Red Queen Alert – What casinos can learn from war

In biology, the Red Queen hypothesis is that predators and prey are in constant competition that leads to a period of inactivity, as each adaptation by one is countered by an adaptation by the other. Your casino might be in a “period of inactivity” but make sure you have a large red queen card mounted on your wall as a reminder that you are the prey!

Lewis Fry Richardson, a British scientist spent 7 years gathering data on wars. The Economist reports that amongst his interesting findings was that “the link between the severity and frequency of conflicts follows a smooth curve, known as a power law. One consequence is that extreme events such as the world wars do not appear to be anomalies. They are simply what should be expected to occur occasionally, given the frequency with which conflicts takes place.” Neil Johnson of the University of Miami has shown that Richardson’s power law also applies to attacks by terrorists and insurgents. They and others have broadened Richardson’s scope of inquiry to include the timing of attack, as well as the severity. This has prepared the grounds for a new paper currently under review, which outlines a method for forecasting the evolution of conflicts.

Gamblers come to casinos to win and when they don’t, internal conflict takes place and the power law kicks in. Some turn into predators and over the years these predators have become smart e.g. A player has been coming into a casino, 3 days a week for 2 years playing baccarat and has won over $1 million. According to the player rating system he only averages $700 a hand. Theoretically he should have lost heaps. He’s been flying under the radar because his average bet is not that high, but one day a pit manager happens to take a closer look at his “lifetime” win loss and his jaw drops when he sees he’s up so much.

Willy Allison at the recent World Game Protection conference reminded us that “it’s all about the maths”. Are you doing the maths on your data?

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