Thursday, June 5, 2014

Why You Should Play Credit Card Roulette, Even If You Don't "Gamble"

(Alternative Title: The Value Of Being Uncomfortable, Part 3)

Ultimate Poker's Director of Poker Operations, Scott Yeates, sits in the office next to mine. In the hallway outside of our office sits our Data Analysis Manager, a very bright guy named Justin. Scott has come back from lunch at the excellent Vegas burger joint, Holstein's, bragging that he won at credit card roulette and didn't have to pay for his lunch.

Despite being an occasional gambler/poker player himself, Justin inquires why we would ever just gamble for the bill. It doesn't make sense to him. Keep in mind that Justin's occupation is very math-oriented, and he understands long-run expectation as well as any poker pro. He just doesn't see the value in gambling for gambling's sake.

I explain, to be an effective gambler, you have to embrace the sting of defeat. It has to hurt a little. It shouldn't hurt so much that it seriously damages you, but constantly exposing yourself to small financial pain is beneficial, in exactly the same way that getting regular exercise makes your body healthy. Exercise is a stressor that makes you perform better the next time you exercise. Losing money is a stressor that makes you more emotionally prepared to lose money.

Of course, many people will respond to this line of reasoning with, "I don't gamble". But, as anyone reading this blog knows, everyone gambles. They gamble on buying (or not buying) insurance, buying (or not buying) a home, having (or not having) children, crossing (or not crossing) the street, asking Alice or Mary out on a date, or vacationing in Hawaii instead of Paris.

Since everyone gambles, everyone should be exposed to losing at gambling.

So, tell your non-gambling friends: CCR makes you a better person.

(Bonus content: Here's a CCR blog post from 2006, when it wasn't nearly as big a thing as it is now.)


  1. CCR makes perfect sense from a behavioral economic point of view. The "pain of paying" is non-linear. The additional pain you feel paying $10 instead of $0 is much higher than the increase in pain you feel for paying $20 rather than $10. To minimize the total pain of a group paying, you should randomly select one person to pay the whole bill. CCR does that in an equitable way.

  2. awesome post. more blogs. win bracelet. good luck.

  3. Except that CCR ruins my ordering patterns. It creates an externality.

  4. I'd say marriage is a pretty big gamble.

  5. Great post thanks for sharing this! I definitely agree Credit Card Roulette makes you a better person :) Gambling is present in our everyday life so your point is justified!

  6. Maybe CCR is good to get used to the pain of 'bad beats' since you stand to win more often than you lose. But what about the psychology of 'consumption' it fosters?

    If I know I get the meal/drinks for free if I win, and if I lose I never pay more than what it would have cost me for my own meal (but of course I pay for others as well) wouldn't the correct strategy be to spend/eat/drink as much as possible? Doesn't everyone else know this also? And what if I really would like desert, but do not want to be seen as 'that guy' ? Would I now 'not order' just to make sure I am not perceived as gaming the system?

    another downside might be the other guests who cannot afford to embrace the variance. I always wondered how y'all handled that during your expensive dinners with lots of guests? Is it typical for a number of diners to opt out?

    1. If you regularly go out with friends who try to "win" at CCR by overconsuming food and drink, then you should find a new social network.

      If you *are* that friend, then people will probably notice, and you will end up eating alone more frequently (efficient market).

      And yes, no one is obligated to play CCR when the variance is way out of range. It is perfectly reasonable to let people buy out when it is way over their hands (although Bill Chen would probably point out here that the variance of a typical CCR is smaller than most people think it is).

  7. FYP

    Since everyone gambles, everyone --- is already -- exposed to losing at gambling.

    the one below I cannot fix, it is inherently a contradiction from your own statement that 'everyone gambles',..

    "So, tell your non-gambling friends: CCR makes you a better person."

    But since everyone already 'gambles' according to your first statement, how is CCR the catalyst for becoming a better person?

    1. Well, everything is a matter of measurement, right?

      Technically, everyone exercises, even if it's just getting up from the couch to the fridge. But not everyone does 4x400 interval repeats.

      "CCR makes you a better person" obviously (or maybe not so obviously...) was somewhat tongue-in-cheek. What CCR does -- specifically what losing at CCR does -- is steel you against future bad beats. It also has the nice side benefit of getting non-gamblers to think about expectation a little more critically. We as poker players tend to insulate ourselves with other gamblers, but it's easy to forget that there are people who either don't understand EV at all, or do understand it intellectually but can't bring themselves to use it in their decision-making.