The House always wins …

Here’s a puzzle: Why do people gamble in casinos, especially if (as our old friend Freddie Torres would like to say when talking about lawsuits against the government) “the House always wins”? By way of example, check out this report by Chris Opfer about blackjack payouts in Las Vegas. Pay close attention to this part of Mr Opfer’s report:

But like skinning a cat, frying a fish, or badgering a cocktail waitress, there are several ways to squeeze more cash out of the gambling masses. One is to simply change the rules … In March, the Venetian and Palazzo casinos changed the payouts on blackjack hands from three-to-two to six-to-five. That might not seem like a big difference to casual observers, but experts say the change significantly increases the casinos’ house edge …

[One way to win at the game of blackjack] is by making a “blackjack” or “natural 21,” that is, drawing an ace paired with a king, queen, jack, or 10 in your first two cards. A player who beats the dealer usually get paid at a one-to-one rate. Bet $10, win $10. Getting a blackjack is a less frequent occurrence, and one that’s a bit more lucrative. Until recently, it was standard for casinos to pay out blackjacks at a three-to-two rate, meaning that a $10 blackjack hand pays the winner $15. At the Venetian and Palazzo, the same hand now pays $12.

“It’s like a hidden tax that you’re being charged by the casinos,” Henry Tamburin, a gambler, gaming instructor, and author of Blackjack: Take the Money and Run, says of the payout change. “Most people don’t realize that.” Tamburin says a player can expect to hit a blackjack about once every 21 hands. At an average of 80 hands an hour, that translates to the house snatching an extra $12 out of players’ hands every 60 minutes. Spread that over every player at every table at a casino and you can see why pit bosses might go all in on six-to-five.

In other words, “the House” not only decides which games to play; it can also literally change the rules of the game in the middle of the game! Notice, moreover, that this observation is true not only of casinos in Las Vegas but also of the game we call law. That is, ordinarily, a simple majority vote in Congress or in the Supreme Court suffices to change the rules of the law game. For example, Congress has the power to change the rules of the copyright game, while the Supreme Court has the ex post (and self-declared) power to review any changes made by Congress. But is majority rule consistent with the ideal of the “rule of law,” especially in the case of unelected and unaccountable Supreme Court judges? We don’t think so. In fact, if we could amend or re-design Article III of the U.S. Constitution (which, by the way, makes no mention of the power of “judicial review”), we would seriously consider imposing a two-thirds “super-majority” voting rule on the Supreme Court to limit the judiciary’s power to change the rules of the game. (Our modest rule-change proposal, though, is not without irony.)

Warning: the House always wins.

About F. E. Guerra-Pujol

When I’m not blogging, I am a business law professor at the University of Central Florida.
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