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Chapter 1

Why Do People Gamble?

It’s All About Money, Right?

The croupier picks up a small object from the roulette table layout where it was sitting after the last winning number. This object is a plastic device called the dolly. When the dolly is on the table it marks where the payout bets are located. Bets have just been paid, so now the croupier says in a relatively loud voice “Place your bets”. The 7 or 8 people standing around the table hurriedly and systematically drop different coloured chips onto the green-coloured felt surface of the roulette table. There are a variety of positions covering different numbers. One chip on a single number is called a straight-up. There are various other positions for half and quarter bets on the inside of the table layout (splits, corners, columns etc.). The inside layout of the table has a complex array of numbers which makes sense if you study it over time.

Other people prefer to make what is called an outside bet — on the outside edge of the table layout. These are bets which are not based on an actual number, but on broad characteristics associated with numbers. That is, simple outcomes such as whether the ball will land on a red or black coloured number (half the numbers are red, half are black and a zero is green). Outside bets can also be whether the number is odd or even, or a low or high number (1 to 18 or 19 to 36) etc.

As people join the table they glance up at the LED-lit numbers of the last 15 spins, to determine whether the table is likely to be a winner. These might be a run of red numbers, or a run of numbers in a particular section, all of which shapes each person’s betting decision. A player will then drop $50 or $100 notes, which the croupier exchanges for either a plastic coloured chip (in roulette it is possible to have your own colour for that table) or casino chips of monetary value. The problem with the latter is that there may be a lot of people putting these chips on the table and arguments ensue as to whom the chips belong (interestingly, arguments are limited due to the security cameras filming the placement of bets).

The frantic pace slows as the players finish swapping money for chips and placing bets. The croupier flicks the small white ball in the groove of the roulette wheel. It spins around the rim of the wheel several times (if less than three spins it is called a no spin and therefore has to be done again). As the ball begins to slow the croupier waves their hands across the table saying, “No more bets” (the hand wave allows casino management to see when the last bet was called to prevent people betting after the winning number is known).

It’s possible for every number on the table to have some combination of chips on it. Therefore, all 36 numbers plus a zero are ALL considered by the players to be possible winning numbers. That means that if a player has bet on only one number, they have 36 chances of being wrong (on a single zero table)! Put another way, a single straight-up bet would have just one chance in 37 of winning (or less than 3 per cent). As you can probably see, the casino will make money because they only pay 35 to 1. That means that if a player bet on every number every time they would lose 2 bets.

There is a silence where time almost stands still as the small white ball begins to slow its cycles around the ball track, dropping across the various diffusers (“diamonds”) which can change its direction, before it lands on the pockets of the numbers and bounces to its final resting place. The wheel is of course designed to make the drop random and the ball may bounce or roll in different directions. It is not a smooth decent onto an obvious number, but a breath-holding process of bouncing either toward or away from the numbers upon which bets have been placed. The croupier guards the table without looking at the wheel to ensure that no one places a bet or removes a chip once the betting has closed. Most of the players track every movement of the ball, willing it to land in a particular place (although on one occasion I observed an older European man, who had placed $25 chips all over the layout, walk away from the table because he didn’t like to watch the ball land).

With a clunky sound the ball bounces across a few more pockets before it lands in its final resting place. The croupier looks at the wheel, announces the winning number (e.g. “26 black”) and immediately begins to clear away all bets except for those around the winning number — the inside of the layout, in the black, even, 18–36, or highest third section of the outside of the layout.

The croupier systematically pays out the winnings for those who were lucky enough to have a chip on the number 26, and to those who had chips on the outside of the bet (outsides are always paid first as they are more accessible to someone trying to cheat by adding an extra chip or two). Some of the crowd leaves before the payout as they know their numbers did not win.

To those who have bet on the number straight-up, the croupier pays 35 chips for every chip placed. The European man who walked away and who had 2 × $25 chips straight-up, returns to be paid $1,750. As a large stack of chips is pushed towards him, a novice player says, “Great win mate, you’re so lucky”. However, the European man (a regular gambler) responds “I’ve lost $5,000 today already”. He then places the larger part of his winnings back on the table ready for the next spin, with the hope that there will be another winning number.

From this scenario, to which I will return later, it is obvious that people put their money on numbers in a game of chance because they hope that they will win. At this point you could roll your eyes and say “We didn’t need a psychologist to tell us that”. However, the key to understanding gambling is that people are motivated by the adrenaline-charged experience of winning, coupled with a variety of other psychological experiences, and not simply from the desire for money.

