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Capitalism, casinos and free choice


Tim "Undercover Economist" Harford's column "Casinos’ worrying knack for consumer manipulation," takes a skeptical look at business and markets -- specifically their reputation for offering a fair trade between buyers and sellers. Inspired by Natasha Dow Schüll's book Addiction by Design: Machine Gambling in Las Vegas, a 2012 book on the calculated means by which gamblers are inveigled to part with more money than they consciously intend to, Harford asks a fundamental question about capitalism: are markets built on fair exchanges, or on trickery?

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How to Cheat at Everything: an encyclopedia of cons


Back in 2007, I reviewed a great book called How to Cheat at Everything, by Simon Lovell. Lovell's book, nominally a guide to committing fraud, was really a tremendous catalog of all the ways that we get conned -- all the deceptive psychology that goes into cons long and short. It's a book that's simultaneously paranoid and liberating, and I've turned to it several times in the years since. I'm not the only one -- I still get email from people who found it through my review, years later. So I thought I'd revisit it today -- including the colorful notes about Lovell that readers sent in back in 2007.

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Short documentary about the psychology of slot machines

Cool Hunting: "During a visit to Las Vegas we had the opportunity to dig a little deeper with Bally Technologies' Director of Game Development, Brett Jackson. He offered some insight into the surprisingly complex innovation, psychology and design behind the slot machines that illuminate so many casino floors."

Casino cheats used house CCTVs to score $32M

A rich, high-stakes gambler was dragged out of his opulent comp suite at the Crown Towers casino in Melbourne, accused of participating in a $32M scam that made use of the casino's own CCTV cameras to cheat.

The Herald Sun understands remote access to the venue's security system was given to an unauthorised person.

Images relayed from cameras were then used to spy on a top-level gaming area where the high roller was playing.

Signals were given to him on how he should bet based on the advice of someone viewing the camera feeds. Sources said the total stolen was $32 million.

They are capable of transmitting the most intricate detail of goings-on inside the building.

Casinos were the world leaders in CCTV use, and really represent ground zero for the panopticon theory of security. What is rarely mentioned is that "security" measures can be turned against defenders if attackers can hijack them. This is as true when a mugger uses his victim's gun against him as it is when a casino's own CCTVs are used to defeat its own anti-cheating measures. This is the high-stakes gambling version of all those IP-based CCTVs that leak sensitive footage of the inside of peoples' houses onto the public Internet.

Crown casino hi-tech scam nets $32 million [Mark Buttler/Herald Sun]

(via /.)

WTO gives Antigua the right to sell pirated American copyrighted goods

The WTO agreement is supposed to guarantee level playing fields for its member states, allowing each to sell into the others' markets. But US law bans online gambling, which is the major export from Antigua. Antigua has been going back and forth with the USA in trade court since 2003, and now the WTO has agreed that the US has violated its treaty obligations. By way of reparations, the WTO has given Antigua permission to set up a kind of legal pirate market, where American copyrighted works can be sold without permission or royalties. The initial ruling came in 2007, and was affirmed on Monday. Antigua has announced plans for a site for downloading US software, music and movies.

Antigua’s Finance Minister Harold Lovell said in a comment that the U.S. left his Government no other option than to respond in this manner. Antigua’s gambling industry was devastated by the unfair practices of the U.S. and years of negotiations have offered no compromise.

“These aggressive efforts to shut down the remote gaming industry in Antigua has resulted in the loss of thousands of good paying jobs and seizure by the Americans of billions of dollars belonging to gaming operators and their customers in financial institutions across the world,” Lowell says.

“If the same type of actions, by another nation, caused the people and the economy of the United States to be so significantly impacted, Antigua would without hesitation support their pursuit of justice,” the Finance minister adds.

Antigua’s Legal “Pirate Site” Authorized by the World Trade Organization [Ernesto/Torrentfreak]

Casino panopticon: a look at the CCTV room in the Vegas Aria


A fascinating article in The Verge looks at the history of casino cheating and talks to Ted Whiting, director of surveillance at the Aria casino in Vegas, who specced out a huge, showy CCTV room with feeds from more than 1,100 cameras. They use a lot of machine intelligence to raise potential cheating to the attention of the operators.

Despite that, Whiting says facial recognition software hasn’t been of much use to him. It’s simply too unreliable when it comes to spotting people on the move, in crowds, and under variable lighting. Instead, he and his team rely on pictures shared from other casinos, as well as through the Biometrica and Griffin databases. (The Griffin database, which contains pictures and descriptions of various undesirables, used to go to subscribers as massive paper volumes.) But quite often, they’re not looking for specific people, but rather patterns of behavior. "Believe it or not, when you've done this long enough," he says, "you can tell when somebody's up to no good. It just doesn't feel right."

They keep a close eye on the tables, since that’s where cheating’s most likely to occur. With 1080p high-definition cameras, surveillance operators can read cards and count chips — a significant improvement over earlier cameras. And though facial recognition doesn’t yet work reliably enough to replace human operators, Whiting’s excited at the prospects of OCR. It’s already proven useful for identifying license plates. The next step, he says, is reading cards and automatically assessing a player’s strategy and skill level. In the future, maybe, the cameras will spot card counters and other advantage players without any operator intervention. (Whiting, a former advantage player himself, can often spot such players. Rather than kick them out, as some casinos did in the past, Aria simply limits their bets, making it economically disadvantageous to keep playing.)

