Human nature, or how the casino learned to stop worrying and love the ego

Some food for thought.

Ignoring advantage players, it is accepted that casinos make their money from the massive volume of bets that occur everyday and their edge. But have you ever thought about why there are so many more lifetime losers than lifetime winners who gamble? Why are there so many more people who have lost thousands of dollars at the casino than people who have won thousands?

The answer, of course, lies in human nature and how we treat wins differently from losses. Why walk away from a win of 100 dollars when you can use that 100 dollars to maybe make 200? So few people can actually stop when they are ahead, such is the nature of optimistic greed. And so they keep playing, and sooner or later, their profit inevitably turns to loss. When they chase that loss, if they are lucky, then they can get back to break even or ahead and then continue that cycle, assailing the mathematical edge time and time again. If they chase that loss and they lose, then they bankrupt their bankroll and sooner or later, have to give up. Winners almost always continue to gamble, if not today, then next week, next month, next year.

And thus, I postulate that casinos win their money more from human nature and our egos refusing to lose, constantly chasing that loss and constantly trying to increase our win, than from their pure mathematical edge. Of course, it is the edge that allows them to win over a lot of bets in the first place, but I believe their profit would be so much smaller if everyone bet like a machine, with set win/loss thresholds.

But that would take the fun out of it as well ;)

Quote: DrinktheCoolaid

Some food for thought.

Ignoring advantage players, it is accepted that casinos make their money from the massive volume of bets that occur everyday and their edge. But have you ever thought about why there are so many more lifetime losers than lifetime winners who gamble? Why are there so many more people who have lost thousands of dollars at the casino than people who have won thousands?

The answer, of course, lies in human nature and how we treat wins differently from losses. Why walk away from a win of 100 dollars when you can use that 100 dollars to maybe make 200? So few people can actually stop when they are ahead, such is the nature of optimistic greed. And so they keep playing, and sooner or later, their profit inevitably turns to loss. When they chase that loss, if they are lucky, then they can get back to break even or ahead and then continue that cycle, assailing the mathematical edge time and time again. If they chase that loss and they lose, then they bankrupt their bankroll and sooner or later, have to give up. Winners almost always continue to gamble, if not today, then next week, next month, next year.

And thus, I postulate that casinos win their money more from human nature and our egos refusing to lose, constantly chasing that loss and constantly trying to increase our win, than from their pure mathematical edge. Of course, it is the edge that allows them to win over a lot of bets in the first place, but I believe their profit would be so much smaller if everyone bet like a machine, with set win/loss thresholds.

But that would take the fun out of it as well ;)

I agree. I think that the real key to casino success is to let people win. Winning is addictive, so much so that all we want to do with the winnings is win some more. If we win sometimes, we will be back again and again, win or lose. Winning is what causes the volume of bets sufficient enough that the house edge starts to amount to something.

The other half of this corollary, though, is quite interesting.

When most people end up bankrupting their bankroll, it is usually past the -EV value. For example, if they were playing a game with a house edge of 5% and they were expecting to lose, let's say $500 out of a $10,000 bankroll but end up losing all $10,000, that might be enough to turn off the person to playing the game, which means that the house profited an extra $9,500 off that person than they should have.

So by this logic, if you are significantly below the expected -EV for a particular game, then you should continue to play it until your loss value matches your predicted loss value.

Obviously, this is an extremely risky strategy for the average bankroll, but as long as you continue betting the same way as previously, gambler's fallacy is actually true, at SOME POINT, you will get an upswing as significant as the downswing you've endured. The amount of time and money it would take to get there, of course, might be crazy, but that is the correct, mathematical play.

The real danger here though, is that when we lose, we tend to bet more money, make suboptimal bets, and thus increase both the variance and the house edge even more. And that is why so few people can really get back to where they should be in terms of predicted -EV, since the variance literally bankrupts them before they can get back.

So there's an argument to both stop gambling, and to continue gambling if you're losing!

Quote: DrinktheCoolaid

And thus, I postulate that casinos win their money more from human nature and our egos

I'm afraid the casinos have beat you to this revelation.
Decades ago. Everything you see in a casino, from the
lack of windows, no clocks, the carpet design, the music
playing, the free drinks in Vegas, the design of the chairs,
on and on and on, is part of the science behind how to get
you to stay and chase your losses till your BR is gone and
you're lined up at the ATM with the other losers.

Agreed wholeheartedly EvenBob. +1

The bravdo of both parties can be summed up in a scene from Dr. Strangelove near the ending... "Stay on the bomb-run Ace, I'm goin' back an' gettin' those bomb-bay doors open if it hare-lips ever'body in Bear Creek!" (None other than Slim Pickens can say this and mean it)

"In researching the literature about gambling, I found an interesting concept about compulsive gamblers - that they had an unconscious desire to lose when they gambled. This theory was based on Freud's Oedipal Complex in which the concepts of luck are symbolically parental representatives, as in 'Lady Luck' and 'Father Fate'. It seems that Freud had theorized about patricide (killing of the father) and gambling, with a patient who was a pathological gambler. The Oedipus Complex came about from the story of Oedipus, who was so obsessed with seducing his mother the Queen, that he killed his father, the King, in order to get to her. Afterwards, he was so guilt-ridden that he blinded himself by tearing out his eyes.

