The ruffle of shuffled cards, the muted rumble of thrown dice, the dings of slot machines. The sounds of gambling are all over, with casinos found within a reasonable distance of many Americans and mega-resorts all around the world. With the rise in Internet gambling, those sounds now include the click of a mouse.
Those sounds are not popular with everyone, of course. Throughout history, there have been many attempts to close down gambling of all kinds. The recent move by Congress to try to suppress online gambling, affecting companies such as CryptoLogic
How do I know? Well, David G. Schwartz's book, Roll the Bones: The History of Gambling, describes many such attempts throughout history. All of them ultimately failed. What is ironic, though, is that while governments have sometimes cracked down on gambling, at other times they have been a silent partner, raking in a percentage of the profits. Consistency is not in the cards, so to speak.
The probability business
Schwartz's book also traces the rise of gambling as a business, leading to the existence of companies like Harrah's Entertainment
The mathematics of probability arose from the desire to solve a puzzle involving a game of chance -- how to equitably divide up the wagers for an interrupted gambling game. According to Schwartz, back in the 1600s, Pascal and Fermat, in a series of letters to each other, invented the mathematics of probability while answering that question. From this came the ability to calculate the odds of any game and to set a small, but consistent, house advantage that provides all of the profits for the big casino corporations.
Harrah's, founded by William Fisk Harrah, understands the concept of house advantage. By following his own philosophy of making the customer comfortable and letting the house advantage take care of the rest, Harrah built an empire.
Going back to the most ancient civilizations, Schwartz traces the roots of gambling to divination, or trying to determine what will happen in the future by the interpretation of various patterns. One popular device for this was a group of the "bones" of the book's title -- astragali, or hucklebones, the bone just above the heel. Some animals, such as sheep, have smooth enough hucklebones that throwing them gives a relatively random result. These, of course, evolved into today's dice.
Schwartz also traces the evolution of many different types of games and gaming devices. For instance, the 52-card deck common around the world evolved over centuries and had many forms, including round cards. Bridge, which has been a betting game, evolved from whist, which came from an Italian tarot game called trionfi. Lotteries appeared and disappeared, being used to fund governments or to move merchandise.
Don't get the idea that the evolution of gaming is over, though. Companies like ShuffleMaster
Gambling and governments
In addition to tracing the history and development of various games and devices and the rise of the modern casino industry, Schwartz also shows how gambling influenced governments, and vice versa, throughout history, something I alluded to earlier.
The legality of gambling has waxed and waned over the centuries, with governments profiting from it at times and suppressing it at other times. Homburg, in modern-day Germany, became a gambling mecca with the support of the local government, which profited hugely. At another time, Cromwell harshly suppressed gambling in England. The recent move by Congress is only the latest manifestation.
Odds and ends
Betting on animals has also been big throughout history. One popular sport, horse racing, almost disappeared in the U.S., though, because of the influence of crooked bet makers. Churchill Downs, operator of the Kentucky Derby, finally made it acceptable again in the States by implementing a fair means of determining the odds at the beginning of the 1900s, though it was not a public company back then.
As for many people's belief that investing in the stock market is the same as gambling, Schwartz does not touch upon it much. However, he does note that a "gambling fever" mentality could overtake investors, as happened in the tulip and South Seas bubbles.
Even though the history of gambling is a fascinating story, I feel the book itself has two drawbacks. First, at times the details seem overwhelming and one can begin to get lost among the interconnecting threads. Second, the focus is primarily upon Europe and the United States. Asia is mentioned on occasion -- it is credited with the invention of cards, for instance -- while Africa and South America are rarely mentioned. The focus is clearly on the western world, though this could be attributed to the source material available to the author.
The book itself is not an investing book per se. However, if you are considering an investment in companies such as Harrah's or Motley Fool Hidden Gems pick Ameristar Casinos
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Fool contributor Jim Mueller usually plays blackjack at the casinos he visits, though he has been known to dabble in craps and roulette. He owns shares of Ameristar and CryptoLogic, but no other company mentioned. The Fool's disclosure policy can be read without making a wager.