Fooled by Randomness - Part 1

It is the mark of an inexperienced man not to believe in luck.

- Joseph Conrad



From poker's earliest days, professionals understood in their bones that excellent play alone wouldn't be enough to provide a steady income. The luck factor was simply too pervasive. They might daydream about luck "breaking even" so that their skill would always prevail, but deep down they knew unmarked, squarely shuffled decks were too unpredictable for that. Random dealing would inevitably give them an unfoldable second-best hand in the night's biggest pot, wiping out the profits of a week's worth of strong, honest play. So while greed was certainly motivating them, fear of bad luck – of what modern statisticians call random outliers – was perhaps the main reason players as diverse as George Devol, Alice Ivers, Nicky Arnstein, Joseph Johnston, and Arnold Rothstein, not to mention the crew that took Rothstein to the cleaners, all cheated. Today's pros rarely cheat anymore, but nearly always make deals near the end of a tournament to insure themselves against getting unlucky.



Writing about honest poker in the wake of the Rothstein debacle, James Wickstead – like many tacticians before him and since – naively downplayed the luck factor. "In philosophy there is no such thing as 'luck,'" he says in his 1936 primer on stud. "'Luck' is purely subjective, in the eye of the beholder. The amount of 'bad luck' that a player has over a period of time is practically negligible. He holds average cards and his winning or losing is contingent on how he plays them." What Wickstead overlooks is that while playing well is extremely important, for a player to hold average cards – that is, for short-term variance to become perfectly flat, canceling every last outlier – the universe of hands must be vast, well into the millions by even conservative estimates and certainly more than most players will see in their lifetimes, let alone in one weekend or tournament. So when Wickstead tut-tuts, "Viewed through the lorgnette of careful reasoning, we must reach the conclusion, namely, that 'luck' or any other exterior factor counts for very little," experienced players might quote Joseph Conrad, or at least ask, "What the hell's a lorgnette?"



Or as the narrator of Rick Bennet's novel King of a Small World astutely observes, "In the long run there's no luck in poker, but the short run is longer than most people know." Meanwhile, the narrator of Jesse May's Shut Up and Deal seems to respond directly to Wickstead: "People think mastering the skill is the hard part, but they're wrong. The trick to poker is mastering the luck. That's philosophy. Understanding luck is philosophy, and there are some people who aren't ever gonna fade it."



While it's difficult to put a finger on exactly where luck, good or bad, works its magic, let's look at the stages of fortune in a typical hand. Lucky to be dealt pocket jacks near the bubble of a no-limit hold'em (NLH) tournament, Player A is unlucky to have an opponent find queens, especially an opponent with a bigger stack. Player A raises to three times the big blind; Player B considers reraising with queens, but respects the early-position raise and just calls. On a rainbow flop of 9-7-4, A thinks he's lucky that not a single overcard has appeared, but in fact he is unlucky that the texture of the flop encourages him to bet into queens. Depending on his chip count, A may very well go all in at this stage, even if he checks first and B makes a sizable bet. Granted, the play of such hands can be rather complex. A supremely observant and disciplined player may somehow put B on a bigger overpair, check, and fold when B bets. Or B's acting skill might convince A that B called preflop with a much weaker hand than Q-Q. What nullifies almost every complexity is that a short-stacked A will probably go all in before or after this flop, get called by B, and get busted.



When getting dealt a worse hand would have led to a better result, we say that A's timing was off; B's timing was perfect. But instead of B's poker skill, it was the dealer – the human randomizer in a clip-on bow tie – who literally and figuratively pushed all those chips to him. Eight or nine times out of 10, this is who determines who wins the make-or-break hands, especially when we count all the races decided by that same human shuffle machine.



Now let's look at some inflection points in baseball, since the valences of our national pastimes are surprisingly similar. Both are played nine- or 10-handed but place a huge premium on individual success: it's the whole ballgame at the poker table, of course; and while a baseball team competes for a pennant, it's the home run hitters and strikeout artists who make the long money. The tactics of both games are dominated by probability. Managers maneuver to achieve or avoid lefty-righty matchups, and they count on statistics to establish rotations and batting orders. Poker players gauge pot odds, randomize bluffs, fold when their hand is a statistical underdog, raise when it's the favorite. In both contests, decoys and stealing are crucial, but patience is just as important. Baseball and poker players spend most of their time picking up signs, moving into position and working the count, and once every nine plays or so, on both offense and defense, their skills really have to pay off. But more than in most competitions, luck becomes pivotal.



Imagine that there are two outs, bases loaded, late in a close playoff game, as Rothstein certainly did back in 1919. With a full count, the pitcher unleashes a nasty two-seamer that tails in on the hands of the opposing cleanup man. The dozens of possible outcomes include the batter taking a close pitch for ball four – or strike three. On a perfect pitch, luck is involved in getting, or not getting, the call. (The obvious parallel is a race between queens and A-K.) Or the batter might swing – pull in his hands and skillfully make hard contact, driving the ball just over the left field wall; or to nearly the same spot, where the left fielder makes a snow-cone catch; or an inch to the left, where the fielder gets his glove on it before it caroms away for a bases-clearing double. The wind, more than skill, will decide. Or the batter might swing and make feeble contact, resulting in a foul tip caught or not, a swinging bunt, a grounder to short, a seeing-eye single, a pop-out, a duck-snort just within or out of reach of the second baseman, and so on.



