The Reckless Pursuit of Risk | A Game of Loss

The world’s earliest mathematicians of probability theory appeared when humans started to think carefully and critically about games of chance. The first forebears of probability theory sought to discern the sensible mathematical principles that underpinned the unquantifiable mass of superstitions and rough estimations that had been–and perhaps even continue to be–the human race’s methods for dealing with chance events and encounters.

Games of chance have been a part of Chinese history since the Xia dynasty (2000-1500 B.C.). While Chinese governments across ages often imposed strict rules against them with heavy penalties which included canning, jail time and even exile–it is believed that the law enforcers themselves were the ones who gambled the most.

After six years of studies and surveys, Desmond Lam, a marketing professor at the University of Macau, came to the conclusion that each gambling table is a microscopic battle: a standoff between science and faith. On one side is the casino, which can reliably calculate its advantage to two decimal points. On the other, is a collection of beliefs about fate and superstition.

Are there those who walk among us who willingly and vicariously walk into a bad situation?

To answer this question, I would like to begin with a highly unlikely hypothesis. Imagine you have two options and only two options. They are: fortune and misfortune. The probability of either occurring is 0.5. But first, you need to enter the game. The pendulum can swing either way. And with each swing of the pendulum, the probability shifts in one direction. Once the pendulum has shifted in one direction numerous times, then that becomes the more likely probability.

You may have started with a 0.5 probability of fortune. Three pendulum swings later, you had one case of fortune and two cases of misfortune. Ten pendulum swings later, you have two cases of fortune and eight cases of misfortune.

From a purely mathematical perspective, the likelihood of misfortune is growing bigger and bigger–and yet, the likelihood of a gambler staying in the game grows bigger. Not only have you walked into a bad situation, you have decided to stay there–much to your own detriment.

When we compare investing to gambling–both of which require the individual to take on considerable risks–we realise that investors are prepared for a certain level of bad debt and sunk costs.

But when the game itself is the pursuit of risk–as is the case with gambling–there is no chance of winning over the long haul as for every risk taken; there is another corresponding bigger risk that has to be taken to cushion the first risk. Over time, the risk that needs to be undertaken for a reward grows exponentially bigger and bigger.

Gambling is, in essence, playing with the God of Mathematical Probabilities. If such a God exists, and I’m not saying it does not, but from my view the probability is highly unlikely—then this is a God that has never been in your favour when it comes to the gamble you are taking with your life.

At the heart of what flips the odds in a gambler’s favour is the act of cheating. From the people who set up the game, to the people who play it–they are all looking to cheat. And cheat, they will–till they get caught in quicksand. The game is not only rigged in favour of the people who created it; but also in the favour of those who can manipulate an already very inequitable and irrational game to their advantage.

There is no doubt in my mind that gamblers do not play to win. They are playing to lose. Why do they want to lose? Why are they willing to stake everything they have on a game where the probability of loss is so high?

The answer, in my opinion, does not require academic research, extensive interviews or even complex equations.

Gamblers are absolutely unafraid to lose.


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