July 10th 2010 Shuffle up and deal A special report on gambling Gambling.indd 1 23/06/2010 14:54 The Economist July 10th 2010 A special report on gambling 1 Shue up and deal Also in this section The risk instinct Why do people bet? Page 2 At war with luck Is poker a game of skill or chance? Page 3 Bet on the bot Will Polaris do for poker what Deep Blue did for chess? Page 4 Log on, ante up Online gambling o ers the greatest threats and the biggest opportunities. Page 5 Lengthening odds New betting options imperil horseracing’s future. Page 6 Cutting o the arms The internet is radically changing the business of gambling. Now Slot machines are becoming mobile. Page 8 policy must catch up, argues Jon Fasman INPOINTING a precise moment when changed out of all recognition in the past When the chips are down Pthe world changes is never easy, even in decade but all forms of gambling world• Competition and the economic downturn retrospect. Yet it is possible to say with rela• wide. The reason has been simple: for the have hurt, but Las Vegas is ghting back. tive condence that the world of gambling rst time anyone who wants to gamble Page 9 was changed dramatically by events and has an internet connection can do so. around a green felt table at Binion’s Horse• The desire has been there for much of re• shoe in Las Vegas on May 23rd 2003, the • corded history. An excavation of a bronze• The dragon’s gambling den nal day of that year’s World Series of Poker age city in south•eastern Iran turned up a Macau is only the start: all Asia is coming out (WSOP). The hand immediately preceding pair of dice dating back nearly 5,000 years. to play. Page 11 the nal tablethe last nine of the tourna• Islam forbids gambling, but the Bible men• ment’s 839 competitors who would play tions casting lots or using fortune to deter• for $2.5mpitted Phil Ivey, one of the mine an outcome. Card•playing for money Come, all ye gullible sharpest and most ruthless players of his has often been depicted in art (see detail Lotteries are a bad bet, but everybody loves time, against Chris Moneymaker, an un• above of Georges de la Tour’s The Cheat them. Page 12 known 27•year•old accountant from Nash• with the Ace of Diamonds, circa 1635•40). ville. The newcomer eliminated Mr Ivey Gambling’s widespread and enduring Sure thing thanks to a lucky draw on the last card appeal comes as much from the hope of dealt. Mr Ivey, a stone•faced old•school imposing order on the fundamental ran• People will keep on betting, legally or illegal• player, declined to shake his vanquisher’s domness of the world as from the expecta• ly. It makes sense to tidy up the rules. Page 13 hand. Mr Moneymaker went on to win the tion of economic gain (though that certain• tournament. ly has its charms). Blaming a bad result on His victory created what came to be an o ended spirit or a good result on di• Acknowledgments called the Moneymaker e ect: interest in vine favour is far more comforting than ac• In addition to the people named in this report, the author wishes to thank Jeremy Aguero, Stephen Burn, Nic poker soared. Suddenly spending time cepting the cold indi erence of probability. Coward, Scott Daruty, Behnam Dayanim, Markus Funk, playing a game on a computer looked like a But there is a darker side to gambling Bobby Geiger, Marshall Gramm, Carlos Guestrin, Mark road to riches. And those riches seemed at• with which ancient civilisations were also Harris, Simon Holliday, Randy Matthews, Adam Pliska, Peter Reynolds, Emmanuel de Rohan•Chabot, Bas Rokers, tainable. The stars in poker, unlike those in well acquainted. The Rig Veda, a collection John Shepherd, Eric Tom, Mor Weizer, Jenny Williams and professional sport, look very much like the of Hindu religious hymns more than 3,000 John Williams. spectators; they just happen to be more years old, contains a section known as the successful. In the years since Mr Money• Gambler’s Hymn which laments: With• A list of sources is at maker’s victory, the tournament has vari• out any fault of hers I have driven my de• Economist.com/specialreports ously been won by a patent lawyer, a Hol• voted wife away because of a die exceed• lywood agent and a 21•year•old profess• ing by one [an unsuccessful bet]. My An audio interview with the author is at ional poker player. mother•in•law hates me; my wife pushes Economist.com/audiovideo/specialreports It is not just professional poker that has me away. In his defeat the gambler nds 1 2 A special report on gambling The Economist July 10th 2010 The risk instinct Why do people bet? T 