Harvard study On Gambling
Top US business newspaper re-examines Bwin's Harvard study stats to show how to stay ahead. Bwin's historic collaboration with a Harvard Medical School study on addictive gambling some years ago surfaced again over the weekend in a lengthy Wall Street Journal article focused on the odds of players winning at casinos.
The Journal used the detailed player behavior stats of 4,222 Internet gamblers which are in the public domain after being supplied to the Harvard researchers, concluding that the best way for gamblers to win at games of chance is to get lucky and then stop gambling.
Although the online Bwin gambler profile differed in some ways from those typically found in a U.S. casino, their win and loss patterns should be roughly similar because the games are similar, Robert Hannum, a University of Denver specialist in gambling mathematics, told the Journal.
To make sure, the Journal asked Puneet Manchanda of the University of Michigan and Hee Mok Park of the University of Connecticut to analyze a private gambling database to which they have access, detailing two years of play by 18,000 holders of loyalty cards at a Native American casino in the northwestern U.S.
The two academics found similar patterns: Only 13.5 percent of gamblers ended up winning, versus 11 percent among Bwin customers, and the ratios of big losers to big winners were similarly large. They also found that 9.3 percent of the gamblers at the Native American casino produced 80 percent of the group's revenue.
The article notes some casinos get 90 percent of their revenue from 10 percent of their players, and that casinos generally “…gather vast quantities of data about their customers for marketing purposes, including win and loss tallies for many regulars, [but] keep such information a closely-guarded secret.”
The piece goes on to quote the Bwin online gambling stats to show that gamblers won money on 30 percent of the days they wagered, but continuing to gamble is a bad bet as just 11 percent of players ended up in the black over an extended period, and most of those pocketed less than $150.
The top ten percent of gamblers – categorized as those with the biggest wagering spend over the two years of the Bwin study – fared poorly. 95 percent ended up losing money, some dropping tens of thousands of dollars. And the big losers of more than $5,000 among these heavy gamblers outnumbered big winners by 128 to 1.
The Bwin stats come from the anonymous records of 4,222 Internet gamblers who wagered on at least four days on casino-style games of chance such as blackjack, roulette and slots. They played between 2005 and 2007 on websites run by the European gambling group. Bwin told the WSJ that there's no reason to believe a more current sample of customers would show significant differences.
Of the 4,222 casino customers detailed in the Bwin stats, just 2.8 percent – or 119 big losers – provided half of the casino's take, and 10.7 percent provided 80 percent of the take, the WSJ article claims, commenting that this may be an indication of how revenue is concentrated in land casinos.
Approached by the Journal, US casino marketing specialist Andrew Klebanow said the Bwin results are in line with his own estimates, based on confidential casino data that many U.S. casinos get about 90 percent of their revenue from 10 percent of customers.
Jim Kilby, a former professor and author of casino management books, said that most gamblers are aware that the house has an edge, but do not understand the math of the multiplier effect.
“Casino games are nibbling machines, and the more nibbles you have, the bigger your losses,” he explained.
Illustrating the effect, the Journal quotes Bwin stats showing that the lightest gamblers – the 10 percent of customers who placed the fewest wagers over the two years of the Harvard study – also had the highest winning percentage. About 17 percent of them ended up in the black – significantly better than the 5.4 percent winning percentage of the heaviest gamblers.
Among the whole group covered by the Bwin 4,222-player stats, just seven won more than $5,000 over the two years, while 217 lost more than $5,000…a 31-1 ratio of big losers to big winners. The Wall Street Journal piece acknowledges that poker produces different results, mainly because it is at least partly a game of skill.
In stats from a distinct poker database, about one-third of poker players classified as “most involved” by the Harvard researchers ended up winning money over time, while just 10 percent of the rest ended up in the black.
Joachim Haeusler, Bwin's responsible gaming manager, told the Journal that his company provides entertainment and people shouldn't gamble “based on the idea to get rich, because they won't.”
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