who really has that kind of money to wager?

But if you wager just $1,000, you’re still looking at odds of winning that are comparable to being struck by lightning.

That’s not skilled gambling.

That’s plain insanity.

I could list examples of the roles played by skill versus luck in the lottery all day, but I know you’ve got to get back to work. And so do I.

I’ll leave you with this, though. Gambling is almost always a negative expectation bet, so you should never bet money you can’t afford to lose.

Even the most skilled gamblers are only pressing the smallest of edges, and they can go broke even when the odds are in their favor.