Question of the Day - 21 May 2022

The European online gambling site Bwin made available to Harvard Medical School a database of anonymous records on 4,222 of its customers who igambled for at least four days between 2005 and 2007. The Harvard researchers were studying compulsive-gambling behaviors; they in turn posted the information publicly and the Wall Street Journal covered the results in a story published in 2013. 

The Journal reported that over those two years, 11% of gamblers ended in the black, though most of them had a net win of less than $150. The top 2% of gamblers, in terms of action, made up 50% of the online casinos’ revenue; the top 10% accounted for 80% of revenue. Among the heaviest gamblers, only 5% were overall winners.

The 10% who gambled the least had the highest winning percentage: 17%.

Individually, only seven players won more than $5,000, while 217 lost more than $5,000.

A Swiss gambler played an average of three days per week, making 1,000 wagers per day at an average of $9 per bet. He won on an average of 1.9 days a month and lost $110,000 over the two years.

A gambler in Slovenia made a few smallish bets a day, going for jackpots. He got lucky, hitting big on two days and walking away for good with a $22,000 profit. He was the biggest winner in the study.

The Journal then checked the Bwin results against a database of 18,000 gamblers at "a Native American casino in the northwestern U.S." to which two academic researchers had access. "The researchers found similar patterns: Only 13.5% of gamblers ended up winning, versus 11% of Bwin customers, and the ratio of big winners to big losers was similarly large."

In short, the data give a glimpse of a reality in Casino Land that we've long known (at least since Whale Hunt in the Desert was published): Casinos are extremely reliant on a small percentage of high rollers for the lion's share of their revenues.

All in all, based on these stats, we’d put the over/under of casino players who show a net win at the end of the year at 10% — and we'd take the under.

Now, what accounts for the fact that 90% or so of casino gamblers lose?

Obviously, the casino edge subtracts its percentage from every bet it books, ultimately grinding into dust every bankroll it encounters (minus the tiny fraction of bankrolls wielded by successful advantage players, of course). Anything can happen in the short-term (sometimes known as luck), but at a negative-expectation game, the longer you play, the more you’ll lose. It’s a mathematical certainty.

Another element in losing is a tendency, ingrained in gamblers, to lose a lot, but win a little. In the casino back rooms, this is known as “Eat like a parakeet, poop like a moose.” In other words, gamblers have a surprisingly strong bias against big cumulative wins.

Say a player walks into a casino with $10,000. Chances are, he’s ready and willing to lose it all if he falls behind. On the way down, he flies open like a cheap suitcase in an attempt to get off his losses (poops like a moose). But on the way up, he’s tighter than a hangman’s knot, not wanting to risk crossing that sickening line from winner to loser (eats like a parakeet). There’s a much lower tolerance for winning than losing. 

In a related phenomenon, most gamblers have an easier time living with their losses than their wins. They can be philosophical about losing: “Hell, everyone loses. It’s a rigged game. They don’t build these pleasure palaces by paying out winners. The entire Vegas economy is based on fleecing the gamblers. It’s still fun to try, but in the end, I play for entertainment.”

And as Jean Scott has been preaching for decades, unless you follow the long and winding road toward becoming a pro -- and we'd say one in 500 tries it and a fraction of that amount succeeds -- your gambling bankroll is, essentially, entertainment money, all of which you can afford to lose, though hopefully, you can make it last as long as possible.

Based on a value-to-entertainment ratio, casino gambling is usually a win. Where else can you go on vacation where you have a chance of returning home with more money than you left with? 

And when, more often than not, you don’t? Oh well. Maybe next time. 

[Muchisimas gracias to QoD correspondent Ken M. for going above and beyond Wall Street Journal duty.]