Thursday, September 10, 2015

How 4,000 Physicists Gave a Vegas Casino its Worst Week Ever

What happens when several thousand distinguished physicists, researchers, and students descend on the nation’s gambling capital for a conference? The answer is "a bad week for the casino"—but you'd never guess why.

The year was 1986, and the American Physical Society’s annual April meeting was slated to be held in San Diego. But when scheduling conflicts caused the hotel arrangements to fall through just a few months before, the conference's organizers were left scrambling to find an alternative destination that could accommodate the crowd—and ended up settling on Las Vegas's MGM grand.

Clocking in at 5,124 rooms, the Grand is the largest standalone hotel in the US—making it a convenient landing place for such a big and unexpectedly uprooted conference. It's worth noting that the Grand didn't exist in its current form until the early '90s, but the MGM Marina—which stood in the same place—was colloquially known as the Grand.
Image Credit: Casino Archives
It was an unmitigated disaster for the Grand. Financially, it was the worst week they’d ever had. After the conference was over, APS was politely asked never to return—not just by the MGM Grand, but by the entire city of Las Vegas.

Everyone knows that it's a near-impossibility to beat a casino's odds on a large scale. Lucky individuals' wins are always subsidized by the unlucky masses, and everyone's luck runs out eventually. So what happened? Maybe you’ve seen 21, and you’re picturing teams of sleek geeks using elaborate signaling systems and network analysis to gain a statistical edge over the house in blackjack. That’s been done in real life, but it wasn’t what happened at this meeting.

When I first heard this story (it's practically office folklore at APS), I immediately remembered a documentary I’d seen a while back, where some science-minded gamblers proved that a roulette wheel could reliably be beaten with a timer and a pocket computer...but guess again—they didn’t play roulette, either.

Some physicists have a knack for poker—the quick analytical thinking that lends itself to success in the classroom can translate well to a competitive card game: a Dutch theoretician took home a gold bracelet in the 2010 World Series of Poker. Did a group of the April '86 attendees somehow devise an optimized betting strategy, analyzing risks and payoffs, assigning weights, hedging their bets to come out in the black? Still no—or at least not en masse.

Instead, it turns out that the physicists found the one move guaranteed to provide an edge when the odds are stacked against you: You just don’t play.

See, usually when an organization announces that it's holding a big conference in a certain region, it triggers a bidding war among that area's hotels, and each tries to undersell the others and secure the group's contract to fill up as many rooms as possible. This goes double in a gambling destination like Las Vegas, where hotels have casinos built-in; the Grand doesn't just collect on room charges, it also gets a good portion of however much each guest was planning on taking to the tables. This is so central to the business model of casino hotels that they'll often give rates much lower than what a non-casino hotel could afford to offer, under the assumption that they'll recoup at the tables—it's the same reason you can often find free alcohol and startlingly nice food at all-you-can-eat casino buffets.

So were these physicists just too busy sharing their science, seeing presentations and posters, and catching up on homework to find time for the tables? That's one possibility. The fact that a significant portion of the attendees were broke graduate students probably didn't help matters. On top of that, all the attendees had to have known enough about probability and statistics to recognize the "Monte Carlo* fallacy" at work: When a roulette wheel comes up black ten times in a row, it doesn't make the ball any more or less likely to land in a red slot the next time.

Whatever the case may have been, the week of the '86 APS April meeting found the gaming floor almost completely empty, leaving the casino with its record-low take; in the (probably apocryphal) words of one casino waitress: "They each brought one shirt and a ten-dollar bill, and changed neither."

By staying at a gambling hotel but obstinately refusing to gamble, everyone who booked their reservation with the group effectively had their stay subsidized by guests who were lured in by the chances of a big win—which is probably why Las Vegas hotels never bid on APS conference contracts anymore. The MGM Grand learned a lesson the hard way that week: Physicists do not play dice.

—Stephen Skolnick

*The "Monte Carlo method" a sort of large-scale statistical guess-and-check technique, derives its name from the same casino that gave the Monte Carlo fallacy—better known as the Gambler's Fallacy—its name. Back in the early 1900s, a roulette wheel landed on black 26 times in a row, the odds of which are something like one in 67 million. With each successive spin, people bet larger and larger sums on the assumption that it HAD to come up red, some losing millions in the process.

22 comments:

  1. Hee hee! Well done! Take that, Vegas!

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  2. Next time, come to El Paso, TX. We've got good rates and good food and no one expects you to gamble. :)

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    1. Yeah, but then you have to be in Texas.

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    2. Nothing wrong with Texas. You like good food?

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    3. There nothing wrong with Texas that the removal of low-IQ Republicans and bigoted religion wouldn't fix.

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    4. Yep! Loving Houstonion here, and that is the truth. We have all the bigots here.... you can tell by the recent primary elections... they are still going strong... I am depressed. Republicans are keeping Cruz, Abbot and Patrick. All top-notch racists.

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  3. 'optimized betting strategy' - no, they don't use it

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    1. Actually, they did use an optimized betting strategy, one guaranteed not to lose: Don't bet in the first place.

      It's the Joshua Strategy: the only winning move is not to play.

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    2. Is that a reference to the Wargames movie?

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  4. This is a very stereotypical view of Las Vegas, it’s hotels and thinking that’s how they operate!

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    1. And yet, largely accurate. Even more so in the '80s before all the shows started becoming big attractions in their own right.

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  5. There were two MGM casinos in 1986 (not concurrently). The first became Bally's, and the MGM name was moved to the Marina Hotel (becoming the Marina-MGM). Not knowing precisely when the name changes occurred in 1986, I can't say which location hosted the APS conference, but it is most assuredly not the MGM Grand as pictured. The green monstrosity did not open its doors until 1993.

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    1. This is true. It was probably the original MGM Grand which is now Bally's. I was one of the original team members that opened the NEW MGM Grand in December 1993. And this meeting was actually in May of 1988.
      http://www.the-aps.org/mm/Conferences/APS-Conferences/Past-APS-Conferences
      But as a casino employee for 38 years, the premise is true. Some conventions bring in tons of people who DON'T gamble.

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    2. The above the The-aps.org is for PHYSIOLOGICAL society NOT PHYSCICAL :)

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  6. Hihihi, saw that coming the moment I read the tittle: had a similar experience/stance at one of the casino hotels on the strip. My partner, however, spent enough time or funds at the tables to get a complimentary one week stay ��

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  7. The week of the 1986 APS Annual Meeting was the worst take ever, according to the Las Vegas Sun. https://www.rollcall.com/news/lubell_reject_travel_rules_that_stifle_science-219305-1.html

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  8. Bing bang theory cast was there??

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  9. No bytehow, Galecki hadn't even been in the show Roseanne by then.

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  10. I have a degree in physics. I went to LV 20 years ago and I hardly gambled at all. I guess I fit the stereotype. I also never play the lottery.

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  11. There is a way around the Monte Carlo method. This works when betting red or black. Each time you loose, you triple your bet the next time. Eventually when you win, you get more money than you bet in the previous losses. Of course, this is why there is usually a limit at the table.

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    1. Guaranteed to win...if you have infinite money! Start with $10, and you've got 7 spins before you're out $11,000 and way over most tables' outside limits.
      The probability of your color not coming up in 7 spins is something just under 1/128, but the thing you need to consider is that, with this method, a win only gets you back your previous losses plus twice your initial bet. So you're potentially wagering $11k on 1:128 odds...for a twenty dollar payout. Put that way, does it sound worth it?

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  12. the MGM Grand opened in 1993. must have been a different hotel/casino.

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