kottke.org posts about gambling
In a short video, Joss Fong and Dion Lee of Vox explore how free mobile games are engineered to make money using behavioral psychology.
By collecting troves of data on how users play their games, developers have mastered the science of applied addiction. And with the rise of "freemium" games that rely on micro-transactions, they have good reason to deploy the tools of behavioral psychology to inspire purchases.
Back in 2013, Ramin Shokrizade explained The Top F2P Monetization Tricks:
To maximize the efficacy of a coercive monetization model, you must use a premium currency, ideally with the ability to purchase said currency in-app. Making the consumer exit the game to make a purchase gives the target's brain more time to figure out what you are up to, lowering your chances of a sale. If you can set up your game to allow "one button conversion", such as in many iOS games, then obviously this is ideal. The same effect is seen in real world retail stores where people buying goods with cash tend to spend less than those buying with credit cards, due to the layering effect.
Purchasing in-app premium currency also allows the use of discounting, such that premium currency can be sold for less per unit if it is purchased in bulk. Thus a user that is capable of doing basic math (handled in a different part of the brain that develops earlier) can feel the urge to "save money" by buying more. The younger the consumer, the more effective this technique is, assuming they are able to do the math. Thus you want to make the numbers on the purchase options very simple, and you can also put banners on bigger purchases telling the user how much more they will "save" on big purchases to assist very young or otherwise math-impaired customers.
Having the user see their amount of premium currency in the interface is also much less anxiety generating, compared to seeing a real money balance. If real money was used (no successful game developer does this) then the consumer would see their money going down as they play and become apprehensive. This gives the consumer more opportunities to think and will reduce revenues.
Mike Rose also discussed the psychological aspect of freemium games in Chasing the Whale: Examining the ethics of free-to-play games:
On the topic of in-app purchases, Griffiths says, "The introduction of in-game virtual goods and accessories (that people pay real money for) was a psychological masterstroke."
"It becomes more akin to gambling, as social gamers know that they are spending money as they play with little or no financial return," he continues. "The one question I am constantly asked is why people pay real money for virtual items in games like FarmVille. As someone who has studied slot machine players for over 25 years, the similarities are striking."
Griffiths argues that the real difference between pure gambling games and some free-to-play games is the fact that gambling games allow you to win your money back, adding an extra dimension that can potentially drive revenues even further.
Update: In 2009, Chris Anderson wrote a book called Free: The Future of a Radical Price in which he argued that freemium was going to be an important business model.
The online economy offers challenges to traditional businesses as well as incredible opportunities. Chris Anderson makes the compelling case that in many instances businesses can succeed best by giving away more than they charge for. Known as "Freemium," this combination of free and paid is emerging as one of the most powerful digital business models. In Free, Chris Anderson explores this radical idea for the new global economy and demonstrates how it can be harnessed for the benefit of consumers and businesses alike. In the twenty-first century, Free is more than just a promotional gimmick: It's a business strategy that is essential to a company's successful future.
From Ben Schott, an examination of the inner workings, personnel, and lingo of casinos.
It is curious how irrational even experienced dealers and floor men can be, though inexplicable runs of luck may signal a flaw in security.
Supervisors have been known to perform a range of rituals to cool the action: Shaking salt behind players or under tables, turning the drop-box paddle around in its slot, standing on one leg, swapping out winning dice or cards-sometimes for replacements that have literally been chilled in a fridge. One shift manager places a folded surveillance photograph of a "lucky" player inside his shoe before walking the floor.
Craps is a hotbed of superstition. Pit bosses have been known to place seven ashtrays around a table, to spray paint the number seven on the table when changing the cloth and even to have "hot" tables moved an inch or so. Unscrupulous dealers might throw coins under the table to bring bad luck or find any excuse to touch the dice or brush against a shooter.
I still think it's hilarious that casinos ban players for counting cards but it's perfectly ok for the casinos to have the advantage in every single game they offer.
On Last Week Tonight, John Oliver takes down the lottery.
$68 billion. That's more than Americans spent last year on movie tickets, music, porn, the NFL, major league baseball, and video games combined.
The lottery is a defacto tax on poor people. Despicable. Horrible. But fun!
Update: More from The Atlantic, Lotteries: America's $70 Billion Shame.
The researchers made another damning discovery: Local lottery ticket sales rise with poverty, but movie ticket sales do not. In other words, lotto games are not merely another form of cheap entertainment. They are also a prayer against poverty. This fits what the researchers call the "desperation hypothesis": States are making their most hopeless citizens addicted to gambling to pay for government services.
The Verge has a long look into casinos which includes an interesting section on the first blackjack computers. It also describes the main strategy employed by casinos to prevent and catch cheating: a shit ton of cameras.