With over a thousand cameras operating 24/7, the monitoring room creates tremendous amounts of data every day, most of which goes unseen. Six technicians watch about 40 monitors, but all the feeds are saved for later analysis. One day, as with OCR scanning, it might be possible to search all that data for suspicious activity. Say, a baccarat player who leaves his seat, disappears for a few minutes, and is replaced with another player who hits an impressive winning streak. An alert human might spot the collusion, but even better, video analytics might flag the scene for further review. The valuable trend in surveillance, Whiting says, is toward this data-driven analysis (even when much of the job still involves old-fashioned gumshoe work). "It's the data," he says, "And cameras now are data. So it's all data. It's just learning to understand that data is important."

One thing I wanted to see in this piece was some reflection on how casino level of surveillance, and the casino theory of justice (we spy on everyone to catch the guilty people) has become the new normal across the world.

Not in my house: how Vegas casinos wage a war on cheating [Jesse Hicks/The Verge]

(via Kottke)

Bitcoin casinos report large profits

Bitcoin-based casinos are reporting pretty serious, six-figure profits on a series of games wherein players' apopheniac tendencies cause them to hallucinate non-randomness in the performance of a pseudorandom-number generator. The casinos claim that their financial numbers can be trusted because of BitCoin's shared logfile, which can be parsed to show their earnings.

SatoshiDice, which has servers based in Ireland, is a pseudo-random number generator game where players choose a number and then bet on the likelihood that a “rolled number” is greater than the one they’ve selected. If the rolled number is greater, then they win. The house has a 1.9 percent edge—which is where the profit comes in.

The online dice game has returned profits to the tune of ฿33,310 ($596,231) during 2012—an average actual profit of ฿135.96 ($2,416) per day from May through December 2012. During that period, players put down a total of 2,349,882 bets. That’s still minuscule by Las Vegas standards, but respectable.

bitZino, by contrast, released its figures in early January and seems to be doing a decent pace of business too (bitZino's bookkeeping only measures June 9 to December 31, 2012). The online casino—hosted in the US, offering online poker, blackjack, craps, and roulette—did not publish a profit and loss statement. bitZino did say it had paid out ฿28,986 ($495,000)—and that 3.2 million wagers were made during H2 2012.

Bitcoin-based casino rakes in more than $500,000 profit in six months

Pokertox: freezing the face-muscles implicated in your poker tells


NYC's Dr Jack Berdy offers a botox treatment called "pokertox," which freezes parts of the face implicated in poker "tells" -- nonvolitional expression-changes that signal your opinion of your cards to your adversaries.

Some players look at their cards and ‘‘might raise their eyebrows or raise one eyebrow’’ if they do or don’t like what they see.

“Some squint, or furrow their brows,’’ Berdy said.

“We can inject Botox appropriately’’ so the other player doesn’t get the message that they’re angry, disappointed or happy.

“What someone sees across the table is no movement,’’ he said.

Remember the TSA's plan to turn mall-cops into mind-readers by teaching them to read semi-mythical "microexpressions" and so detect terrorists? Even if it worked, anyone wanting to foil it could presumably plump for some terror-tox injections and pass through the TSA look-into-my-eyes-and-swear-you're-not-a-jihadi checks smoothly and without batting an eyelash.

Botox poker face [NYPost/Rita Delfiner] (via Neatorama)

How a high roller took millions off three Atlantic City casinos without cheating


Mark Bowden's Atlantic article tells the story of Don Johnson, a high-rolling gambler who broke the bank at three Atlantic City casinos without card-counting or other "cheats."

Years ago, I was mildly obsessed with understanding casino economics and cheats, and read a bunch of books on how to win (or at least lose slowly) at a casino. The consensus among the experts I read was to realize that most skill-based casino games are only mildly "negative expectation" (that is, if you play them with perfect statistical strategy, you'll lose a little money over time). Also, most casinos distribute "comps" (freebies) to make up about forty percent of your estimated losses. These losses are calculated by pit bosses who keep an eye on consistent gamblers and observe the size of your normal bet and the tightness of your play, then make a guess at how much you're losing per hour, and multiply that by the number of hours you spend at the table (or at least, they did -- some casinos now use automated stored-value wagering cards that eliminate the need for estimation).

The secret to converting the negative expectation game to a positive expectation game was to trick the pit bosses. Play very slowly when the pit boss isn't watching, making the minimum bet on each hand and losing as slowly as possible. When the pit boss comes by to look, start playing fast and loose, and increase your bet-size. If the ruse works, the pit-boss will be tricked into comping you enough freebies to make your play pay, even if only by a little.