The following simple example illustrates the point. Ask a gambler two questions, the first of which is “How did you go at the casino last night?” They will probably tell you “Had a fantastic night, had some great wins” at which point you think to yourself “going to the casino is all about winning money”. However, the second question reveals the telling aspect of the psychology of gambling, and that is “So, how much money did you walk away with?” Without exception, almost everybody will tell you that they have either lost all their money trying to win more, or they lost a fair part of it before they gave up for the night. Very few experienced gamblers ever report keeping all the winnings at the highest point — they always try to win a bit more.

I remember chatting to a man placing a bet one evening in the Melbourne Casino. In the process, I asked him about winning money. He told me that he had lost $35,000 in the last 2 years. Without thinking I said to him “Why are you still here? When are you going to learn that gambling doesn’t work?” to which he replied, “If I win some money, I might win all of it back” and “I don’t lose every time”. Does he not see that he must lose more often than he wins? The answer is that he does not let himself understand that logic.

The key to understanding why people gamble is to realise that gambling is about the experience of winning more than about making money. Many people don’t realise that the casino is designed in both obvious and subtle ways to create an illusion of winning. For example, poker machines (also called pokies Australia or slot machines in America (due to the slot for money)) are placed in close proximity to one another and not spread out on their own. A psychological principle called vicarious reinforcement, which will be discussed later, helps to explain the location of machines and the social aspects of gambling behaviour.

With respect to winning, there are several psychological principles which govern the experience. These will be discussed in the following sections. These principles are fascinating because they help to explain why early-stage and recreational gamblers gamble for different reasons than later-stage gamblers. The principles help us to understand that people are motivated to gamble by both the desire for excitement and arousal, and to provide relief from stress and negative moods.

Key Points

•The first key to understanding why people gamble is to realise that gambling is more about the experience of winning than it is about making money. The money creates an illusion of winning.

•It is the adrenaline-charged experience of winning, coupled with a variety of other psychological experiences, which explains why people gamble.

•People have a way of disconnecting from their normal logical processes when it comes to losses associated with gambling.

The Big Win

The thrill of a big win is a marvellous experience for almost anyone. In the religious roots of Western society, the work ethic is based on Adam’s charge in the Garden of Eden that “By the sweat of thy brow thou shalt labour all the days of thy life”. The promise of a casino win is the complete antithesis of this — that is, money for nothing and worldly pleasure that does not have to be earned. In psychology we talk about the pleasure principle, which means that people seek pleasure and avoid pain. A life with money is pleasurable. Work is painful. The promise of winning is a promise of not having to work. These are core motivators etched deep within the psyche.

A friend once spoke to me about a “business opportunity”, which eventually turned out to be a multi-level marketing company. Essentially, the company sold products, however, the sales person would start their conversations with prospective clients by asking “What is your dream, and how much money will it take to fill the dream?” Therefore, they aren’t selling a business; they are selling a dream. Gambling offers a promise of money. A successful advertising slogan for a lottery in my state was “one power ball and I am out of here”. This is an example of gambling to change a person’s life — from the drudgery of working to something interesting and pleasurable — not to win money per se.

This is where gambling meets behavioural psychology. There are well-researched principles of learning which govern human behaviour. These principles are singularly unglamorous but are important to understand to make sense of human behaviour, as they represent core drivers for repetitive action (such as gambling).

At its most basic psychological level, if you reward a behaviour it is more likely to reoccur. In psychology, this is referred to as positive reinforcement and is the first of the important rules of behaviour. It can, however, be explained in lay terms as “The Grandma Principle”. That is, first you eat your dinner and then you can you’re your sweets, but if you don’t eat your dinner you don’t get your sweets. This allows parents to convince their children to eat the things that they do not want to eat, by using a reward. This principle is also used to train animals — do a trick and receive a reward. It is powerful because it works.

With respect to gambling, people are willing to give away their hard-earned money for the promise of a reward. They hope that small amounts gambled will produce big rewards. When the bets are bigger, the rewards also increase. It is an upward cycle of payout and return. Focus is placed upon the reward and not the amount spent. The gambler is not concerned about the outlay, but on the possible return (that is, not the $100 bet on the roulette table, but the possible $350 reward).

Studies show that people tend to focus on the outcome instead of the probability of an action. The bigger the outcome, the more likely they are to invest in that outcome. Games such as lotto are some of the most popular forms of gambling throughout the world. The promise of 1, 5, 10 or 50 million dollars causes people to invest in a ticket, even though the probabilities of winning are in the millions. The prize pool can increase to as much as $50 million when the jackpot has not been won. As the prize pool increases, so does the number of people who buy tickets. The odds of winning do not change, but the dream of winning and spending $50 million is far more exciting than winning and spending $5 million.