They keep a close eye on the tables, since that's where cheating's most likely to occur. With 1080p high-definition cameras, surveillance operators can read cards and count chips -- a significant improvement over earlier cameras. And though facial recognition doesn't yet work reliably enough to replace human operators, Whiting's excited at the prospects of OCR. It's already proven useful for identifying license plates. The next step, he says, is reading cards and automatically assessing a player's strategy and skill level. In the future, maybe, the cameras will spot card counters and other advantage players without any operator intervention. (Whiting, a former advantage player himself, can often spot such players. Rather than kick them out, as some casinos did in the past, Aria simply limits their bets, making it economically disadvantageous to keep playing.)
With over a thousand cameras operating 24/7, the monitoring room creates tremendous amounts of data every day, most of which goes unseen. Six technicians watch about 40 monitors, but all the feeds are saved for later analysis. One day, as with OCR scanning, it might be possible to search all that data for suspicious activity. Say, a baccarat player who leaves his seat, disappears for a few minutes, and is replaced with another player who hits an impressive winning streak. An alert human might spot the collusion, but even better, video analytics might flag the scene for further review. The valuable trend in surveillance, Whiting says, is toward this data-driven analysis (even when much of the job still involves old-fashioned gumshoe work). "It's the data," he says, "And cameras now are data. So it's all data. It's just learning to understand that data is important."
Ultimately, catching cheaters is a small part of what casino surveillance teams do. There simply aren't that many cheats out there, compared to the number of purse-snatchers and pickpockets, the ordinary criminals that people like Ted Whiting deal with almost every day. When it comes to cheating, Whiting says, "We're never going to be ahead. Remember that people who get paid to catch the bad guys get paid whether they catch them or not. The cheats don't get paid unless they figure it out. So they're motivated, and they've succeeded. But once they do, we go full in."
Over the course of a few months last year, blackjack player Don Johnson took three Atlantic City casinos for $15 million. And he didn't do it by counting cards...he used the same techniques one might use when buying a used car.
Johnson is very good at gambling, mainly because he's less willing to gamble than most. He does not just walk into a casino and start playing, which is what roughly 99 percent of customers do. This is, in his words, tantamount to "blindly throwing away money." The rules of the game are set to give the house a significant advantage. That doesn't mean you can't win playing by the standard house rules; people do win on occasion. But the vast majority of players lose, and the longer they play, the more they lose.
Allan Benton said it and so did Robb Stark to Jamie Lanister (and I'm totally paraphrasing here): If I do it your way, you're going to win. We're not going to do it your way. (via daring fireball)
Update: Kid Dynamite asserts that the article got it wrong about the math involved.
No. That's not right at all. You're failing to use their discount against them: you're getting no value from it if you keep playing when you're "far enough ahead" !!! Let me put it this way: pretend you're up a million, and you're betting $ 50k a hand. let's just pretend that each hand is 50/50 win/lose (it's not, but indulge me for simplicity's sake). So each additional hand has no positive expected value for you (nor any negative expected value).
However, if you pick up your million dollar win, walk across the street to the other casino who will give you a 20% rebate on your losses for the session, and start to lose - say you lose $ 1MM now - you're MUCH better off. You only have to pay $ 800k to the new casino (they rebate 20% of the million dollar loss), but you won a million at the first casino - you're still up two hundred grand. On the other hand, if you stayed at the first casino and proceeded to lose back your million in winnings, you're now flat - because it's all the same session so you don't get the benefit of the loss rebate. Capiche?
And so the question still remains: how did Johnson do it? (thx, @harryh)
Jay Caspian Kang has a gambling problem.
Twelve thousand dollars lay wadded up in the glove compartment. I was trying to decide if I had what it took to drive home. To help delay a decision, I remember turning the radio to a Dodgers game. I don't know how long I sat there listening to Vin Scully sing his nasally song of balls and strikes, which, even in the age of digital radio, still sounds as if it is being transmitted through a tin of victory cabbage. I remember thinking some nostalgic, self-pitying thoughts about my younger days. I forced myself to say out loud, "You are a degenerate gambler," but doing so only made me giggle. I opened the glove box, pocketed the cash, and walked back through the sliding doors of the Commerce Casino, back to my table in the Crazy Asian 400 No-Limit Game and to the eight friends at my table who had kindly managed to save my seat.
Some time later, I drove home. All the money, of course, was gone. As I drove home through the network of highways that tie up a concrete bow just east of downtown Los Angeles, I felt no compulsion to slam the Outback into a guardrail. In fact, losing almost all the money I had in the world in six hours stirred up only a cold, scraped-out feeling of knowing-the calm that freezes out your brain when you watch someone younger make the same mistakes you made at their age. Staring out at the empty skyscrapers, I tried to figure out what might be the right reaction to losing $12,000. At the 7-Eleven on Venice and Sepulveda, I bought a bottle of Nyquil, drank half of it in the parking lot and drove the rest of the way home in a warm, creeping fog.
People throw away thousands of losing tickets at off-track betting parlors every day. Except that some of those losing tickets are actually winners. This is where the stoopers come in.
