Poker is Not Gambling!

Recently I gave a poker seminar for senior citizens at a community center. Afterward, two men from a large housing complex asked me if I would present the seminar at their facility. Per their request, I contacted the man in charge of arranging such events. His response sort of threw me for a loop: "Poker – that's gambling. I don't approve of gambling. Forget it!" Since then, I have given it considerable thought, and now conclude … poker is not gambling!

That's right. I said it: Poker is not gambling! It is no more gambling than is investing in the stock market. It is more like investing in income property. How so?

What is the difference between gambling and investing? When you make an investment, you commit money or other assets to gain a return on your investment – that is, to make more money. You hope your investment will be profitable. Well, you say, gambling implies taking a risk. There is some danger – a possibility – that you will not gain a profit and may lose your money. But that's true when making many investments, too. (Look what happened to so many of us who invested in the dot.com and other stocks.) Besides, you take a risk even when you cross the street: You could be hit by a car, or trip and break a leg. There is an element of risk in almost everything we do.

If it's not risk, perhaps it's chance that is the key distinguishing characteristic of gambling. When you gamble, you take a chance. It's the likelihood of a particular outcome. It's unpredictable. It happens without apparent cause. You have no control over it. If you toss a penny in the air, you have no control over whether it lands heads or tails. If you drop a coin into a slot machine, you have no control over where the reels will stop.

Being in Control; Making Decisions

Aha! That's the clue: control – the power to influence something. You can direct it, restrain it, dominate it. Without control, you are indeed gambling on the outcome. The extent to which you can control the action and concomitant results depends on one key factor: decision-making. Are you able to make the important decisions that influence results? When you are in control, you can contemplate the situation and take the most appropriate action. You make the choice. If it's the right choice – the right decision – you gain. You are a winner!

And that is why poker is not really gambling. When you develop the skills, you can make the best decisions – those that will help you win money.

Certainly, there is the element of luck. That's another way of saying there is a chance that you will lose money despite making the right decision. But if you make the right decisions, the laws of probability are likely to make you a winner in the long run.

It's More Like Investing in Income Property

Playing poker is more like investing in income property. In both cases, you have the opportunity to make the key decisions: Should I buy that particular apartment building? In that location? Should I improve the building? Should I raise the rent? Should I accept pets? Should I rent to that couple or should I check them out more carefully? To be successful in investing in income property, you must make countless important decisions. If you are knowledgeable and have the skill, you will be successful – and it will be profitable.

In the same way, when you are skilled in the game of poker, you are able to make the right decisions: Should I play at that table? Should I change my seat position? Should I stay in or fold my cards? Should I raise? Is this the opportunity to bluff? Should I semibluff? What is my opponent holding; could he have a straight? To the extent that you make the key decisions, you are in control. That makes it more of an investment than an outright gamble, whereby you rely strictly on chance – or luck.

Grading – Gambling Vs. Investing

We can grade different endeavors based on the extent of decision-making involved. In a pure gamble, like tossing a coin in the air or playing the slots in Las Vegas, you make practically no decisions – other than whether or not to toss the coin or whether to put another coin into that slot machine. That's essentially 100 percent "pure gambling."

When "investing" in the stock market, we do have the opportunity to get information about a stock before deciding to buy it; but, once it is purchased, we no longer make any decisions except whether to buy more, hold, or sell our shares. All the decisions that influence the value of our stock are made by some executives 2,000 miles away – who may be interested only in stock options and bonuses. We are not in control.

On the opposite end of the spectrum is "pure investment," with virtually no risk – like purchasing AAA-insured municipal bonds, treasury notes, or savings bonds, or having government-insured savings in a major bank.

Everything else lies in between these extremes. The more you can make the key decisions – and therefore are in control – the more the activity lies near the pure investment end of the spectrum (see the exhibit below).

Admittedly, poker is not a pure investment. There is some degree of risk – chance – involved. In fact, I would rate it a bit to the left of income property on our scale. What's your opinion?

Editor's note: George Epstein is the author of The Greatest Book of Poker for Winners! On June 25, he will present a special two-part "Poker Seminar for Engineers" near the Los Angeles International Airport, hosted by the Society for the Advancement of Material and Process Engineering (SAMPE), Los Angeles chapter. For more information, E-mail George at [email protected].