Is online poker rigged?

Is online poker rigged?

The question on whether or not online poker is rigged is one of the most hotly debated topics in poker chat forums all over the internet. You only have to look at this forum to see how many posts have been made on the topic.

Poker rooms are well aware of this skepticism. Most of the larger poker rooms have employed independent consultants, such as Price Waterhouse Coopers, to verify the randomness of shuffling algorithms. The major poker rooms have all passed this scrutiny with flying colors. Not satisfied, conspiracy theorist have suggested that poker rooms employ biased random shuffling shuffling good enough to fool the consultants, but biased enough to keep poor players in the game so that they can continually churn rake. Others have suggested that poker rooms rig it so you are more likely to lose following cash outs. In fact, there are so many conspiracy theories out there, to cover them all would take 20 pages.

This article tries to put to bed the notation that review poker is fixed. However, for those of you out there who are convinced that online poker is rigged, I doubt this article will be any comfort to you. I am sure you are so set in your ways by now that my input will be of little value, you might even accuse me of being in on the grand conspiracy, given I derive some income from advertising. This article is really aimed at those venturing to online poker for the first time to try to give them some comfort that the game is above board.

Firstly, let me state that there are two types of ways online poker could be fixed. The first is by the best poker rooms themselves and the second is by players colluding. It is generally accepted that there is some collusion between players. The net effect of such collusion will be the subject of my next article. The focus of this article is limited to discussing the possibility of poker rooms themselves fixing the game.

What are the Motivations for a Poker Room to Rig a Game?

Is online poker rigged?

Each player has a fixed amount of money they can spend on gambling, the amount of which depends on their wealth. If a poker room could rig the game in such a way that each player took the maximum amount of time to lose all of their income then the poker room would maximize its profit. This is easy to see, because the longer it takes to lose your money the more hands you play and the more rake the poker room collects. The best way for a poker room to do this would be to make all players even. So on the surface, the motivation to fix the game is valid.

As a side note, poker rooms have been reluctant to offer the super high limits for fear that their customers will quickly go broke. Competition in the industry has seen Party Poker add 1000 NL games in recent times, but before this the maximum stakes were relatively small.

What is the downside risk?

If it could be proven that a particular poker room was fixing its games then all of their customers would presumably leave and that poker room would go out of business. There is therefore, considerable downside risk to fixing the game.

What is the tradeoff?

The tradeoff that an online poker room faces is identical to that of a bricks and mortar casino. It's the tradeoff between maximizing your short term profit, by rigging a game, compared to maximizing your long term profit, by having a reputable game and strong brand name. Economists examine choices such as the one presented above using game theory models. Often the need for regulation is redundant if the payoff from a long term strategy is greater than the payoff form a short term one.

What has been the historical equilibrium?

Is online poker rigged?

We have all seen gambling heists in the movies along with the occasional news story of a real life gambling fiasco. Ask yourself how often these events are initiated by a casino? More often then not it's the punter attempting to scam a casino (now that's a contradiction in terms). Now I am not saying that all casinos throughout history have presented a fair game, but I would argue that the very vast majorities have. You rarely hear stories of large reputable bricks and mortar casinos fixing games. Could you imagine the backlash if some of the larger casinos in Vegas were actually fixing games. It seems that bricks and mortar casinos have examined the alternatives and the equilibrium has been to implement fair games.

So too is the case with online poker rooms. Party Poker is expecting to float at the end of this year for around 5 billion US. Could you imagine the damage that would be done if their games were found to be fixed? I wouldn't like to have shares in that company. The way I see it, the risks are too great. In fact, for any of the larger online poker rooms fixing a game would be equivalent to killing the goose that laid the golden egg.

What Evidence Can I Put Forward?

In a future article, I hope to put forward some hard statistics to back up my claims. For now, I can tell you that I make money from online poker. I can tell you that all of my best students make money from online poker. I can tell you that my worst students lose money playing online poker. I can tell you that all of the people I know who play a decent game win at online poker.

So why all the skepticism

The problem is that most people do not understand the variance associated with the game. Did you know that an expert player can still lose 100 big bets after 5000 hands purely because of chance? Don't believe me? Check out my article on this topic.

Let's look at how damaging this variance can be. Let's examine the claim that online poker rooms rig it so you lose after cashing out. Take a site like Party Poker that has more that 750,000 members (see also Poker Stars review). Now I am making up the figures to illustrate a point, but let's say that in any given month 50,000 of these members are making withdrawals. Let's also say that a good player has a 45% chance of a bad run following a withdrawal and a 55% chance of a good run. Of course, these probabilities have nothing to do with the withdrawal at all, but simply assume that at any given point of time a good player has a higher probability of winning than a bad player. Out of these 50,000 people let's say half of them are good at poker or think they are good at poker. So what is the probability of a good player cashing out 4 times in a row and by chance losing money after each cash out? Well its (0.45)^4 which is 0.41 per cent. This seems low doesn't it?

Is online poker rigged?

Now multiply the 0.41 by the number of good players that cashout a month (25,000). Doing this arithmetic we get 1025 disgruntled good players that have lost 4 times in a row after a cash out purely because of chance. Notice that this has nothing to do with the site being rigged! So after a year or more we might have more than 10,000 disgruntled players that suspect that every time they cash out they lose. If only 5 per cent of these punters post on a forum like mine this equates to 500 or more disgruntled customers that are posting that Party Poker is rigged each year. Add in all the players from the other sites, that is a lot of upset customers. Furthermore, I am just looking at the cash out complaint. If you did the same arithmetic for good players catching bad beats it's a wonder that the forums are not crammed with people crying foul.

Get the point? Because of the shear number of players playing online poker, there are always going to be skeptics who, granted have been unlucky, feel the need to voice their frustration on chat forums. It's the age old story - poor gamblers need to blame something or someone other than themselves for their losses.

I present this challenge. If you honestly believe you have been duped, send through your poker track database for me to evaluate. Post a message on the forum and I will send you a private message on how to trade your database. Anyone who has played less than 5000 hands and has lost less than 100 big bets need not apply.