Page 28 - October 2015 • Southern California Gaming Guide

PAGE 28
SOUTHERN CALIFORNIA GAMING GUIDE
OCTOBER 2015
RIisk and Uncertainty in Video Poker
n May 2000, I was a guest in the home of my brother Dick and his wife Lisa, who at that time lived near Houston, Texas. My then-wife Shirley was o on a women’s religious retreat and I chose to spend time with Dick and Lisa rather than being a temporary bachelor in Las Vegas.
preparing gourmet meals, but there are things in life that I pay others to do for me.
Lisa still has no knowledge or experience regarding “investing” in video poker. And whether I de ne it as “risk”
or “uncertainty,” because video poker is outside of her expertise, her rational decision is to avoid investing in it. So, Lisa doesn’t gamble.
But just because it is outside of her expertise doesn’t mean it’s outside of mine. Video poker is what I do and who I am. e rational choices that Lisa makes and the rational choices I make are very di erent—partly because of di erent interests and di erent expertise.
But mine is hardly the only family where di erences of opinion arise about how smart it is for someone to gamble—and in many cases, the disagreement is between spouses. ese disagreements can get ugly, and sometimes lead to divorce or other unpleasant conclusions.
I can easily defend my choice to invest in video poker. I am fortunate to have a positive track record that “proves” I know what I’m doing. Actually, no such track record can prove that. How much skill and how much luck was involved in anyone’s scores can always be debated. But my track record “suggests” that I know what I’m doing.
Whether it’s smart for a particular person to gamble or not is often a tricky question—and one that I’m glad I don’t have to answer for others. With that caveat noted, the main point in my argument is that it can be perfectly rational for some people to wholeheartedly believe that gambling is a risky expense to be avoided. It is also rational for others to wholeheartedly believe that certain forms of video poker o er pro table investment opportunities.
Professional video poker player Bob Dancer’s radio show Gambling With An Edge, is on Thursday evenings 7 p.m. to 8 p.m. Paci c 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. Paci c Time.
Without going into speci cs, and with me as the exception, my family is largely very conservative, especially when it comes to religion. I’m the only gambler in the group, and in many ways have been a non-conformist compared to the others. On the second day of my visit, the discussion got around to video poker and my success — or lack thereof.
Four months after the visit, royal ushes started coming out the of woodwork, and I would begin the million- dollar six-month period that would later be chronicled in my Million Dollar Video Poker autobiography. While visiting in Texas, however, there was no way for anyone to know that fame and success were right around the corner. At the time of that particular vacation, I’d been living in Las Vegas for seven years, and had experienced moderate-but-not-great video poker results.
I told Dick and Lisa that for the rst four months of 2000, I was ahead about $60,000. Lisa asked me how much money I usually made playing video poker, and I told her that $60,000 was slightly below my recent annual average — but that every year was di erent and
scores uctuated. I had some additional income as well, and Shirley and I lived modestly. We were happy with our lifestyle.
Lisa then suggested that I quit gambling for the year. is out-of-the-blue suggestion took me by surprise.
“Why would I do that?” I asked.
“You’ve made your yearly goal,” she explained. “Why
risk giving it all back?” I reminded her that my “goal” was not the same as my recent yearly average.
Lisa saw video poker as a risky enterprise, and in her mind, this risk was to be avoided if at all possible. She believed the casino always had the advantage, and even though I claimed to be a winner over the preceding few years, she believed that in the end, the casino would always win. I guess you could say that she had a “quit while you’re ahead” philosophy.
My view of gambling at video poker is a lot di erent than that. I believe that there are cases where the knowledgeable player has the advantage. I limit myself to these cases, and believe that over time, my wealth will increase. ere will be ups and downs along the way, of course, but so long as I bet relatively small amounts compared to my bankroll and always have the advantage when I bet, I’ll end up ne.
According to economist Frank H. Knight in his book Risk, Uncertainty, and Pro t, there’s a di erence between “risk” and “uncertainty.” Knight says, “ e practical di erence between...risk and uncertainty is that in the former the distribution of the outcome in a group of instances is known...while in the case of uncertainty, this is not true...because the situation dealt with is in high degree unique.”
Investing in video poker has risk, but the characteristics of a 52-card deck are well known mathematically, at least to those of us who have studied this. Investing in the stock market is uncertain because of external events like wars, famines, weather, and politics, the turmoil in Greece, among other factors. e year 2015 is similar investment-wise to certain other years in some respects, but in many ways it has one-of-a-kind characteristics.
Lisa, however, was quite comfortable investing in the stock market. She still spends ten hours or so a week doing her research and making the buy/sell/ hold decisions for her family. She would not dispute that there is uncertainty in these investments, but it is uncertainty she is used to. Her knowledge and experience have convinced her that she is able to thrive in that environment.
I, on the other hand, pay a nancial advisor to make those types of investment decisions for me. I could become good at this, I suppose, just like I could become good at changing the oil in my car, or good at
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