Monday, May 7, 2018

Games of Skill and Chance

In the town of Wadesboro, where my economic development practice is located, a couple of new "adult arcades" have opened along the US 74 strip. It seems as though every few years the proprietors of these businesses find some loophole in the law that they can exploit until the state legislature figures out a way to close it. In the early 2000's it was video poker, which was originally categorized as a game of skill and, hence, not considered gambling. Then it was Internet sweepstakes, which originally fell under online privacy protections. The current iterations of these casino-lites are back to the "game of skill" angle.

Anson County is not alone in this current gaming boom. Multiple locations have popped up all over the Charlotte region, including Albemarle and Monroe. I am not certain about the types of games offered at places such as Hot Spot or Skill Fish, but an article about an Albemarle location mentions "shooting games." What is fairly obvious is they cannot actually be games of skill. A game truly dependent on a skill would mean that once that skill was acquired, one would be able to beat the machine on a regular basis.

Think about Asteroids, a game I occasionally played at the arcade back in the early 80's. The idea of the game was to navigate a tiny triangular ship between asteroids while blasting them with your laser and avoiding alien spaceships. I was never very good at it -- I might have been able to make a quarter last for 10 minutes, tops -- but I had buddies who turned that very specific and arcane skillset into an hour of play on two-bits. Yes, they had invested many quarters into developing those skills, but after a few hours of "practice," they were essentially able to play for free.

Clearly, that could never be possible in an environment where the "house" must pay out money for success. The business model for casinos is based on the predictable failure rate of random chance; if you roll dice an infinite number of times, certain number combinations will appear in predictable ways. There is, for instance, only one way to roll a 2 or a 12, while there are multiple ways to roll a 7.   Or, more graphically, imagine a roulette wheel. You can bet individual numbers, but you can also bet red or black. In doing so, you have slightly less than a 50% chance of winning, because there is one green "house" number. If an individual player plays red or black long enough they will eventually revert to the mean, which is to say they will not quite break even. The house, however, will always come out ahead in the long run.

For suburban homesteaders, that begs the question, "is what we do a game of skill or chance?" Certainly there is skill involved in knowing what crops to plant when to plant them and how to properly care for them, but ultimately does any of that make a difference if it doesn't rain, or rains too much, or if there is an unusually late frost? Is what we do more like Asteroids, where acquired skills all but guarantee success, or is it more like roulette, where eventually everything reverts to the mean?

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