Monday, January 10, 2011

Breaking News: Slot Machines May Addict Their Players! Shocker!

I couldn't believe this hysteria on 60 Minutes last night.  Embedded video:

And the summary: "Lesley Stahl reports on the proliferation of gambling to 38 states and its main attraction, the slot machine, newer versions of which some scientists believe may addict their players."

Some scientists believe that slot machines may addict their players?  File this one under: NO SHIT SHERLOCK.  They are, and always were, designed to do EXACTLY that - from colors and the specific tones of the sounds, to the randomized reward schedule. 

I actually watched this on 60 Minutes last night, and thought that Lesley Stahl's report was almost a joke at first: "The main attraction at these casinos is now the new slot machines."  And guess what - THEY ARE ADDICTIVE!  This is not news! That's how it's always been!  Slot machines, somewhat incredibly, are the cash cow of the casino, and they are based on some of the simplest tenets of human and animal psychology.

I am quite sure that I'm not the only one who ever took a class in basic psychology.  Randomized reward, bayyybeeee.  Rats learn it, pigeons learn it, octopuses learn it, dogs learn it, and people learn it.    Apparently, Lesley Stahl never learned it, because she was shocked - SHOCKED I tell you - to learn that slot machines can addict people!

Gambling can be highly addictive.  Slot machines in their very existence are designed to feed this addiction. I guess it can't hurt to remind people of Psych 101 though.   

The 60 Minutes report mentioned the penny slots, which gives me the perfect opportunity to give my readers some real value added content here - I can tell you how to BEAT THE PENNY SLOTS!  For real... If you've read all of my past Vegas Trip Reports, you already know this answer - it's a classic, mostly unknown arbitrage that's available to you.  I'll leave it up to you to figure out how to scale it into a profitable business idea.  Ready?  Here goes:  when you cash out your penny slot balance (under the new ticket-in-ticket-out system that is abundant), the casino rounds you up to the nearest nickel when they pay you out at the cashier's cage!  Ie, if you cash out $1.26, they give you $1.30.  HOLY FREE F*CKING MONEY!  Go forth and reap the profits, my dear readers. (*note: I should clarify that this is how it was at the WYNN when my wife did it several years ago.  I somehow doubt that they have been overrun by an army of low paid workers who are paid by a master syndicate to take advantage of this arb and bankrupt the casino, although it's possible that they have been forced to change their rules.  Please report back anything you find out!*)

I'm intentionally avoiding a debate on the meat of the rest of the 60 Minutes piece, which is a variant of the "If we give kids condoms, does that make it easier for them to have sex" argument, in my mind.  The actual topic was basically "Does having casinos that are closer to where we live make it more likely that we will gamble (and become addicted)."  The condom analogy is actually pretty apt, as I think that one revolves around "We might not want our kids to have sex, but if they do have sex then we want them to have safe sex, but at the same time, by providing them condoms we don't want them to think that we are encouraging them to have sex and we don't want to make it easier for them."  The gambling tract is "We don't want our citizens to become addicted to gambling, but if they are addicted to gambling and are going to gamble anyway, we might as well keep those revenues in state, although that might result in even more gambling in and more gambling addicts."

I think that ease of access certainly makes it more likely that people will go to the casino, and that more people going to the casino probably means more people getting addicted.    I also find it pretty hypocritical when states with lotteries take such a hard stance against casinos.  I'm not about to argue that scratch tickets (or lotto drawings) are as addictive as slot machines, but they are absolutely addictive as well - same principles of randomized reward, just not quite as fancy in the implementation.   Then of course, there are cigarettes, which is a whole other story.  I have yet to see any state propose a ban on the sale of cigarettes, although that product is also designed to not only addict, but KILL the users!  We know why no state is proposing such a ban, of course: money. Tax revenues - which gets right back to why more states are considering expanding legalized gambling.



Unknown said...

I think Ms. Stahl would be kick ass poker player maintaining a straight face throughout the introduction.

Replace her with someone from The Onion and its the same story.

Sadly, I'm slot addict who can vouch that they are the sole reason I go home from Vegas down, versus sticking with profitable poker.

If you'll excuse me, I think Mr. Cashman is calling my name.

Onlooker said...

Drizztdj beat me to the Onion reference. This truly could be one of those "is the an Onion story, or a real one?"


Onlooker said...

Oh yeah, and we're (as a nation) going to gamble ourselves to prosperity. Holy malinvestment Batman!

I mean really, when are we going to reach the point of saturation in this nonsense? Or are we already past it?

EconomicDisconnect said...

The states rely on addiction for revenue. Smokes are a huge windfall, and regular lotto is huge as well. What makes slots any different? Still waiting for online poker to get the green light again.

Joel Juday said...


JhighPaiGow said...

KD - perfect time for a little poker room/casino story. I was visiting family in PA over the holidays and of course got stuck due to the snow storm. I head on over the local Casino to play poker.

Upon arriving, they tell me I *must* have a player card to sit on a live ring game and I must get it from the player rewards center, they won't make it in the poker room. Sigh. That would never happen at the Wynn.

Fortunately there was no line, so I roll up to the counter and get not only a card, but a FREE $1 PA LOTTERY TICKET! The freeroll +EV coursed through my veins and scratched if off with my new player's card in the poker waiting area (of course there is a wait for $1/2 and no $2/5, because the $35 tourney with $8 fee and 18 min levels - holy sh*tshow batman - was busting out, but I digress).

It takes me a solid 3 minutes to determine if I've won anything. Afterall, I'm a scratch off lottery amateur. After determining the maze of symbols, drivel, and nonsense I figure out that I did not win anything. Now I'm bored wondering who plays in 18 minute level tournies with a 23% fee. In desperation, I read the back of the lottery ticket.

SECOND FREEROLL! All losing tickets are eligible for a drawing, and you have to go the lottery's website to find out how to get in the drawing. Determined to squeeze all EV possible from this situation, I fire up the iPhone. No Service - this would never happen at the Wynn.

At home I login to the PA Lottery's website. Turns out that you had to mail your ticket in by Dec 12th to be in the drawing, yet I was given my freeroll $1 baby on Dec 27th. I cannot tell you the anger the at this point about the aforementioned lost EV.

However, I find this gem:

Check out that baby - that's a diagram of where the money from lottery tickets go. And its not like they hide it, ITS THE FIRST LINK IN THE MENU!!

Conclusion from image: 60.9% of the lottery proceeds pay out games. This implies that on average, the PA Lottery's game feature a mere 39.1% edge - and you thought the fruit wheel was bad! This crushes the fire bet! PA Lottery is gangster.

So please, please, please, install some more slot machines up in this piece at sub 5% edge!

Great blog, keep it up.

Kid Dynamite said...

jeol - well done on VOLCKER RESIGNS!

jhighPG - good story - thanks

Onlooker - we're not going to gamble ourselves to prosperity - we're going to tax ourselves to prosperity. It will work perfectly if we only let people with a certain net worth lose their money in the casinos!

Onlooker said...

Yeah, that'll work!

EconomicDisconnect said...

Both the Atlantis and the Crystal Casino in the bahamas (Nassau) do not have poker anymore. They said nobody plays at the tables, they all play online.

Anonymous said...

Vegas was built on chain smoking little old ladies sitting next to their oxygen tank bound husbands sitting at the slots from sun up to sun down. Go check out Harrah's next time you're there. It's like a nursing home.

Kid Dynamite said...

anon - I went to Atlantic City about 6 years ago - I walked into Resorts International, and literally RAN around like a rat in a maze trying to escape - it was horrifying. Basically exactly what you described Harrah's like.