Win limits and gambling outcomes

Casinos make their money because they pay “casino odds” on bets, rather than the true odds. That is, the casino keeps all the money placed on losing bets, and pays less than the true odds on customers’ winning bets. The law of large numbers ensures that casinos will make a profit on casino games in the long run. In this paper we examine what we believe to be an aspect of the typical patron’s behavior that enhances the casino’s ability to make money. Psychologists and even the casino industry have emphasized the need for casino patrons to impose loss limits on themselves. This helps to prevent people from losing more than they can afford and may help prevent disordered gambling behavior. But loss limits also make it more likely that patrons leave a casino when they are losing. Oddly, the literature does not mention “win limits,” whereby gamblers leave the casino upon winning a certain amount. We anticipate that a self-imposed win limit will reduce the gamblers’ losses, and thus also reducing the casino’s profit. We test the effect of a self-imposed win limit by running simulations where the treatment group of players has self-imposed and self-enforced win and loss limits, while the control group has a self-imposed loss limit or no limit. We find that the results conform to our expectations that the win limit will lead to improved player performance and reduced casino winnings. Additional research is needed, however, to determine whether win limits could be a useful component of a responsible gambling strategy.