Occasional Paper Series

©2012 Center for Gaming Research • University Libraries • University of Nevada, Las Vegas Number 14 February 2012 Center for Gaming Research Occasional Paper Series University Libraries University of Nevada, Las Vegas Containment and Virtualization Slot Technology and the Remaking of the Casino Industry Kah-Wee Lee ABSTRACT: This paper examines how the casino industry was transformed by slot technology between 1950 and 1990. The criminalization of slot machines in the 1950s led to their massive evacuation into Las Vegas casinos. In this concentrated environment, slot machines revealed to casino operators an automated surveillance technology that could disassemble the player into streams of virtual data, not through any overt means, but through the very activity of play itself. Slot managers and gaming technologists found themselves empowered professionally as they experimented with ways to transform data into profits. From the 1970s to the 90s, this technological development effectively linked up every economic activity in various casinos across the US, creating a virtual network that defeated the geographical injunctions designed to segregate gambling from other spheres of life. Keywords: Slot technology, techno-politics, virtualization, casino gaming, Las Vegas Preferred Citation: Kah-Wee Lee. “Containment and Virtualization: Slot Technology and the Remaking of the Casino Industry,” Occasional Paper Series 14. Las Vegas: Center for Gaming Research, University Libraries, University of Nevada Las Vegas, 2012. Technological dreams was no longer a monopoly of casinos, but In the 1970s, a technological revolution flooded into the imagination of every gambler took place in the US. Gamblers were using who saw in the computer a way to use computers to build “systems” to help them mathematics against the house. In 1979, an invest in stock markets, identify the best odds avid gambler created a quarterly newsletter, for horse racing and reduce the house “Computers and Gambling,” aimed precisely advantage of casinos. Claims of foolproof at this community of technologically savvy ways to win lotteries and beat the casinos are gamblers. One letter from a subscriber not new at all. What is new in the 70s is how published in the inaugural issue gives a sense computers gave the gambler a way to handle of what they were up to: complex probability calculations that would My interest in your proposed otherwise be impossible. The idea of a format centers around the simulation “system” of playing where winning is almost (on microcomputers) of poker guaranteed if one stuck to the precise rules competitions, including: 1. [2] Occasional Papers | Center for Gaming Research | University of Nevada Las Vegas Identification of weak, strong and the computer strategy. It’s the same breakeven strategies (for various as having the IBM computer sitting games); 2. General application of right there next to you to make every game theory to personal playing decision.4 (italics mine) (psychological) conflict situations; 3. A skilled gambler must entrust his fate to Mathematical quantification of the the laws of probability. He must block his elements leading to strong or weak senses and empty his emotions, and become a play …1 servant of the computer. Another computer However, computers then were too tutorial for poker trained the player to play expensive and beyond the reach of most like a machine, so as to deflect the Americans. A company under the innocuous psychological and sensorial distractions one name of “Tony Anderson Sales Company”, would encounter in the casinos.5 This self- positioning itself in the field of consumer dehumanizing strategy was articulated in protection, offered to test various systems in many ways by the various systems in the the market for a price. It would dispense market - “Gamble intelligently”, one advice such as which table in which casino at admonished; “Any casino game based on what time offered the best probability for mathematical principles can be beaten by gamblers (down to a difference of 0.03% properly applied math”, a Dr Frank Walker between betting on Banker or Player in a (PhD Math) declared; others tried to exploit game of Baccarat), explain how computers “mathematical imperfections” in gambling generate random numbers and test whether machines.6 Books like “The Theory of or not certain systems worked. By 1972, they Gambling and Statistical Logic” (1967) and had tested 45 systems in the market, and “Playing Blackjack as a Business” (1972) gamblers could purchase their analyses via sought, similarly, to disenchant gambling by discreetly packaged mail.2 Most systems, Mr exposing and exploiting the mathematical Tony Anderson cautioned, were fraudulent. logic of casino games. (See Figure 1) With computers, the criterion for good This prelude sets up dialectically the systems was tougher – at least 10,000 technological dreams that gripped the winning plays, with profits to make the western gambling world in the 1970s. The investment worthwhile. 