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This is the second Gold Rally win topping the million mark, bringing the total amount paid out to date by Gold Rally to more than $33 million.
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The game Gold Rally, is an incredibly popular progressive 8-line Wild West themed slot game which features two interactive bonus stages, has become one of the leading progressive games online today mostly as a result of its speedy replenishment rate and numerous multi-million dollar payouts. Since the game was launched it has paid out $33,793,743.58 million to numerous lucky jackpot winners.

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Well, we had our vote and it was a dead heat - equal between taking the gamble and taking the money (12 for, 12 against). Even after thinking it over, the vast majority opted to remain with their original choice. After thinking it over, only one person decide each way to change their vote (they canceled each other out). Seven stuck to their choice to gamble and four stayed with not gambling. Dr. Brown's students reportedly took the gamble. Only a "small percentage" opted not to gamble. Admittedly, these were college students who were taking his statistics course. Moreover, they were not using real money. Certainly, not their own money!

OK. The moment of truth. What did you choose to do - gamble or quit? Here's the mathematical analysis. First, you were given your $5000 stake. Whatever you ended up with after four plays, you were still going to walk away a winner. But you have a chance to earn more at twice the cost of taking a loss.

Let's look at the case where you lost four times in a row. You are down to $1000. If you lose for the fifth time, you still walk away with $500. However, if you guess right and double your money, then you have won $1000. Thus, the payoff on that final bet is $1000 to $500, or 2:1. The expected payout is always greater than whatever the player has after four plays. And you have created the opportunity to walk out with four times the amount of money that you are placing at risk.

Let's look at the opposite scenario. You have made $4000 and have a total of $9000. If you lose, would will still walk out with $4500. This is almost the amount of money that you were given to play with in the first place. Your bet here is $4500. If you win, however, you will win, again, twice what you are willing to risk. You could walk out with $18,000! These are tremendously favorable odds for a 50/50 game. This is not a simple 1:1 payoff in a 50/50 game. This is a 2:1 payoff for a 50/50 game. In both cases, you are guaranteed that you will never go broke; you will always retain some of your $5000 windfall.

Don't believe me? Let's look at Roulette. Here, you bet either red or black. You bet a dollar and you either win a dollar or you lose a dollar. This is a pure 1:1 payoff. The casino's advantage is that there are two green slots. Those two numbers gives the casino it's slightly better than 5% advantage. To be a pure or honest game, the payoff would have to be 20:18. Now you can see why I say that the optimal strategy, mathematically, would be to always take the fifth gamble at that tremendously favorable 2:1 payoff.

The refusal to take that fifth choice is a measure of your risk aversion. Whether you had had a previous losing streak or not should not have even come into the equation. The only things that might affect your final choice would be the number drawn on the fourth choice. Why do I say that? Let's start with the obvious. As Mark Wolfinger noted (good analysis Mark, Joshua, Tyro), if the fourth number was a 1, 2 or 38,39. Then, your chance of choosing correctly "higher" or "lower" is virtually 100%. But if you had picked out 19, 20 or 21, then you have only a 50/50 chance of choosing correctly, "higher" or "lower." Even then, your optimal strategy would be to gamble because, as I said, you would always walk out a "winner." The choices here never involve losing all your money.

The difficulty comes when people see the money that they are holding as "theirs" and that is when the pain of losing but still walking out a winner outweighs that tremendous 2:1 payout. As I've said before in this blog, empirically, that is what people do. They value a loss at twice or more than the value of a similarly sized win. They are saying that it would "hurt" to lose $500, or $4500, more than it would be pleasurable to win $1000 or $9000. And so, you see, we are back to Prospect Theory which says exactly that.

p.s. Judging from the poll numbers and the comments that I've received, it appears that many of you assessed the risk correctly. You did not rely on heuristics or first impressions and did not make any snap judgments. You actually thought it through. And, as I said, there is no right or wrong answer to this game scenario. It's all about establishing or quantifying your level of risk aversion. Considering the turmoil that we've seen in the markets recently, I would not have been surprised to have seen even more risk aversion than the poll reflects.