Therefore, the key to understanding gambling is that the payoffs are a reward. Every spin on a roulette table provides a possible reward. A bet on the outside of the table will result in a win almost half the time (i.e. there are 18 red, 18 black, and 1 green number on a standard European roulette wheel, and 2 green numbers on an American roulette wheel — the odds are around 47 per cent for a win). What does that mean on a practical level? It means that you can double your money.

Many casino games have bonus sections. For example, on the different forms of poker tables bonus jackpots are paid for a Royal Flush (i.e. 5 consecutive cards in the same suit comprised of the 10, Jack, Queen, King and Ace). The probability of that occurring is nearly 650,000 to 1, but the pay-off varies from $100,000 to over $3,000,000. The thought of the reward overcomes a consideration of the odds. The belief underpinning this is that “Somebody’s got to win it” (and somebody else invariably does). Books about gambling note that these side bets have the worst odds, but the bets are popular due to the size of the payout.

Key Points

•Historically, a strong work ethic forms the core of society’s belief. Gambling offers an alternative path to reward, to escape the drudgery of work.

•If a behaviour is rewarded, that behaviour is more likely to reoccur. This is called positive reinforcement.

•As the size of a reward increases, the likelihood of betting also increases. The hope of a reward is a very powerful one.

The Winning Rush

Watching the roulette table ball land in the pocket corresponding to black 26, an attractive young lady squeals with excitement (loud enough for everyone around her to look). She has won! The croupier places $25 chips next to an outside bet on the black section of the roulette table, and the young lady picks up her winnings (having doubled her $25). She is so excited she hugs her boyfriend and then tries to hug a nearby stranger.

An older European man, who just won nearly $2,000, barely utters a sound (in stark contrast to the young lady who sounded like she had won a million dollars). Some important psychological issues need to be discussed in order to understand the man’s lack of reaction. The young lady who squealed in excitement demonstrates the pleasure principle in its purest form — the joy and excitement experienced by the novice gambler receiving an unexpected reward from their first-time win.

The feeling of winning is exhilarating. When a person wins and receives a reward, the brain experiences a variety of chemical and physiological reactions. Neurotransmitters, such as dopamine, are released. This causes surges of feelings of pleasure, excitement and arousal. One of the most common reasons for gambling is the feeling people experience when they win. If the young lady repeats her $25 bet and wins a second or a third time, she will continue to feel that excited rush or “high” akin to that of being on drugs. As such, a reward is a powerful reinforcer.

Reinforcers occur naturally in the world. Spending a day at the beach, or eating a special meal, may produce pleasurable feelings. However, these things are neither predictable nor easy to do every time you want to feel happy. For example, the beach might be windy so you have to go home early because the sand is taking the skin off your legs. Conversely, a drink of alcohol, a win at the casino, or taking drugs can generate a happy feeling in a predictable fashion. Therefore, addictions are often the preferred method of generating good feelings on a reliable basis. Three drinks of alcohol will make you feel much the same way each time.

This first rule of behavioural psychology is that the frequency of a behaviour is likely to increase if that behaviour is rewarded. Therefore, having enjoyed the pleasurable experience, the young lady mentioned earlier is now more likely to place further bets. Having enjoyed the winning experience, her brain now wants to replicate it. As stated previously, human beings are designed at a basic level to remember things which are either pleasurable or painful. We want to remember the pleasurable things so that we can replicate them. We need to remember the negative things so that we can avoid them in the future. Brain scans show that not only do the temporal lobes (the parts of brain associated with memory) activate, other systems are also activated by high pleasure rewards.

The research on gambling shows that many people who have an early-stage big win, creating a sense of exhilaration, have a gambling problem or addiction in later life. Therefore, have a night of losses at the casino to avoid becoming a gambler. It’s not very exciting, but it is a good inoculation against future addiction. Conversely, if Madam Chance blesses you with early luck then you could be in trouble (that is, win once, especially a big win, and you will want to do it again).

Interestingly, casino games are designed to provide many small wins. Statistics suggest that in blackjack you will beat the house almost half the time. Therefore, in the space of 5 minutes you could have 15 wins. In roulette, if bet on 12 numbers inside you will have a win for every 3 spins. If you bet on red or black you might win nearly 50 per cent of the time (in probability you could lose 10 consecutive spins on roulette or win 8 hands in a row on blackjack). The wins do not need to be large (you might only receive the same money back) but the wins nevertheless establish the reward.

If the principle of reward was as simple win and then feel good, we would all do it again and again. It would also be easier to treat gamblers. However, there are several factors that complicate the situation. Linked to reward is a process called “habituation”. Habituation means that if the same reward is repeated, it will lose its powerfulness over time. In simple terms, if the excitement is repeated it becomes boring.