The problem with this method is that it means that you can get a "free holiday" in Vegas or Atlantic City only if you're willing to devote most of that holiday to standing at a blackjack table or video-poker machine playing hand after hand after hand, for eight or ten hours a day, playing with perfect, machine-like precision, making no mistakes at all (get the odds wrong and your profits can disappear in a single hand), in order to win a few nights in a hotel, show tickets, buffet passes, and some golf. Most people capable of that sort of consistent activity and focus can find gainful employment that pays substantially more than they'd earn at the tables and just buy the vacation outright, without having to squander their holidays trying to beat the house.

But Don Johnson went much further. As a high-roller, Johnson was often solicited by the big casinos to come and play at their tables. As the recession deepened, the offers got sweeter. They offered him "discounts" on his losses -- cash rebates of a fixed percentage of the money he lost at the tables. Johnson is also a monstrously focused, skilled blackjack player. So he would negotiate these excellent deals from the casinos, bring a huge stake with him, sit at a blackjack table, and play at high velocity, making zero mistakes, for extremely long stretches. With perfect, high-speed play, he could convert his small positive expectation -- thanks to the discount he'd negotiated with the house -- to multimillion-dollar winnings.

Sophisticated gamblers won’t play by the standard rules. They negotiate. Because the casino values high rollers more than the average customer, it is willing to lessen its edge for them. It does this primarily by offering discounts, or “loss rebates.” When a casino offers a discount of, say, 10 percent, that means if the player loses $100,000 at the blackjack table, he has to pay only $90,000. Beyond the usual high-roller perks, the casino might also sweeten the deal by staking the player a significant amount up front, offering thousands of dollars in free chips, just to get the ball rolling. But even in that scenario, Johnson won’t play. By his reckoning, a few thousand in free chips plus a standard 10 percent discount just means that the casino is going to end up with slightly less of the player’s money after a few hours of play. The player still loses.

But two years ago, Johnson says, the casinos started getting desperate. With their table-game revenues tanking and the number of whales diminishing, casino marketers began to compete more aggressively for the big spenders. After all, one high roller who has a bad night can determine whether a casino’s table games finish a month in the red or in the black. Inside the casinos, this heightened the natural tension between the marketers, who are always pushing to sweeten the discounts, and the gaming managers, who want to maximize the house’s statistical edge. But month after month of declining revenues strengthened the marketers’ position. By late 2010, the discounts at some of the strapped Atlantic City casinos began creeping upward, as high as 20 percent.

The Man Who Broke Atlantic City

(Image: A blackjack hand at the casino, a Creative Commons Attribution (2.0) image from Images_of_Money's photostream)

Christian card counters

In the NYT, Mary Pilon profiles a (now defunct) ring of Christian blackjack card-counters who lead Bible-study classes and youth groups when they're not scoring millions at the casinos. One such Christian counter, Colin Jones, has branched out into running for-pay card-counting workshops for would-be sharps. One of the team has produced a documentary on the team's activities, called Holy Rollers.

But first Jones and his group had to wrestle with the apparent moral paradox: Should Christians be counting cards?

“My father-in-law flipped out about it,” Jones said. “I remember Ben and I discussing everything. Are we being dishonest to the casinos? Is money an evil thing?”

Group members believed what they were doing was consistent with their faith because they felt they were taking money away from an evil enterprise. Further, they did not believe that counting cards was inherently a bad thing; rather, it was merely using math skills in a game of chance. They treated their winnings as income from a job and used it for all manner of expenses.

(via Super Punch)

Tim Powers's Last Call: a mind-altering journey into superstition, Vegas style

I just got through re-reading Tim Power’s World Fantasy Award-winning 1996 novel Last Call, which is truly one of the triumphs of modern fantasy literature.

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Diablo III delayed

Epic action-RPG Diablo III will not be released in February. Rumors persist that the game is finished, but Blizzard will not launch it unless the game's real-money auction house, where players may buy their way up the loot ladder, can go live on day 1. The problem: it's been ruled illegal gambling in South Korea, the home of Blizzard's hardest-core audience. Rob

Microcameras versus casinos

Microcameras really change the security landscape. Case in point: a casino-cheating gang used a microcamera to capture footage of a baccarat deck as it was being riffled during the player-cut, and then got cues from an off-site analyst who ran the video in slow motion to get the deck-order.
After a few hands, the cutter left the floor and entered a bathroom stall, where he most likely passed the camera to a confederate in an adjoining stall. The runner carried the camera to a gaming analyst in a nearby hotel room, where the analyst transferred the video to a computer, watching it in slow motion to determine the order of the cards. Not quite half an hour had passed since the cut. Baccarat play averages less than six cards a minute, so there were still at least 160 cards left to play through. Back at the table, other members of the gang were delaying the action, glancing at their cellphones and waiting for the analyst to send them the card order.

The gang had just walked away from Macau, the largest gambling city on Earth, with millions. They took $100,000 from the Bicycle casino in Los Angeles only weeks after the Las Vegas run. The Cutters’ scam did not require marking or switching cards, so casinos’ card scans and tracking software was irrelevant. Security consultants say that the gang numbers about 70. (With so many players, facial analytic software is easy to beat.)

Spy vs. Spy: Casinos Can't See The Cameras Hidden Up Gamblers' Sleeves (via Scheneir)

(Image: Baccara Palette, Wikimedia/Roland Scheicher -- public domain)