10,000 plays, he tactics of these gamblers both mirrored and calculated, translated to 14.58 days of non- provoked the ways the casino industry stop continuous play.3 The worst enemy, he reformed itself around numbers and further argued, is the player himself. To play machines. In a 1974 interview, casino using a system is to replace the “gambler’s consultant Bill Friedman responded to the psychology” with “cold logic and challenge posed by these intrepid gamblers. mathematical calculation.” While most He did not do so by threatening to bar them systems simply did not work, this psychology from casinos. That kind of punitive action also prevented good systems from working. should be directed at people who behaved in One system of his own – a “computer a disorderly fashion, not these card counters calculated roulette system” – illustrates this. or system players who actually played by the Unlike other systems, this was “logically rules. Rather, he tried to prove, using developed” by computers, and proven to win computers, that the human brain could not over “3100 times out of 5000 trials.” possibly break the mathematical armor that Gamblers using this system would place their protected the house advantage: bets based on 38 decision charts: They have run 200,000 hands Using the charts, there is nothing left through a computer but I once had an up to the player. You simply watch the opportunity to make my own system wheel for a spin and see what on a computer and the mathematician happened. You then turn to the page I was working with wisely say “Let’s for that particular result and follow find out how big a problem we are Lee | Containment and Virtualization [3] facing. Let’s see how many possible In this paper, I attempt to trace the hands can be dealt.” The computer contours of this new model of casino practically covered an entire page gambling brought about by the “avalanche of with zeros. The figure was so big the printed numbers.” Working through the mathematician couldn’t even internal discourses and practices of the pronounce it. So 200,000 hands isn’t casino industry recorded in trade journals, even the smallest part of one percent manuals, industry reports, and academic of the possible combinations, so the discussions between 1950s and 1990s, a samples are meaningless in terms of figure was unmistakably significant - the slot telling us what the advantage is.7 machine. In the span of 40 years, slot The technological revolution was truly an managers and gaming technologists grew in “avalanche of printed numbers.”8 From prominence in the forums of professional regulators to investors to casino operators, exchange and transformed the casino the objectivity and certainty promised by industry beyond recognition. The slot numbers agitated against the specter of machine revealed to casino operators an chance and the suspicion of criminality. The automated surveillance technology that could annual reports of the Nevada Gaming Board disassemble the player into streams of virtual built the case of economic benefit, data, not through any overt means, but professionalism and social order through through the very activity of play itself. Every statistics – gaming fees and revenue were bet and push of the handle became a piece of listed quarterly; number of jobs created by data that could reveal patterns about player the growth in gaming industry was calculated habits and game profitability. By the 1970s, in relation to state population; the locations slot technology effectively linked up every of licensees and the numbers of slot machines machine into a virtual network, thereby allotted to them were tabulated.9 At the first defeating the geographical injunctions Annual Conference on Gambling held in Las designed to segregate gambling from other Vegas in 1974, the “serious study” of spheres of life. In this epiphany, table games, gambling was dominated by economists, hospitality services, and corporate psychologists, sociologists and management practices were absorbed into a mathematicians who employed quantitative “virtual superstructure of numbers,” where methods.10 Like Anderson, Friedman was a objectivity and certainty could prevail. Yet, key witness and protagonist of the beneath these overarching processes of transformation of the casino industry during abstraction and rationalization, there were this period of time. He taught in the College of strategic imprecision and dangerous Hotel Administration at the University of Las unpredictability. As more numbers were Vegas since 1970 and was a dogged produced, more anxieties were generated. proponent of gambling as a legitimate form of Slot managers and game technologists were entertainment and business. On one side, he both caught up in this performance of would give seminars to vacationers on how to objectivity they must both produce and gamble so as to have “a fighting chance denounce in order to ensure their against the casinos,”11 and on the other, he professional existence. would teach casino operators how to modernize their businesses and maximize Containing Vice their profits.

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