There are some reinforcers that are more powerful than others (money is pretty high on the list). However, the excitement from each win diminishes over time. If you were in the desert and nearly dying of thirst, you would pay anything for the first drink of water. After several glasses of water you may no longer have any desire for it. This is similar to the process of habituation, in that the water is the same but the value attached to it changes as circumstances change. When it comes to pleasurable things, rather than basic needs, this factor becomes even more notable. The pleasure derived from fun things diminishes as we get used to it. In the same way, a $25 win at the casino might be very exciting at first, but after many similar wins it loses it power.

You might argue that water is a basic need and the desire to have it will increase as thirst increases. That is true. For those things which are not basic needs, the pleasure initially derived from them will diminish unless stopped for a long time. Therefore, the young lady mentioned earlier would need to ensure that she enjoys her $25 win because habituation means that she will never feel that same excitement again.

When habituation takes place, what options are available? In simple terms, there are 2 ways to keep the power of the reward and make things interesting and exciting. Either find some other pleasurable thing or keep doing what you are doing but find another way of making it more pleasurable. The young lady has now had four or five $25 wins and she is no longer squealing with excitement. She then ups the stakes and places $100 on the red outside bet. When the ball bounces to a finish and lands on red 7, the squeal is piercing. When she suddenly wins another $100, she bets again. This keeps going until she gets used to winning $100. This is the moment when the fun of a night out shifts from recreation to gambling. If she leaves with her friends, she will have a happy memory. If she stays, she must overcome habituation.

The memory of the excitement of the wins, coupled with a potent cocktail of neurological chemicals, means that the young lady needs to push the high to a new level. As she watched the European man receiving stacks of money she might be tempted to experiment with a few chips in the centre of the layout hoping to get a payout of 35 to 1. If she does win, it will be far more adrenaline-charged than the $25 she won previously.

Alternatively, the young lady could move to blackjack to see if she can win there. Casinos intentionally have a dozen or more game variations. Whether or not she ultimately likes blackjack, it is an easy game to learn. She will try it if someone in her group tells her what to do. Later I will discuss the way in which different people are attracted to different games. The young lady will probably keep going until she finds a game that suits her personality. Having said that, as a young white female she is less likely to return. She will probably leave with her friends and go home before getting to this point!

I am fascinated by the way gambling alters a person’s perception of money. I spoke to a man in prison who explained how, in his non-gambling world, he had driven 20 minutes back to a shop to argue over a $2 error in change he’d received, yet he went to a casino and placed bets of up to $1,000 at a time (knowing that he might lose that money). The reward from the casino had become so intense that it overrode his normal beliefs about money, but only in relation to gambling. In other words, the gambling behaviour became state-dependent.

In simple terms, the concept of state-dependence means that if you learn something in a particular place or state of mind, you are more likely to remember it in that place or state of mind. For example, studies have shown that students who studied for exams with music on would receive better marks with music playing than without. In the same way, people experiencing something when intoxicated are more likely to remember that experience when drinking alcohol. While making a shopping list, returning to the room in which a thought of what to buy occurred will help you to remember that item. State-dependence is helping you to remember. This means that you may view and treat money differently in a casino than in other places.

Money changes meaning over time. That is why money is spent in casinos in ways that are not seen in normal life. People do not value money in the same way in a casino. Instead of viewing money as hard-earned cash, which should be carefully managed, it becomes either a means to win more money or a tool to help improve a bad situation. Habituation partly explains why this happens. Habituation is fed by big rewards and the need to use larger stakes to earn a larger payout.

I once spoke to a croupier who had just paid out $230,000 on a jackpot bonus bet. She said the man who won the jackpot did not smile and his only comment was that the money would probably repay everything he had lost in the last 20 years of gambling. That to me is both sad and astounding to think that gambling makes money seem so worthless. Sad in that the pleasure of the reward has been completely habituated, and astounding in that so much money could mean so little. As I am not a hard-core gambler my reaction to a win like that would be completely different.

What have we learnt so far in this section? We have learnt that people like pleasurable rewards, and if they receive a pleasurable reward they are more likely to engage in that behaviour again. Therefore, the experience of winning is a very powerful one. The irony is that it is not so much the size of the win but the feelings generated by the win. This then establishes the situation of new experiences producing the best rewards. However, with our knowledge of habituation we realise that gambling is neither simply about the reward nor the money. We can see that the reward loses power over time. The logical response should be to stop gambling as the payout becomes less effective. Casinos are busy, so it means that something else must account for persistent gambling.

Key Points

•The pleasure principle is the first type of reward. The joy of pleasure cannot be underestimated. Neurotransmitters surge through the brain when a gambling win takes place.

•We are designed to remember things which are pleasurable and then repeat the experience.

Casino Life:

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