Almost a decade of blogging had worn me down, but after some time off, I’m ready to jump back in the saddle. I can’t think of a better way than by embarrassing myself with the annual Kentucky Derby predictions!
A few months back, I helped start a little company, SpinforGood, that offers a new way to give to charity while having fun. It’s not legal in the U.S. to play games like slots and blackjack for real money online, but it is legal to play those games online for charity. So it’s our hope that by hooking up people who like to gamble online with charities, we can let people have fun while doing a whole lot of good.
We are running a special tournament today and tomorrow. In this particular tournament, I personally donated $1,000 of my own money to the prize pool to give people an extra incentive to participate. Which charities get my money (and yours) will be decided by the tournament winners. So for a $10 donation, you can have fun gambling and potentially win thousands of dollars for the charity of your choice.
Americans love to gamble, as evidenced by the ubiquity of lotteries, the growing number of local casinos, and the remarkable success of Las Vegas.
One place Americans can’t legally gamble is online because, except in a few states, the current laws prohibit it. Right now, the closest legal substitute that exists for Americans is virtual gambling at sites like Zynga, where people pay literally billions of dollars a year in real money to buy tokens that allow them to play virtual slot machines and tables games. By virtual, I mean that even though the consumers pay real money, they can’t win cash prizes, but rather things like online trophies or more tokens that allow them to play the games longer.
InTrade, the Dublin-based prediction market (i.e., betting platform) that we’ve written about regularly over the years (including a Q&A with its founder, John Delaney, who has since died), is under legal scrutiny from U.S. regulators and will therefore stop taking bets from U.S. customers. Here is InTrade’s statement, and here is the CFTC’s press release on the shutdown. What will U.S. regulators do next, outlaw online poker?
Anglicare, a Tasmanian welfare agency, has submitted a proposal to the Australian government’s inquiry into problem gambling that would require pokies (the Aussie version of a slot machine) players to stand up while playing. “We don’t want to punish people, but there are things we can do to assist problem gamblers to get a break in play,” said Chris Jones, the CEO of Anglicare. “If they want a break, they can sit elsewhere, but they don’t need to take a seat in front of a machine.”
In the Boston Globe, Andrea Estes and Scott Allen write about how people have been taking advantage of a statistical quirk in the rules of an obscure Massachusetts Lottery game called Cash WinFall. A Michigan couple in their 70s, Marjorie and Gerald Selbee, spent three days buying more than $600,000 in Cash WinFall tickets from two convenience stores in Sunderland, Mass. Their timing was purposeful:
For a few days about every three months, Cash WinFall may be the most reliably lucrative lottery game in the country. Because of a quirk in the rules, when the jackpot reaches roughly $2 million and no one wins, payoffs for smaller prizes swell dramatically, which statisticians say practically assures a profit to anyone who buys at least $100,000 worth of tickets. During these brief periods – “rolldown weeks’’ in gambling parlance – a tiny group of savvy bettors, among them highly trained computer scientists from MIT and Northeastern University, virtually take over the game. Just three groups, including the Selbees, claimed 1,105 of the 1,605 winning Cash WinFall tickets statewide after the rolldown week in May, according to lottery records. They also appear to have purchased about half the tickets, based on reports from the stores that the top gamblers frequent most.
As an economist, Steven Levitt says he has an underdeveloped moral compass. In the past, the University of Chicago professor and Freakonomics co-author has tricked colleagues into drinking cheap wine and opined that drug dealers in Sao Paulo would do a better job keeping communities safe.
But his moral compass went spinning when the U.S. recently cracked down on the top three online poker companies, resulting in 11 indictments. The federal government accused PokerStars, Full Tilt Poker and Absolute Poker of running their operations illegally, including paying banks to secretly process transactions.
“I think it makes no sense at all,” Levitt says. “Most things that are made illegal, everyone agrees on: homicide, theft–there’s a general agreement. And then there are these other activities that fall into a gray area. I think poker is so obviously on one side of the gray area relative to legality that it just doesn’t make any sense to me.”
Levitt says he doesn’t usually get riled up over such issues, but then he realized why he got so angry: his daughter.
I was outraged a few weeks back when the U.S. government cracked down on internet poker. It took me a while to figure out why.
One of the most important roles of government is establishing a set of rules under which society will operate. Governments determine property rights and coordinate the provision of public goods. Some frowned upon activities are deemed illegal (e.g. homicide); other favored activities are encouraged through subsidies (e.g. home ownership, education).
Two economists walk into a Las Vegas casino. They ask to place a $2,500 bet on the Chicago White Sox to win more than half their games this year. The reply from the casino? That’s too risky.
Commitment devices are an increasingly popular weight-loss method, especially among economists. However, new research from Nicholas Burger and John Lynham indicates that betting on your own ability to lose weight may not be a sure thing.
