Antonio Lamanga, an Italian friend of mine, is writing a book about gambling. Antonio has some authority on the matter, having spent several years as a croupier.

As a matter of fact, Antonio is a TV croupier in an Italian gaming channel called WingaTV. I know him since I lead the product design and implementation of the technology solution enabling the gaming activity and also managed the compliance activity to secure the Italian gaming license.

I wasn’t surprised when I learned that Antonio is planning to write a book for the Italian audience: Gambling is an intriguing subject with lots of complexities, exaggerations, prejudices and superstitions, mathematics and design, randomness and determinism. Having spent over 7 years as a casino games and systems designer, I still don’t fully understand what drives people to stake their hard earned money on the wheel.

I have answered such questions many times before: in applying for licenses in various jurisdictions, going through due-diligence processes and pre-sale bids, writing hundreds of help pages for games and all kinds of new game proposals. This interview was the first time when the questions were asked from the player’s point of view. Now here is a little secret: gambling game designers are playing the games, even for real money on occasions, but we are not players. We take our gambling to other places, like the stock exchange, the startup scene, applying for bids where only one out of five will win, but casino games? OK, so maybe we are players after all.

Antonio conducted the Interview via email. This enabled us to take as much time as needed get the interview done, with full transcript and no unnecessary expenses. It took about a week to complete the interview with Antonio sending me a fresh batch of questions every day as a follow up from the previous email. At the end of the process, I was left with a correspondence of almost 8,000 words in my “sent items” folder, so I thought, well; why not use it for my blog? Actually, there is no indication if the interview is done, but for now, I decided to rewrite the correspondence and provide here a concise version:

Games and Random

Q:  Casino software use Random Number Generators to mimic the action of a physical casino machine. Does it have anything to do with the famous “house advantage”?

Nope. The famous house advantage is built-in to the game design rather than to the call for random number:

  • The European roulette has 37 numbers, one is green (0), 18 are red and 18 are black.
  • Let’s say you place a bet of $1 on a single number. If you win, you win, you will get $36 – your $1 bet plus the $35 win. But if the game was “fair”, you would have gotten $37, because the probability of one number winning is 1/37. This is like income tax: the house is taking 2.7% from your win, which makes the “house advantage”.
  • Now let’s say that you want to minimise your risk, by placing a bet on a colour. Let’s say Red. You stand a 50/50 chance, right? Wrong! You stand a 48.6% chance, because the number that comes out can be either red, black or green (2.7% chance of that)
  • Now say you want to make sure you get your money back – a “risk-free” bet. So you put $1 on Red and $1 on Black. Most probably (97.3% certain) you will win $2 at the end of the spin: you put 2, you got 2 back. This is great, but statistically, one every 37 spins, you will get a green, so that the $2 are lost. If you play like this, you are making sure that you lose exactly according to the prediction. Is there anyone who plays like this? Yes: bonus hustlers. These are people who get a bonus, and they know that it becomes real money only after you play 20 times the value of the bonus. If you get a $1000 bonus, you want to play it safe over a lot of spins, until you lose $540. Then you can withdraw $460 in real cash and go get an iPhone or something. This is why the casino rules usually make it difficult for such players by raising the requirements to 40 times the value of the bonus, or completely taking roulette off the gambling requirements for bonus redemption.

So – the house always wins (2.7% in roulette, 4% in slots, 25% in keno, 0.6% in blackjack and so on…) – There is no need to use the RNG for revenue control…

Q: Is it fair to say that by the built-in house advantage of the roulette, any player will eventually lose over their lifetime? Can someone actually come out a winner of the roulette over a long “career” as a player?

 

A: The answer is yes to the first question and yes to the second question as well:

Look at the casino as one entity, “the house”, and look at the entire body of players as another single entity “the punter”.

Now, the house runs each month millions and millions of spins in as many roulette games that occur. Consider these games as one type of game.

At the end of the month, after the punter has bet millions of millions of Euros on the game, the punter gets back the 97.3 Euro Cents for each 1 Euro that was placed, and the house gets the remainder 2.7 cents per Euro.

Thus, the punter has less money at the end of the month than what he had at the beginning of the month.

Now let’s breakdown the punter into individual players: at the end of the month there will possibly be many people who have not lost and not gained anything. There will be people who have won many bets and lost very little, so the overall balance will be in their favour – they are winners. But the majority of the players did loose. Some lost big, most lost very little. The house doesn’t care: the more people to come and bet, the more money spent – the house will keep the same percent earning.