The Oedipal Complex is equated to the attempts made by the compulsive gambler to seduce or woo `Lady Luck'. Like Oedipus, the gambler is always after the `big killing' which is symbolically killing the father (Father Fate). This provokes guilt, so just as Oedipus blinded himself; this type of gambler blinds himself to his excessive losses, regardless of the consequences. However, if he loses, this is his punishment and he is then relieved of the guilt. Many theorists after Freud have continued to endorse this concept."

http://www.lasvegas.net/ARE-GAMBLING-and-SEXUAL-BEHAVIORS-CONNECTED.htm

Ohhh so THATS WHY there are Come bets, Buys, and Lays in Craps.
Carry On!

Quote: EvenBob

I'm afraid the casinos have beat you to this revelation.
Decades ago. Everything you see in a casino, from the
lack of windows, no clocks, the carpet design, the music
playing, the free drinks in Vegas, the design of the chairs,
on and on and on, is part of the science behind how to get
you to stay and chase your losses till your BR is gone and
you're lined up at the ATM with the other losers.

Obviously all this has some effect on things, I don't think it has as big of and effect as you think anymore. With cell phones people mostly know down to the 1/2 HR what times it is. I don't think places such as Dotty's in Las Vegas put any type of effort in design If you didn't know it was a casino, you would think its a craft store or something. Worst logo I have ever seen, its ugly. They have a kind of country home feel, purely by accident, They toss in a few cheap plastic plants (ugly IMO). OH, And plenty of windows. Not sure if you can see out of them.. lol They are one of the fastest growing local casino joints ever.They have the same exact games and promos for years and years. Even local casinos are scared of them. It seems like they have one on each block.

Now Free Drinks, that's the best thing ever invented by the casinos.

Quote: AxelWolf

Now Free Drinks, that's the best thing ever invented by the casinos.

2nd Best thing invented by casinos "The Junket".

Quote: AxelWolf

Now Free Drinks, that's the best thing ever invented by the casinos.

All hale Benny Binion's memory!!

Casinos "book" a loss to the player as a "loan" to be repaid by the player under very vague terms of time and place. Its the casino's job to make that loan repaid as promptly as possible and at the same casino.

That is how casinos "win".. Get the crowds in, for every five dollars on a roulette layout nick them for twenty-six cents and let them play all day and night. If any of them do stagger out with dripping pockets, make sure they stagger upstairs to one of your rooms. If they stagger back home, make sure they are so happy they bring that money back to you, not someone else.

Most bets taken in the casino are at odds >= 2 to 1. You won't find odds like 1 to 2.
Thus, if casino makes net income from those bets, they (the casino) necessarily win more bets than they lose.

This has nothing to do with "human nature refusing to lose". Even if players would play emotionless, i.e. play a random number of bets, there will be more losers than winners.

Quote: MangoJ

Most bets taken in the casino are at odds >= 2 to 1. You won't find odds like 1 to 2.
Thus, if casino makes net income from those bets, they (the casino) necessarily win more bets than they lose.

This has nothing to do with "human nature refusing to lose". Even if players would play emotionless, i.e. play a random number of bets, there will be more losers than winners.

That's the nature of a -EV game. The percentage of winners vs. losers mainly depends on the games played and the length of time they play them.

Quote: AxelWolf

Now Free Drinks, that's the best thing ever invented by the casinos.

I agree with this generally, but I do try to buck this trend by consuming a lot of drinks while playing games that cost me less than said drinks at retail...not that hard to do with today's prices.

Quote: tringlomane

I agree with this generally, but I do try to buck this trend by consuming a lot of drinks while playing games that cost me less than said drinks at retail...not that hard to do with today's prices.

Perhaps your smarter then 99% of gamblers, but aside from the games themselves, I do think free drinks is the best thing that happen to Vegas casinos in the beginning. Slots really boosted casinos, Now Slots and VP are like crack, so no need for everyone to be drinking. I wonder how much money the casinos would lose if you could not drink while gambling.

Quote: AxelWolf

Perhaps your smarter then 99% of gamblers, but aside from the games themselves, I do think free drinks is the best thing that happen to Vegas casinos in the beginning. Slots really boosted casinos, Now Slots and VP are like crack, so no need for everyone to be drinking. I wonder how much money the casinos would lose if you could not drink while gambling.

Considering where I am from, where you have to pay for your drinks, not as much as one might think I am afraid. Missouri casinos do pretty damn well even charging for beer/liquor. Same goes for most other midwest states. Loveman has even stated he'd like to get rid of comped drinks. But he wouldn't do it as long as the competition keeps serving them. :) Before the advent of video slots though, I definitely agree, free booze helped a lot. Still helps today, but not nearly as much.

Quote: tringlomane

Considering where I am from, where you have to pay for your drinks, not as much as one might think I am afraid. Missouri casinos do pretty damn well even charging for beer/liquor. Same goes for most other midwest states. Loveman has even stated he'd like to get rid of comped drinks. But he wouldn't do it as long as the competition keeps serving them. :) Before the advent of video slots though, I definitely agree, free booze helped a lot. Still helps today, but not nearly as much.

I Meant if no drinking was allowed at all. I know people would still flock to the casinos But how much more dose being dunk cost the average person. By either them playing real dumb or spending far more then they intended.