11pm there usually remained be• far back in animal experience. The instinct thrill of action. A more recent study by A hind only the real, the desperate is, in itself, right and indispensable. A Henry Chase and Luke Clark at the Behav• gamblerspersons for whom, at spas, psychologist of the same period, Clemens ioural and Clinical Neuroscience Institute there existed nothing but roulette, and France, saw similarities between gam• at Cambridge University found that near who went there for that alone. These bling and faith: both expressed a need for misses and wins in gambling produce gamesters took little note of what was go• reassurance, order and salvation. similar responses in the brain. ing on around them, and were interested Those theorists were writing about Russell Poldrack, who runs a cognitive in none of the appurtenances of the sea• gambling as a pastime, but for some peo• neuroscience lab at the University of Tex• son, but played from morning till night, ple it is much more than that. In the 1960s as at Austin, has found that activity in the and would have been ready to play and 1970s excessive gambling began to be ventromedial prefrontal cortex depends through the night until dawn had that seen as a medical problem. Robert Custer, on a person’s attitude to loss. And Paul been possible. an American psychiatrist, argued that Glimcher, a neuroeconomist at New York Playing until dawn is often possible to• gambling could be just as addictive as al• University, has shown that activity in the day, and the game is not always roulette, cohol and drugs, and indeed substance prefrontal cortex and ventral striatum re• but otherwise Dostoyevsky’s description abusers gamble to excess more often than veals the value someone puts on a reward. from 1867 will be familiar to anyone who others. About three•quarters of problem Undoubtedly gambling, like other ad• has ever been in a casino late at night. Dos• gamblers su er from depression, and dictions, depends on a complicated mix• toyevsky wrote from experience; his no• quite a few attempt suicide. Mr Custer’s ture of brain chemistry, environment and vella The Gambler is thought to have eldwork showed that pathological gam• socialisation. Howard Sha er, a professor been written to enable him to pay his blers were often gregarious, clever and of psychiatry at Harvard Medical School, gambling debts. What is it that drives generous but also impulsive, anxious and notes that the rate of pathological gam• some people to go on betting until they restless, looking for instant gratication. bling in America has remained relatively lose their shirts, whereas others can take it As with many aspects of psychiatry, constant for the past 35 years, despite a or leave it? the study of gambling has moved from huge expansion in the opportunities on W.I. Thomas, an early•20th•century mind to brain. A 1989 study conducted by o er. There was a spike in the late 1990s American sociologist, argued that a taste Alec Roy, a psychiatrist, found that chron• but levels have dropped since then. Dr for risk is essential to human develop• ic gamblers had low levels of norepineph• Sha er draws a parallel with a classic vi• ment. He believed that the gambling in• rine, a chemical secreted by the brain at rus•infection curve: high at the beginning stinct is born in all normal persons. It is times of stress or excitement. This seemed as those most susceptible fall ill, but grad• one expression of a powerful reex, xed to suggest that such people gamble for the ually tailing o as people adapt. 2 none to pity him. No one has use for a gam• winning the jackpot in America’s richest enues from online gambling continue to bler, like an aged horse put up for sale. lottery, Mega Millions, is one in 176m. Euro• rise. H2 Gambling Capital, a consultancy As the newly single poet above had just Millions, available to players in nine west• that monitors the global gambling market, discovered, the numbers make most forms ern European countries, o ers slightly bet• estimates online gambling revenues in of gambling a mug’s game. The odds of ter odds: one in 76m. Roulette players, on 2009 at around $26 billion (see chart 2). 1 average, will hit their number once in 36 or 37 attempts. Poker players’ chances of be• The wages of sin 1 ing dealt a royal ush are much the same as Watch it grow 2 Global gambling market*, 2009, % of total being struck by lightning. Global interactive* betting industry gross gaming yield †, $bn Casinos Lottery 31.2 products A majority sport FORECAST 29.6 40 Yet hope never dies.