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Colorado Amendment 50 modifies the part of Colorado's state constitution that sets rules for gambling in Central City, Black Hawk and Cripple Creek (and thus could not have been accomplished through a statutory change), and earmarks increased state revenues, if any, for local governments that are home to casinos and to community colleges.

Many of the provisions of Amendment 50 are good:

* Increasing the betting limit from $5 to $100.
* Authorizing the games of Las Vegas-style roulette and craps in Colorado.
* 24/7 gambling for the first time in Colorado.
* Excluding gambling tax revenues from TABOR spending limits, but include them in the requirement that tax rate increases be approved by voters.
* Requires the industry to bear the burden of increased regulatory costs associate with its increased scope.
* Increases tax revenues from gambling due to increased gambling revenues.

The proposal isn't perfect (which is one of the reasons I generally don't favor law making by citizen initiative). The local governments involved probably make out a bit too richly in their share of increased gambling tax revenues. There is no meaningful mandate to keep some gambling taxes targeted at treating problem gamblers in the state in particular, as opposed to local impacts of gambling in general on the community. And, the choice of community colleges as a funding beneficiary is a poor fit, despite the fact that community colleges do need more money.

Still, overall, the monies from additional gambling taxes would reduce pressure on the state budget general fund, which is currently exceedingly tight, by making reasonable modest liberalizations in the scope of casino gambling in the state. So, in the end, I give Amendment 50 a weak thumbs up. Allow me to explain my reasoning in more detail.

The Conduct of Gambling

The whole point of gambling in Colorado is to have a mini-Las Vegas in Colorado and there is absolutely nothing wrong with that, indeed, it is ecologically sound because it reduces carbon emissions from Colorado residents who might otherwise make the long trip to Las Vegas to gamble.

Betting limits protect the casino, not the gambler, because betting limits make the impact of random chance on the percentage of wagers that go to the casino more reliable. Since the odds in any given game at a casino are always designed favor the house, the mathematically optimal approach to betting and coming out ahead by any given amount of money, is to bet as much as possible in as few bets as possible. Still, a $100 betting limit is still so small, that this impact is likely to be minimal.

Betting limits do little to discourage problem gambling, since the cap in on the amount to be spent in a given bet, not the amount to be spent by a given gambler. Also, limits on gambling of one type simply encourage gambling in some other manner. If one can't make big bets at the slots, one will buy lots of lottery instant winner games. Piecemeal approaches to stopping problem gambling are useless. Any industry level regulation of problem gambling needs to be comprehensive to work.

Even banning gambling all together wouldn't stop problem gambling. It is well established that illegal gambling thrives where it is illegal to gamble, with all the attendant criminality that comes with organized crime. The particularly troubling phenomena of problem gambling also appears to be linked more generally to personality and/or mental health traits that predispose a person to addictive behavior anyway. To the extent that problem gamblers would otherwise be doing drugs or becoming alcoholics, problem gambling may actually be a better vice.

Particularly in Colorado, where legal gambling discourages the development of a thriving illegal gambling industry, regulation of gambling is a more promising option, and the number of casino gambling options is small enough to make barring problem gamblers from casinos and other gambling venues a not entirely unworkable proposition. Certainly, nothing prohibits the state from enacting legislation to address problem gambling, like the development of list of persons prohibited from gambling, and developing treatment programs.

Local governments around the casinos should fund treatment programs, but probably won't to a sufficient degree. Funds to address problem gambling in the state should have been better mandated in the gambling tax revenue stream, but given benefits that gambling taxes have on general revenues in Colorado, spending some state general revenues on gambling treatment programs would still probably hurt general revenues less than the additional funding of community colleges would help a program traditionally funded from general revenues.

There is no reason under the sun that roulette and craps are any less desirable for any reason than slot machines, blackjack and poker. Why are roulette and craps any worse than various Colorado Lotto/Powerball games, or betting on horse and dog racing or bingo and raffles, all of which are also legal in Colorado? All gambling in Colorado is tightly regulated anyway.

There is nothing more moral about gambling during the day time or evening, than gambling between the hours of 2 a.m. and 8 a.m. in the morning. Indeed, forcing people out of bars at 2 a.m. in greater Denver, where violent closing time incidents are common, appears to impair public safety. There is no obvious good served by tossing people out of casinos at 2 a.m. in the morning, an hour at which they may be more likely than at other times to drive drunk, at the very least.