Poker luck is more egalitarian. The genes of very few of us produce Randy Johnson's seven-foot left-handed wingspan or the eyesight and coordination of Alex Rodriguez, but everyone has the same chance of being dealt a timely hand when the money is on the line – and of not being dealt one.



In NLH tournaments, amateurs with excellent timing routinely destroy famous pros. They also lose coin flips and finish 100th out of 1,007 – when 99 places are paid. For the pros it's no different. Among the top 300 tournament specialists, the differences in skill are quite small. Whoever "runs good" for a few months will make televised final tables, win major titles and millions of dollars, and be hired, as Michael Mizrachi was last year, as pretty much the sole face of a big online site. A lot of folks must have been sold on the idea that Mizrachi was more skillful than the pros who, by winning an extra coin flip or two, would have earned those same titles.



Tournaments definitely require serious poker skill, but by far the most important factor determining who wins them is luck. Too few winners acknowledge this, though, and the winners are who everyone wants to hear from. TV producers and magazine editors operate under the assumption that poker fans don't want to hear that a black swan took down those photogenic bundles of Benjamins. No, it was their hero's laser focus on a pulsing vein late on day six that earned him the cash and the bracelet.



What the hell's a black swan, you ask? Astonishing luck, good or bad. According to Nassim Taleb, the trader who made them notorious in his books The Black Swan and Fooled by Randomness, "A black swan is an outlier, an event that lies beyond the realm of normal expectations. Most people expect all swans to be white because that's what their experience tells them; a black swan is by definition a surprise. Nevertheless, people tend to concoct explanations for them after the fact, which makes them appear more predictable, and less random, than they are. Our minds are designed to retain, for efficient storage, past information that fits into a compressed narrative. This distortion, called the hindsight bias, prevents us from adequately learning from the past."



Hindsight bias is also a polite term for calling a preflop raise with A-7 suited, rivering a straight, clapping once but as loud as you can, and yelling, "Yeah, baby! Ship it!" Of adolescents such as these, Taleb writes: "Lucky fools do not bear the slightest suspicion that they may be lucky fools." And why not? Because their "strings of successes will inject them with so much serotonin [the hormone of pleasure] they will fool themselves about their ability," and also because "our hormonal system does not know whether our successes depend on randomness." In other words, it feels so damn good to win a big pot, we prefer to give our favorite player the credit, even when all he's done is hit the bull's-eye of the target next to the one he was aiming at.



Another reason we're so easily fooled by random success is that poker movies and television broadcasts tend to equate getting lucky with tactical prowess. As Mike D'Angelo pointed out in the May Esquire, directors "try to create excitement by emphasizing luck rather than skill – or, more accurately, by treating luck as if it were skill." It's a crucial distinction, of course, but one that a huge fraction of the audience is unable to make. D'Angelo points to the climactic hand of the $150 million sit-and-go in Casino Royale: "While the icy arch-villain's full house bests a flush and a smaller full house, it's no match for 007's improbable straight flush, which he smugly unveils as if he'd somehow willed this result rather than just winning the poker equivalent of the state lottery. Hell, I could defeat international terrorism getting hit by the deck like that. So could you. So could a sponge. Move Bond just a single seat to the right in that hand and all he possesses is a license to tilt."



While the hand is a perfect example of a black swan, it's important to realize that every winner of an actual NLH tournament has also been bitten by a few of these life-changing fowl. Again, this is not to say skill isn't crucial. But when 75 percent or 80 percent of the entrants are skillful enough to win if their timing is exquisite, it's foolish to give so much credit to the player who bought the right lottery ticket. D'Angelo puts it more starkly while addressing the "lie" such movies propagate: "that winning a given poker game or tournament has any meaning whatsoever. Poker is a game of skill, but only in the long run – great players sometimes endure losing streaks that last for months, and a complete idiot with ten grand to spare can win the world championship."



Daniel Negreanu, no idiot, was the highest-ranked tournament player in 2004, but the charismatic and talented Canadian didn't win a single event in 2005. Did his acumen suddenly wither? Of course not; his luck just regressed a bit closer to the mean. In his always frank blog, Negreanu walked us through two key hands against Erik Seidel during the '05 World Series. Both times, Negreanu was a slight favorite when the big money went in the pot, and both times he lost. "Those hands in particular have been the difference in my year this year vs. last. Playing the hands is unavoidable, but if you never hit one it's impossible to win. Plain and simple."



Seidel, a New Yorker who used to work in Taleb's business and now has eight WSOP bracelets, is ironically more famous for losing the '88 world championship to Johnny Chan when Chan was fortunate enough to flop a straight on the final hand. Film of the hand was used in Rounders to show how skillful Chan was. Not that Chan wasn't skillful, but slow-playing the flopped nuts hardly proved it.



T.J. Cloutier has won more tournaments than anyone, and would have won the 2000 world championship if Chris Ferguson hadn't spiked a 9 on the river. The following summer, virtually the same thing happened to Cloutier in the Tournament of Champions. In both cases, he smiled as he shook the lucky winner's hand and told him how well he had played. "That's poker," he added. His thoughts about vicious black swans might be called Texas Fatalism: "You can set up all the plays in the world, you can play perfectly on a hand, and you can still lose. And there's nothing that you can do about it."



Coming soon: the argument that luck is a negligible factor, especially in games such as H.O.R.S.E. and in the overall Player of the Year standings.