Fake near-misses in gambling (26 May 2010)

I wasn't a degenerate gambler by any means when I lived in Las Vegas. When I would go to the casinos I would almost always play low-stakes craps, the sort of games you could buy in for $50 and see as much action as you wanted (and never really win much). Even then I had an strong bias against slot machines and in favor of table games, which seemed somehow more legitimate -- honest gambling, as if there is such a thing. I used to watch people pump their paychecks into video-poker machines at bars and imagine they felt a sinking, synthetic feeling, wondering how they let the whole world and all its mysteries, the grand cosmic story of their own dance with fate, get condensed down to the whims of a machine. I sometimes get a similar feeling when I play arcade games for too long -- in the end you always die, and the machine decides when it happens to you, despite your accrued skill or karma. It seemed like you were always teased with the possibility of some unforeseen and inexplicable mastery, transcendence, only to have it wrenched away arbitrarily.

So I'm not surprised to learn from this post at Neurophilosophy (via Paul Kedrosky) that gaming machines are rigged to simulate near-misses and jackpot close calls.

Manufacturers of gambling games have apparently known the rewarding effects of near misses all along, and they design slot machines in such a way as to exploit the cognitive distortions of gamblers. Using a technique called clustering, they create a high number of failures that are close to wins, so that what the player sees is a misrepresentation of the probabilities and randomness that the game involves. The gambler who nearly hits the jackpot will therefore want to continue playing, because he thinks he has a good chance of winning.

That's just diabolical, a perfect example of the latent evil inherent in neuroscience and psychological studies. But gambling is essentially an activity one participates in because one seeks to indulge the fantasy of suspending the rules of probability and coaxing the universe into organizing itself around one's own good fortune. The near-misses lend support to that dream, that the gambler has a date with destiny. It's not too much of a stretch to connect that kind of mechanical manipulation of the gambler's "narrative" of their losing experience with the sort of manipulations more conventional entertainments -- films, novels, etc. -- subject us to.

Historical gambling (30 January 2007)

Tyler Cowen links to this WashPost article about historical gambling, a potential future offering at Virginia's horse racing tracks.

Colonial Downs, which offers betting on horse races at 10 sites across Virginia, is pushing for changes in state law so that it can offer a new form of gambling, called historical racing, on which people wager on horse races that have already taken place.

Like Tyler's, apparently, my first response to this was "Wow. That sounds pretty stupid." But that's because I'm thinking that the pleasure of gambling on horseraces lies in the number-crunching and theorizing that handicapping consists of and then the drama of seeing your theories tested as the races happen live. And, actually, I'm thinking that gambling on races when you know the outcome already wouldn't be much fun because you wouldn't ever lose. Where's the joy in that?

That's when it becomes pertinent to consider historical gambling's other, far more accurate moniker: instant gaming. The machine picks an old race, and you instantly bet on a horse based on the odds at the original post time. I'm assuming the specific data (names of horses, date, track location, etc.) is scrambled so you can't fire it into a BlackBerry and get the results. Then you instantly see whether you made the right choice and get paid out according to those odds. It follows that same Pavlovian mechanism of instant gratification that scratcher tickets exploit, only with a throughbred racing theme and even more unpredictable expected returns. (Original odds are based on pari-mutuel wagers; applying them to a single bet seems almost arbitrary. The bet, the odds, and the outcome would seem to have an almost random association in instant gaming.) The charade of handicapping involved in this allows track owners to argue (with a straight face even) that instant gaming is a game of skill and not chance, like slot machines, which, incidentally, are prohibited at Virginia's tracks. It's clear why track owners want slots. They want to transition out of the dying business of thoroughbred racing (R.I.P. Barbero) into the always profitable business of straight gaming. These machines would likely be more profitable than straight slots because with the fluctuating odds, it seems like it would be difficult to mandate a reasonable payout percentage. (Slot machines in Las Vegas return around 90 cents for each dolllar played on them; Nevada requires that they be set up to pay out at least 75 percent of money put in.) Players would certainly have a tough time deducing their expected returns.

But reading about this made me rethink which form of gambling is more "dangerous" to the gambler, the game of pure chance, which inspires the average gambler to superstitious flights of fancy, or the game that promises the gambler a chance to use his skills, which probably leads to his overrating his responsibility for success (like the traders Nassim Nicholas Taleb likes to excoriate) and ignoring the amount of chance still involved. Is it better to handicap and lose, or guess randomly and lose? Handicapping horse races (and making sports book bets or playing poker) invites you to stake intellectual capital along with cash, and the former can be hard to recoup. At least losing at a slot machine won't bruise your ego along with emptying your wallet.

Blackjack, the new poker? (19 September 2006)

Televising blackjack, as CBS is planning to do, has got to be one of the more desperate attempts to cash in on the poker craze; the thinking seem to be that because they are both gambling games involving cards, audiences will embrace them both with equal fervency. (I guess that's why we aren't seeing World's Ultimate Keno Championship). But playing blackjack isn't all that exciting; watching it even less so. What's the pitch? "You'll thrill as player A contemplates hitting a soft 17. You'll gasp when player B steals the dealer's bust card. You'll writhe in envy as player C splits eights with the dealer showing 6. You'll marvel as drunk tourists pass out at the table while trying to figure out what his cards add up to. Watch in amazement as player D doubles his initial betting increment after achieving a favorable count!" As this article in today's WSJ points out (buried in the last paragraph), quoting a LV Hilton gambling boss, "Blackjack is what it is; the game itself is strategy and if you know basic strategy, you either hit or you stand." Though CBS has likely tried to add the semblance of show-downs and drama, blackjack's not really a competition against other players so much as it is a feat of mathematics, of counting the deck and hedging one's bets accordingly. There are no bluffs, no betting ruses -- no psychology involved whatsoever if its being played at the highest level. The only suspense is to see whether an audacious better turns out to be unlucky.

When I lived in Vegas, blackjack was what you'd play when you wanted to chill out from the gambling games that are actually exciting and move quickly (craps) or involve multiple levels of analysis and courage (poker). There is no need for assessing personalities in blackjack as there is in poker, and there is no infectious excitement or momentum to sweep you up into gambling euphoria, as there is at a craps table, when a hot roller is visibly multiplying chip stacks all around you and creating mountains of wagers before your eyes on the green felt and the dealers' patter becomes more animated, as they get cut in on all the action, and the bettors cheer like its the world series and total strangers start slapping high-fives with each other. At the blackjack table, a much more muted camaraderie develops, one that revolved around how frequently the cocktail waitress returned. The pace, with the frequent reshufflings to stifle card counters, can be glacial, and because it requires no time to make decisions about play (every choice about whether to hit or double down can be determined in advance -- some players bring a chart with them to the table), every pause by another player feels excruciating. When you can see the cards of your tablemates, as with some games, you want to shout out what they should do and get on with it. Really, blackjack is an extremely inefficient slot machine, with lots of room for human error (or crooked deck mechanics).

So I'm guessing TV blackjack will fail. You can't really learn anything from watching it, and it lacks drama because the outcomes seem almost entirely random. But maybe people watch gambling for some other reason, for a vicarious thrill at seeing money treated as points. No longer a matter of survival, money becomes merely a means of keeping score, in gambling games, and perhaps there's something liberating in that.