Taking the Chance out of Chance
August 16, 2012
The gambling known as business looks with austere disfavor upon the business known as gambling.
― Ambrose Bierce
Back in the late 90s, the Head of Risk Management for MGM Grand– at the time, the largest gaming operator in Las Vegas– told me “the one place that we don’t have any risk is the place where everyone assumes we do: on the casino floor. We take huge risks [largely in real estate and construction, as he went on to explain]; but on the floor, you guys are paying us for the privilege of playing with each other’s money.”
And paying them pretty well: margins on casino games range from 15-30% of dollars wagered (table games, poker, keno, and sports books) to 60-70% (slots) [source]. The 30-80% of the dollars that remain are “won”… but clearly, on average, most casino gamblers are simply renting very expensive stools.
They’re renting them on a pretty wide scale: casino gambling in the U.S. runs over $90 Billion a year. Commercial casinos (like the MGM Grand) account for 45% of that total; Indian casinos, 44%; the balance “racinos” (horse-racing tracks that have added casino gaming to their staple pari-mutuel wagering) [source]… and then there are are the legal lotteries– another $56 Billion or so– which take a state mandated “profit” of 30-35% out of the pot before calculating pay-outs [source]. Add in legal sports books, sanctioned charitable gaming, card rooms, and the like– all of which exact their own variety of “vig”– and the total comes to something like $150 Billion a year [source].
But of course, that’s only the legal (and thus, accountable) gambling that transpires. Illegal gambling is, by definition, harder to measure. But to put its scale in perspective, $4-5 Billion is wagered online by Americans [source] And more dramatically, while in 2010, $2.76 billion was legally wagered in Nevada’s sports books, the National Gambling Impact Study Commission (NGISC) estimated that illegal wagers ran as much as $380 billion– a figure that, even if overstated, is pretty bracing [source]…
Indeed, to put all of this in perspective, the entire U.S. consumer electronics market is knocking at $200 Billion per year.
But while essentially all Americans buy in the consumer electronics market, only 86% of us report having gambled at least once in their lives, only about two-thirds of us have gambled in the last twelve months– 46% of us, in casinos [source]…
So, how does the business of gaming actually work?
In “Dispatches from an Indian Casino,” Leslie McDonald (pretty certainly a pseudonym), “an employee at an Indian casino,” offers a guided tour of one Eden of odds, “Thunderclap” the casino at which he works…
He begins with a question surely on many minds: “Who Are These People?“…
One thing I learned early on is that you can’t tell who the high rollers are by looking at them. You could scour the casino high and low looking for someone who fit the profile of a “high-roller” or even a “gambler” and you’d be severely disappointed. Sure, every once in a while you’ll see some older guys with fake teeth and expensive tans in BMW polo shirts (really) flashing thick rolls of $100 bills, but the portly little Filipina grandmother of six with the Louis Vuitton handbag will outspend him six days out of seven. (Unless she’s a Bingo player. Bingo players bring in less than 1% of the casino’s total revenue.)…
And he ponders the motivations at play…
Most experts will tell you that gambling is a game of chance; those experts are wrong. Gambling is a psychological phenomenon. Gambling takes place in the mind, not at a slot machine, horse track, poker table or back alley dice game. Gambling is the metaphysical absorption and dispensation of risk for the purpose of sport with real-life consequences. This is why gambling makes no sense to people who are risk-averse and is vastly appealing to fabulists. Gambling taps into our imagination. Gambling makes us believe things we ought not to believe, which is as good a definition of fiction as one is likely to find.
He shares the experience of being a member of the staff…
The employee entrance isn’t exactly cheerful, but it’s a circus compared to the cafeteria. Everyone is exhausted here. Employees sit slumped over the tables, their bulky bodies perched on the flimsy frames of cheap chairs. They sit in groups segregating by language: Spanish, Vietnamese, and Tagalog. They poke disinterestedly at their food. Used newspapers cover the tables. The televisions are too loud and each one is on a different station. Telenovelas compete with talk show catastrophes.
And then there are the cameras. I am used to being watched on the floor. I don’t mind them because they are hidden; but down in the cafeteria they don’t bother disguising the cameras and they’re everywhere. They never want us to forget we’re being observed.
I used to like coming here to eat and read, but I avoid it now. I prefer the excitement of the floor. Upstairs there’s a fantasy for sale. Surrounded by jackpot jingles and colorful lights, I get to participate in the magic; but lately the feeling disappears whenever I go to the cafeteria. On the floor I’m an ambassador of fortune; downstairs I’m an underpaid employee of an enormous 7-Eleven.
But mostly– and most elegantly– he meditates on the compulsions that keep gamblers and casino employees alike coming back…
I don’t like hearing my co-workers talk about hating their jobs, but feeling too financially insecure to do anything about their situation. When I hear this, it disabuses the comfortable lie that the workers are somehow better than the gamblers. While both populations come here to make money, only one has the potential to strike it rich, only one is acting on a dream for a better life. (A foolhardy dream, but a dream nonetheless.) That’s when it gets me. The more I hear these complaints, and I hear them a lot, the more I suspect that I have become one of these timid creatures.
Once, as I was walking to my car, I saw a snake writhing in the parking lot. A car had run over its tail, crushing it into the asphalt. The rest of the snake was very much alive, hissing and snapping and whipping about, trying to free itself from itself. A bunch of us stood in a circle and watched the snake wear itself out. I remember thinking, metaphor. Every one of us here at Thunderclap is trapped in the crushing grip of a compulsion for money that is stronger than our best instincts, better than our boldest desires, and most of us will never break free.
There’s much, much more– all of it eminently worthy of a read– in “Dispatches from an Indian Casino.”
I used to be a heavy gambler. But now I just make mental bets. That’s how I lost my mind.
- Steve Allen