Think of lottery: let’s say 10 million people buy lottery ticket. One of them will win, but the rest, 9,999,999 people, will lose the price of the ticket.

From the point of view of the house, they accepted money from 10 million tickets, and returned a certain percent of it to the players (actually, in the lottery, the calculation of the prize is done based on the number of tickets sold for the previous draw, but I am simplifying the model for the sake of the explanation).

 

Q: What is the difference between slot machines, poker rooms, blackjack, video poker and roulette software?

 

A: As explained above, the difference in terms of RNG is in the way these games are calling the RNG: in every game the range is different (keno asks for 20 random numbers from 1 to 80, Blackjack asks for a random number from a range that changes in every turn, and so is the case with poker).

Games where the RNG call is asking for a random number or array of numbers from a fixed range are called Fixed Odds games (roulette, keno, slots).

In these games, you can know that with a large number of games played (hundreds of thousands of games at least), the players will statistically lose a fixed percentage of the bet (in European roulette it will be 2.7%, which means that the player will get back 97.3 cents for every 1 Euro bet).

Games where the RNG call is asking for a random number or array of numbers from a range that changes with every turn are called Variable Odds games (Blackjack, Poker).

In these games, the players have to reconsider their action in every turn, so that the game depends on a strategy (both the dealer and the player have a strategy).

Watch this video, showing Kevin Spacey explain the Monty Hall problem.

Q: Can a player use strategy to play better? Do any of those “roulette systems” help players in securing a victory?

 

A: If you remember my previous explanation about variable odds vs. fixed odds, you would know that there is a reason to use strategy in variable odds games and not in fixed odds games.

In blackjack, for example, there are stupid strategies that are too risky, so that you may lose more than you should. But if you play a smart strategy, you will not lose so much and maybe win from time to time.

Roulette is a fixed odds game and each spin is new. Strategies are helpless against something so random, but you can minimize your risk on the table: If you place a single number bet, your chance is 1/37 to win, but if you place on Red, you stand a better chance of almost ½ (actually it is more like 1/1.973, or 48.65%). Now, if you were trapped by Machiavelli, and he would have you place a bet on the roulette: if you lose, they chop your head off but if you win you can live. What would you bet? I would go for the even odds bet rather than the straight and risky bet.

However, there is no real way to strategize over several spins. The so called “betting systems” are useless: they try to guess a condition from one spin to the next where there is no such condition. The only smart thing that you can do is if you do win some money, keep some of it and bet on the rest, so that you don’t lose everything. At least not at once…

Q: How do Random Number Generators work and in which games are they used?

 

A: Random Number Generators are software components that reside outside the game engine and the only function they fulfil is to bring a number or a series of numbers according to request.

Let’s look at European roulette:

There are 37 numbers on the wheel.

If the game is a software only game (without a real roulette machine), the game accepts bets until it is time to spin the wheel:

In standalone roulette game, the player clicks on the “spin” button and triggers the action.

In multiplayer roulette, there is a countdown and at the end of it, the game closes and the wheel starts to “spin” (remember, this is not a real wheel, so the spin is either an animation or video).

The game server sends a request to the RNG, saying “please send me a number between 0 to 36”. In response (milliseconds), the RNG generates a number and sends it.

In which games they are used? In almost every game. In Blackjack, the RNG gets a much more complicated request, because there might be 8 decks of cards, which means that you have 8*4 of each card (32 queens, 32, kings etcetera). Now, with every card being dealt in the game (does not matter if the card is hidden or shown), the RNG has less of that card to draw. This way, it works exactly like the real casino game.

But the change is not in the RNG: every game engine has a module that calls to the RNG with a request. The RNG is mainly stupid: ask for a number of any number range and you will get it. RNG works for slots, keno, bingo, poker, table games, card games. Almost everything.

What games do not use RNG?

  • Live roulette – meaning that the roulette is a live physical machine, like the one you have in your studio, This is a balanced piece of well designed machinery that lets the ball drop in any place at random.
  • Live card games – there is a real card shoe with shuffled decks of cards in it. The dealer takes a card at a time. usually, when the card shoe gets half empty, the shoe is replaced because the remaining cards will be known to card counters and the range for random draw will be limited.
  • Sports betting – including all event betting, such as elections, song contests and reality shows – this is determined by the real live events which are as random as can be.

 

Posted by Samuel Miller

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