Home » Why Poker Players Are More Like Economists Than You’d Think

Why Poker Players Are More Like Economists Than You’d Think

Home » Why Poker Players Are More Like Economists Than You’d Think

Why Poker Players Are More Like Economists Than You’d Think

A person wearing glasses studies the financial market on a laptop.

Many card-based casino table games like blackjack and baccarat are largely based on chance, tempered by knowledge of probability. However, poker is closer to a science. That’s why the best poker stars today apply the principles of game theory, devised in mathematics and applied in economics, to identify the most likely outcomes of a game. How that came about is quite a story. 

Keep reading to discover what poker and economics have in common and how to apply game theory to online poker.

From Gutshot Gambling to Economic Game Theory

The image of poker has changed a great deal over time; so has the way people play it. In the past, old-time players relied more on chance and gut instinct than poker theory. Poker continued to be predominantly a gambling game into the 20th century when the popularization of Texas Hold’em changed the poker world forever.

With its combination of hole cards and community cards, Texas Hold’em took the way people perceived poker and transformed it from a game of chance into a game of skill. As more people played, the more obvious it became that poker forces players to bet, raise, call and fold strategically, which is why Texas Hold’em has been adopted as the main game of the World Series of Poker. You have to know the potential strength or weakness of your hand without ever seeing your opponents’ cards. You also need to figure out what your opponents’ hands could be. 

Unfortunately, Texas Hold’em is even more mathematically complex than chess, so it’s beyond the ability of any human player to calculate the odds perfectly at a live table. 

However, the mathematical challenge in this variant was dramatically affected by the introduction of online poker. Suddenly, players could use advanced poker tools such as trackers and solvers to identify the best play in any given situation. This had a noticeable effect on how people would play poker online. Specifically, the old gutshot approach gave way to a more scientific method known as game theory optimal (GTO) poker.

When Is Poker Game Theory Optimal?

Poker playing cards, casino chips and money.

GTO poker gets its name from game theory, a mathematical modeling tool that economists use to model how consumers and companies behave under various circumstances. Game theory analyzes situations where a player’s best strategy depends on what other players may choose to do. For example, a goalkeeper in a game of soccer may choose to dive left or right, depending on what direction he thinks a penalty-taker will shoot. A slightly sillier example is what your opponent will choose in a game of rock, paper, scissors.

The sweet spot for game theory is known as a Nash equilibrium. Invented by Nobel prize-winner John Nash, a Nash equilibrium exists when all players make the best possible choices given their rivals’ choices. For companies, this means maximizing profits according to the prices that other companies choose. For online poker players, it means making the best play depending on the choices available to your opponent (which is another poker skill that may even help you in business.)

How To Think About Game Theory Optimal Poker

A magnifying glass enlarges the words “game theory” with banknotes in the background.

There is one crucial difference between GTO poker and game theory economics. Economists assume that companies operating in the same market are playing a positive-sum game, growing the size of the pie so that there will be more spoils to be had by all. Poker, by contrast, is a zero-sum game. A zero-sum game is simply the idea that in some situations there can be only one winner — and for that to happen, someone has to lose. This rules out the possibility of achieving true Nash equilibrium in a poker game. 

That said, it’s totally possible to apply game theory to poker as long as the focus is on predicting the decisions your opponents will make based on your actions and those of other players. The primary aim of this approach is to make the decision that will return the most profit in the long term. 

According to GTO theory, the way to do that is to think in terms of hand range. This means thinking about every possible hand that you or your opponent would logically fold, call or raise in any given situation. Playing optimally in this way makes exploiting you very difficult, allowing you to minimize your losses and maximize your profit over time.

GTO Poker in Practice

The widespread use of GTO theory among online poker players has changed the game significantly. 

One of these changes is a marked increase in aggressive bluffing. Game theory shows that you should, on average, have a ratio of two bluff bets to one value bet on the flop. Betting more often with weaker hands forces your opponents to call more often. This has two advantages. First, it increases your chances of winning when your hand is strong. Second, your bluffing hand may improve on later streets.

Another change is a general improvement in short-stack play. When you’re down to your last chips, the choice often comes down to whether you go all in or fold, which is all about balancing risk and reward. GTO poker tools help players to narrow down their options with accurate recommendations as to when to shove or fold.

A third important change that GTO theory has brought about is the use of mixed strategies. If you think about it, your opponent could always be using tracking software to analyze your play and read your range when you play poker online. A player with a mixed strategy will prevent this by making suboptimal plays from time to time. Say you have a mediocre hand and the player to your right open-raises. The correct orthodox move would be to fold. With a mixed strategy, you would alternate between calling, folding and three-betting.

Another difference is that GTO poker is less focused on playing your opponent and more focused on the cards. Old-school poker players relied heavily on psychology to analyze and manipulate their opponent, regardless of what cards they had in their hands. Modern players have instead placed their focus on playing the cards first and the player second.

Putting Poker Theory Into Practice at BetMGM

Interested in exploring the ins and outs of GTO poker? You’ll get all the practice you need when you register a poker account at BetMGM. Hone your strategy with daily and weekly Texas Hold’em and Omaha tournaments. You could even play it old school with Seven-Card Stud. No matter what you’re looking for, you can find great poker games online at BetMGM. And if you want to relax in between poker sessions, there’s entertainment with a broad range of online slots and casino table games, such as blackjack, roulette and baccarat, with live dealer options included.

Poker players have adopted a mathematics theory with applications in economics called game theory. Find out more about this approach.