Page 25 - July 2013 • Southern California Gaming Guide

Bob Dancer: Video Poker
AITax on Ignorance
was reading a 2011 interview of Edward orp, a mathematical genius who created the rst widespread blackjack card-counting system (Beat the Dealer) some fty years ago, and then published a methodology for investing in various markets (Beat the Market) a short time later.
He is widely credited with being the rst “quant,” which is someone who uses advanced quantitative models for deciding where to invest.
He was interviewed by a group called “Investment Management Consultants Association” as part of their “Masters Series.” is organization is associated with both the University of Chicago’s Booth School of Business and
the Wharton School at the University of Pennsylvania. Most of the interview
Although it’s possible that orp has never played video poker and almost certainly was not thinking of that game in particular when he addressed these writers, I found myself thinking about how orp’s comments applied to recreational video poker players.
concerned nancial investing, but there were a few gambling questions as well. In particular, orp was asked why losers at gamblingdon’tjustsimplyquit.
“There are a large group of video poker players who simply do not believe that pay schedules matter very much, and believe that strategy is mostly common sense. These people believe they will win if they’re luckyandloseifthey’reunlucky.”
ere are “smart” recreational gamblers. ese players know they are taking the worst of it,
but enjoy what they are doing and don’t mind paying for it. is is actually a rational way to act for some people. ese players believe becoming skillful is too di cult, too time consuming, too boring,
orp said, “It seems to me
that people are not just wealth
maximizers, but seeking to
maximize something else,
whether they do it accurately or inaccurately,whatevertheirtotal
satisfaction is from whatever
they’re doing. I imagine that’s the explanation for why people will gamble and lose money. ey supposedly get an entertainment payout. Part of it, though, is that gambling is a tax on ignorance. People often gamble because they think they can win, they’re lucky, they have hunches, that sort of thing, whereas in fact, they’re going to be remorselessly ground down over time.”
or too whatever. ese players pay for their gambling excitement. orp wasn’t talking about this group of gamblers either.
ere are a large group of video poker players who simply do not believe that pay schedules matter very much, and believe that strategy is mostly common sense. ese people believe they will win if they’re lucky and lose if they’re unlucky.
ese players often use systems to limit their losses. Some of them believe that if they refuse to lose more than $100 each time they go gambling—but their potential win is unlimited — that this is a good money management system. Others use variations on the Martingale systems.
ese systems can usually book a small win, but the
occasional big losses far more than wipe out those normal small wins.
Still others believe in changing machines if either the machine has just hit a jackpot or has been too stingy in paying out jackpots recently. Both reasons are equally fallacious.
ese people are not necessarily stupid (although some are). ey have their strategies for playing as they do. ey just don’t have the knowledge to realize that their strategies are largely worthless. And they don’t understand that this lack of knowledge dooms them to being a long-term loser.
Listen to Bob’s radio show Gambling With An Edge, on Thursday evenings 7 to 8 p.m. Pacific Time on radio station 1230 AM in Las Vegas online at klav1230am.com. Dancer’s products may be ordered at bobdancer.com or at 1-800-244-2224 Monday through Friday from 9 a.m. to 5 p.m. Pacific Time.
orp was not speaking of advantage gamblers. Although there are a lot of smart gamblers that read my articles, orp was addressing a group of people who likely
were not particularly knowledgeable about gambling and, generally speaking, believed that the house always has the edge. For the vast majority of gamblers, this is a realistic thing to believe.
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JULY 2013
SOUTHERN CALIFORNIA GAMING GUIDE
PAGE 25