GAMES AND GAMBLING

ECON 411, Second class

August 27, 2009
William R. Eadington, Ph.D.
Professor of Economics, College of Business Administration
Director, Institute for the Study of Gambling and Commercial Gaming
University of Nevada, Reno
www.unr.edu/gaming
 DEFINITIONS OF GAMES
• An activity providing entertainment or amusement; a pastime =>
A game of cards
• A competitive activity or sport in which players contend with
each other according to a set of rules => golf
• An organized athletic program or contest => football
• Informal: An active interest or pursuit, especially one involving
competitive engagement or adherence to rules: “the way the
system operates, the access game, the turf game, the image
game” => “The real estate game”
• An illegal activity; a racket. => A con game
• A calculated strategy or approach; a scheme: I saw through their
game from the very beginning. => “Gaming the system”
• Mathematics. A model of a competitive situation that identifies
interested parties and stipulates rules governing all aspects of
the competition, used in game theory to determine the optimal
course of action for an interested party. => Zero-sum sequential
games
 Children’s and simple games:
Examples

• Tic-Tac-Toe
– Hangman
• Hide and Go Seek
– Sardines
• Tag
– Laser Tag
• Doctor
• Spin the Bottle
– Daisies
 Social Card Games
• Hearts, Bridge
• Gin, Gin rummy, Rummy
• Fish, Crazy Eights, War
• Cribbage, Casino
• Solitaire
• Concentration
• Nertz, Oh Hell
• Poker
STRATEGY BASED
BOARD GAMES
SKILL-BASED BOARD GAMES
ELECTRONIC GAMES
PARTY GAMES
MIND GAMES AND
PSYCHOLOGICAL
GAMES
TEAM SPORTS AND CONTESTS
CONTESTS OF SKILL & PROWESS WITH STAKES
WAGERED
SOCIAL GAMES WITH WAGERING (AND CHEATING)
CASINO TABLE GAMES
ELECTRONIC GAMING
DEVICES
ELECTRONIC GAMES
(PACHINKO)
 DEFINITION OF GAMBLING
• To bet on an uncertain outcome, as of a
contest.
• To play a game of chance for stakes.
• To take a risk in the hope of gaining an
advantage or a benefit.
• To engage in reckless or hazardous behavior:
You are gambling with your health by
continuing to smoke.
• To put up as a stake in gambling; wager.
• To expose to hazard; risk: gambled their lives
in a dangerous rescue mission.
• An act or undertaking of uncertain outcome; a
risk: I took a gamble that stock prices would
rise.
LEGAL DEFINITION: GAMBLING
• A gamble must include: Prize, consideration,
and chance
– Prize: Something of value to be won
– Consideration: Something of value put at risk
– Chance: Outcome is determined by an
unpredictable event
• A gamble must be associated with an
incidental or discretionary activity
• Negative expected value
• The risk inherent in a gamble is the
prerogative of the gambler
 RISK TAKING THAT HAS
SIMILARITIES WITH GAMBLING
• Speeding on the highway
• Challenging a driver that cut you off on the
highway => Will there be road rage?
• Driving when drunk; Riding with a drunk
driver
• Drug use (for the first time) i.e. MJ, coke, H
• Extreme skiing, rock climbing, paragliding
• Unsafe sex (pregnancy, AIDS, STDs)
• Cheating on a spouse, girlfriend/boyfriend, or
significant other
• Cheating on an exam
• Smoking
 MOTIVATIONS FOR GAMBLING
AND RISK TAKING
• Adrenaline rush
– Pleasure-pain anticipation
– Recapture the euphoria of prior experiences
• Controlling the moment
– “Asking the Oracle”
• Financial, prestige, one-upsmanship
– Importance of the prize
• Beating the system
– Finding the Edge, the Overlay, positive
expectation
• Entertainment value
– Utility of the positive reinforcement of winning
versus the costs of participation
 COMMERCIAL GAMING IN
AMERICA, 2007
• Casinos (Non-Indian): $34.1 billion
• Casinos (Indian): $25.1 billion
• Lottery: $24.6 billion
• Pari-mutuels: $ 3.6 billion
• Card rooms, charity, bingo, other $ 3.4 billion
• Internet gaming (USA) $ 5.8 billion
• TOTAL IN 2007 $90.9 billion*
• TOTAL IN 1982 $10.2 billion
(0.8% of aggregate personal income)
*not counting internet gaming
 U.S. GROSS GAMING REVENUES, 2007
($ billions)

Pari-mutuel Card Clubs, etc. ($3.4)

($3.6)

Lotteries
Commercial casinos
($24.6) ($34.1)

AGGREGATE GGRs: $90.9

Tribal Casinos INTERNET GAMBLING: $5.8
($25.1)