Last week we have peaked “Behind the Scenes of the US Poker Business”, which was an excellent “trailer” into this week’s special guest post, focused at: “a set of algorithms to quantify the effects of skill and luck in online poker”… how sexy does that sounds? WE KNOW! (clarification for Thomas: you can stop panicking and climb down from your desk – it’s algorithms, not alligators!)
So without further delays, here is Dave Thornton of “Skill in Games” and their approach:
We analyzed the first hundred hands played by ~1.1 million players in our database, and for each player, recorded his/her outcome, skill, and luck.
Outcome refers to money won or lost; skill quantifies how the player performed relative to the average, given the situations he encountered; and luck captures how much the cards helped or hurt. Mathematically, $outcome = $skill + $luck.
We used these 100-hand experiences to create basic cohorts, and calculated the increase in the average number of future hands played within each cohort (click on the table to enlarge):
We found these results both intuitive and intriguing. They’re intuitive because they show patterns you’d expect to see, e.g. better players play more. They’re intriguing because they hint at the possibility of better-constructed cohorts, and new categories of promotions and messaging.
Suggestions for possible testing
Higher-yielding reactivation cohorts. Dormant players almost invariably lost money in their last experience at the tables. Thus, reactivation is partially an effort in identifying which types of past losers are the best to bring back. This table shows that players who played well but got very unlucky played a lot more hands than other losing players. It follows that reactivation campaigns targeting this cohort should have meaningfully higher yields.
Tighter cohort construction. Whether you’d prefer to retain or reactivate high or low-volume players, it’s clear that cohorting by skill (or lack thereof) will do a significantly better job targeting the players you want than cohorting by money won (or lost).
New marketing messages. It’s become industry gospel that first experiences matter. Taking a bad beat or encountering a cold deck (e.g. say, running your KK into AA) within 100 hands of your initial deposit is, undoubtedly, a poor first. Why not turn a demoralizing time at the tables into a loyalty generator by offering new players a bad luck bonus? More generally, why not explore ways to recognize a player’s actual experience on the virtual felt? A pat on the back after solid play, or consolation after a bad run of cards, could go a long way towards helping a player feel appreciated.
We are just beginning to explore whether separating skill and luck can be valuable in the CRM context. If you’d like to continue exploring with us, we welcome further dialogue in the comments section.
About the author:
Dave Thornton is the founder and Managing Member of Skill in Games (SiG), a data vendor to the online poker industry. SiG takes a hole-card-up hand history, and breaks each player’s outcome into action-by-action skill measurements, and street-by-street luck measurements.
PS: Meet us in Vegas! Or, meet us in Barcelona!! OR, even better – get a life!!!