Also, like most vices, most negative impact from gambling is local. The biggest real downside to liberalized gambling under Amendment 50 in which the public has an interest is that longer hours may require police to increase staffing at night, and the additional funding provided to these governments is more than enough to address this concern. This is the genius of authorizing vices like gambling only in designated locations that ask to host them, as we have in Colorado, and as Las Vegas did. When negative impacts are balanced by enough positive public impacts, the places impacted welcome them and provide a forum where activity that is considered bad for the neighborhood, even if it doesn't directly hurt anyone else, can do business while keeping almost everyone happy.

In short, those complaining that Colorado Amendment 50 "would bring high-stakes, 24-hour Las Vegas style gambling to the State of Colorado" are mostly raising silly, indeed histrionic points of opposition. Allowing $100 bets is hardly high stakes gambling. In short, the opponents sound like a bunch of ninnies who think we need an ineffectual nanny state to protect us.

TABOR Implications

TABOR spending limitations are wrong in general, and including gambling taxes which are quiet cyclic in the equation simply makes unnecessary work for revenue estimators at the capitol, in the case of a tax that is a pittance compared to the state's overall revenues and can be easily controlled by people subject to the tax by gambling less.

Also, while the TABOR spending limits are dispensed with, the core of TABOR, which is that any tax increase must be approved by voters is retained.

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Every once in a while I come across one of these sites trying to sell a gambling book using testimonials. Amazing how they never include testimonials from the losing players, isnt it?
It reminds me of when I was young and my step-father used to take me and my kid brother to the dog track (back in the day before OTB created a ghosttown at the track.) While dad was pouring over the racing form trying to figure out how he was going to box his quinelas, my little brother was going around to high rollers and giving them his picks. With eight dogs in each race hed give a different dog to each high roller. Hes find a few dozen of these guys which guaranteed at least three winners per race. After the race hed look up the winners and always theyd give him a few dollars tip (sometimes a lot more.) Even the guys that lost would accept his next tip. Funny thing about gamblers is they remember the times they win but seem to forget when they lose. My kid brother had a reputation as a source for pretty good tips. Theres a stock market news letter scam that works in a similar way.
Anyway, the book offer Ive linked to above is about roulette. I like playing roulette but its one of the worst odds in a casino. My dad used to take me to Vegas on the weekends and Id play right along side him (at the age of 15 the casinos never carded me.) Im 49 now, but every once in a while Ill get to Vegas and play some roulette. Im also a programmer and have written and run simulations of various games plotting the results on a graph (with money on the vertical and time/bets on the horizontal axis.) The basic pattern is a downward slope punctuated with occasional upward spikes that often do not cross above the starting amount. To get the spikes to go over your starting amount you either have to increase your bets (which increases the downward slope curve) or play lower success rate, higher payoff bets (until there are none better.)
Casinos love it when you raise your bets because it means you go broke faster. They also limit your bets so its not possible to recover after a certain amount of bets. Otherwise, if you had unlimited cash, you could just keep doubling your bets until you hit. One thing I find amusing about roulette is that people (even most dealers of the game) dont realize that spreading your chips around has the exact same odds as putting them all on a single combination bet. There is no difference what-so-ever. I should clarify that. No difference in odds or payout; however, spreading different amounts on each bet can affect the shape of the graph in some ways (none that are very significant.)
Theres only one way to win in a casino and thats to stop playing when youre ahead. Wheres the fun in that? But even then, there is no guarantee that there will ever be a point in a session where you are actually ahead. So still you lose. So what if you are ahead and are about to make a big bet, that if you lose would put you behind? STOP PLAYING if you want to win.
Let me give an example. Recently I was in a poker game (Texas Holdem) and a guy bets $150. Right behind him a guy raises and its $300 to me. At that point I was up $200. So. If I stop playing, Im a winner. I shouldnt even look at my cards. I did and I have pocket aces. I lost. I came in third. In the two hours I played I had exceptionally good cards including pocket aces five times. Instead of leaving with an extra $200 I went home broke.

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