For the past 10 years, Jesus Leonardo has been cleaning up at an OTB parlor in Midtown Manhattan, cashing in, by his own count, nearly half a million dollars' worth of winning tickets from wagers on thoroughbred races across the country. "It is literally found money," he said on a recent night from his private winner's circle. He spends more than 10 hours a day there, feeding thousands of discarded betting slips through a ticket scanner in a never-ending search for someone else's lost treasure.
David Treuer, an American Indian, is writing a series of dispatches for Slate in which he visits Indian casinos. I'd never heard the story of how casinos on Indian lands came to be. It seems a state tax bill on a mobile home led to a lawsuit which led to a legal precedent that state and federal governments have no regulatory jurisdiction on Indian lands.
The Supreme Court ruling in the Bryan case was expansive. More than just a ruling on taxation, it declared that states and the feds had the right to police the reservation only in the interest of "law and order" and had no civil or regulatory jurisdiction over sovereign Indian nations. Until this time, tribes and states more or less assumed that states had civil and regulatory power on reservations. But the Supreme Court maintained that as sovereign nations, Indian tribes had always had the right to govern themselves (including civil and regulatory powers), just as all nations do, and that tribes should deal with the U.S. federal government, not with states. Kansas, for example, has no power to levy taxes in Luxembourg -- and not only because Luxembourg is far away.
A relatively short article on the mathematics of gambling.
Let's say, for example, you want to bet on one of the highlights of the British sporting calendar, the annual university boat race between old rivals Oxford and Cambridge. One bookie is offering 3 to 1 on Cambridge to win and 1 to 4 on Oxford. But a second bookie disagrees and has Cambridge evens (1 to 1) and Oxford at 1 to 2.
Each bookie has looked after his own back, ensuring that it is impossible for you to bet on both Oxford and Cambridge with him and make a profit regardless of the result. However, if you spread your bets between the two bookies, it is possible to guarantee success (see diagram, for details). Having done the calculations, you place £37.50 on Cambridge with bookie 1 and £100 on Oxford with bookie 2. Whatever the result you make a profit of £12.50.
I say relatively because there are literally millions of pages on the web just about blackjack statistics. For instance, it's easy to see how you'll lose money playing blackjack in the long run -- card counting aside -- by looking at this house edge calculator. The only real advantage to the player occurs with a one-deck shoe and a bunch of other pro-player rules, which I imagine are difficult to find at the casinos. (via big contrarian)
Analysis of Casino Design is one of a number of articles on different aspects of casinos, gambling, and slot machines (see links at the bottom of the page). (via spitting image)
A new form of gambling called historical racing allows people to "wager on horse races that have already taken place" and promises to be as fast & addictive as slots. (via mr)
Update: Here's a company that provides an historical racing service. (thx, sam)
Two weeks ago, author and professional gambler David Sklansky offered $50,000 to any Christian who believes in Jesus' resurrection, believes non-believers will go to hell, *and* could beat his score on the SAT. A dumb bet, but ok. Jeopardy uber-champion Ken Jennings, a Mormon, says bring it on: " I've already taken the SAT -- why bother taking it again? I know what I got, and the College Board can back me up on it. Sklansky looks older than me, but I assume he took the 1600-point SAT at some point. I'll show you mine if you'll show me yours. Fifty grand, math/verbal total." (thx, david)
Interesting story from Steven Levitt: stuck in a Vegas poker tournament with a $3000 first prize but needing to go to the airport to catch the last flight of the night, he starts playing very aggressively in order to win big or lose everything so that he can leave. (via gulfstream)
When the UK gambling industry is deregulated next year, it will be legal for gamblers to use a tiny device to cheat at roulette. The device works by listening to the wheel and how the ball bounces to predict roughly where the ball will land, reducing the odds from 1 in 38 to something a bit more manageable. (via spurgeonblog)
Lottery idea: instead of earmarking revenues for education, why not use the money for individual retirement accounts? The piece includes this startling fact: "Some 20 million Americans spend at least $1,000 a year on lottery tickets". !!!!
Las Vegas is testing out some high-tech gadgets, including fully-automated gaming tables with no chips, cards, or dealer. Doesn't sound like much fun...
In 2005, 34 poker players earned $1 million playing tournaments, compared to 78 golfers earning the same playing their sport.
Jeff Ma, who was a key member of the infamous MIT blackjack team, notes the turn around of the Oakland A's and the reversal of criticism directed toward GM Billy Beane. Even Steven Levitt, who thinks not too highly of Moneyball, has conceded that maybe Beane and the A's are onto something.
Life lessons from blackjack. You gotta know when to hold 'em, know when to fold 'em...
Las Vegas is in for some water troubles. Surprisingly, it's residential use that's the problem, not the showy water displays by the casinos.
A gallery of casino carpeting photos. "Many of the carpets use flowers and wheels, both suggestive of a cyclical life: flowers bud, bloom, and then die, and their beauty is only ephemeral."