New research helps explain anomalies like the gambler’s fallacy and other irrational human behavior patterns. Researchers found that many “irrational” decisions are made because of erroneous beliefs.
From Dan Okrent’s recent Q&A about Prohibition: “No factor played a larger role in the repeal of Prohibition than the government’s desperate need for revenue as the country fell into the grip of the Depression.” In short: governments who hate vice suddenly hate it much less when cash flow is slow. And we are seeing that again today.
“[T]he best ‘poker face’ for bluffing may not be a neutral face, but rather a face that contains emotional correlates of trustworthiness.”
Sumo wrestling controversy continues. NPR reports that 15 wrestlers and 14 stable masters are accused of gambling on baseball games, which is seen as “not in keeping with stringent ethical standards sumo wrestlers are expected to observe.”
I’m troubled by news reports that Antoine Walker was arrested for writing $1,000,000 in bad checks. The ex N.B.A. star — Employee Number 8 — was forced to do a perp walk as he apparently was led out of Harrah’s Tahoe in handcuffs. The criminal complaint alleges that from July 27 to January 19, he wrote 10 separate $100,000 checks with insufficient funds to Caesars Palace, Planet Hollywood, and Red Rock Resort.
How can Swoopo, the online auction site, rake in $2,151 selling a laptop for $35.86? Easy: set an opening price of $0.01 (almost free!), then let each new bidder top the last by only a penny, and extend the auction each time someone places a bid in the final seconds. Oh, and collect $0.60 from each player for each bid they place. The winner of the auction might walk away with a good deal, but the losers will have racked up big fees chasing their sunk costs.
As investment schemes, state lotteries are about as sound as a Bernard Madoff venture. But at least one lottery might be worth it — if you do the math.
The Powerball lottery jackpot, which now stands at $20 million, is tough to win — and sometimes, nobody wins it. It’s incredibly hard to match all six numbers drawn for the game. To get an idea of just how long the odds are, software engineer Andrew Arrow built a clever little program that randomly generates six lottery numbers (including, naturally, . . .
Phil Gordon has made more than a few appearances on this blog, most of them concerning his skills as a jack-of-all-poker-trades: he’s a champion player, author, teacher, ringleader, analyst, and entrepreneur. He hasn’t always applied his smarts to cards: a former computer programmer, he started out working at Lockheed Missiles and Space Company on artificial intelligence projects; he also sold . . .
At its heart, Inspectd is a simple game: it shows you a chart of historical data on a random stock, asks you to bet on whether the stock’s price will rise or fall, and then immediately tells you if you won or lost — with another performance chart showing you why. And maybe that instant gratification is what makes this . . .
The gender-swapping trend in online gaming. New software fights fraud on gambling sites. (Earlier) Atlanta man builds robot to chase away drug dealers. (Earlier) Doctors don’t get enough sleep for optimal functioning.
As a Valentine’s Day present to my wife, Jeannette, I flew her to romantic Council Bluffs, Iowa, and bought her an entry into the High-Heeled Poker Tour event being played there over the weekend. These are women-only events, with the winner taking home the coveted “high-heel” necklace. Just so she understood that this truly was a Valentine’s gift to her . . .
Can big businesses lead us to a cultural revolution? Does the human “inactivity bias” make economic sense? (Earlier) Michael Shermer discusses The Mind of the Market. (Earlier) A guide to betting on the Oscars.
Airbus to open flying casinos? (Earlier) The physiology of kissing. Study finds that love may cause “blindness” to other potential mates. Scammers use online dating sites to defraud unsuspecting singles. (Earlier)
Last Sunday, the New York Giants played the Chicago Bears in football. The point spread on the game favored the Giants by 1.5 points, meaning that if the Giants won by only one point, those who bet on them would lose. Having watched the game myself, I was not at all surprised to receive the following e-mail from a fan . . .
Among many ingenious ideas/scenarios/scams proposed by blog readers in response to my horse betting quiz, the answer I was looking for finally appeared. Jim Vanasek is the reader who nailed it. Here is what he wrote: The scenario: You are alive in going in to the final leg of the pick six. There is going to be a payout of . . .
Yesterday morning, I posed a challenging question for horse bettors: Is there ever a situation in a parimutuel betting system in which you would want to bet on a horse to win, even though you knew for sure that the horse would lose the race? Some clever folks came up with an answer involving “breakage.” That was not what I . . .
Here is a tough little Freakonomics quiz for people who like to bet the ponies: Is there ever a situation in a parimutuel betting system in which you would want to bet on a horse to win, even though you knew for sure that the horse would lose the race? This is a hard one. Had it simply been posed . . .
Ian Ayres is an economist and lawyer at Yale and the author of Super Crunchers, which we excerpted here. He has agreed to write occasional guest posts on our blog, which delights us, since he has a lot of compelling interests and insights. Ian is not the only notable guest blogger who will turn up on this site in the . . .