New casino strategies
It might seem that online casinos UK are a great place to earn extra income. After all, with a bit of luck, you can multiply the “invested” money. Except that almost all forms of gambling have mechanisms built in that prevent you from winning regularly. And where it is possible, it takes a lot of skill and a few dozen naïve people who are only cash providers for a few stagers.
Some politicians would like us to believe that investing is not that different from roulette. You put your money on some number (company), and it brings above-average profits or losses. The risk can be limited by diversifying, i.e. betting on several companies or numbers.
Positive, negative and zero-sum games
Game theory is a relatively new, fascinating branch of mathematics that stems from research into gambling. I do not have space for a detailed lecture on it (although I encourage readers to search for them on their own), so I will necessarily shorten and simplify some things.
According to this theory, any situation of conflict and cooperation between intelligent beings making rational decisions is a game. The effect of the game is the payout that each participant receives (it can be zero). The payout does not have to be in cash, but game theory seeks to present it in numerical form. A famous classic introductory task to game theory is the prisoner’s dilemma.
We can divide the games with positive, negative and zero sums. In a positive-sum game, the sum of the players’ payouts is greater than zero. In a zero-sum game, it is zero. In a negative-sum game, it is less than zero.
We can also put it differently. In a positive-sum game, players get more back than they put into the system. In a zero-sum game, they get back what they paid, but only that. In a negative-sum game, they get less, but beware – this does not mean that the split is fair. Only the sum of the payouts counts.
A zero-sum game
An example of a zero-sum game is a bet of two colleagues who will win the Champions League final (or the winner of an android casino game). They both throw £10 into the pool, the winner takes £20. One player’s win is equal to the other player’s loss. One earned £10, the other lost £10. Someone has to lose so that someone can earn the same.
A positive-sum game
For example, an online mobile casino in business can be a positive-sum game. Partners invest in the company, but everyone makes money from it, so in the end, the sum of the payouts is positive. This does not mean that everyone will make money on a positive-sum game. You can imagine a situation when two partners earn £10,000 each, and one loses £15,000 – for example as a result of a partnership agreement that is unfavourable to him. However, the sum of the payouts is still positive (£5,000).
Stock market investment is also such a game. The inflow of money from outside the system in the form of dividends, purchase of own shares and other rights resulting from the shares held causes that in the long run players take more from the system than they put into it.
A negative-sum game
Of course, in the event of an economic catastrophe and mass bankruptcies, the stock exchange may begin to turn into a negative-sum game, i.e. a game in which the sum of payments to participants is less than zero. In the financial world, the classic negative-sum game is futures or Forex. It seems like a classic zero-sum game. If I earn £1,000 on contracts, someone else who has bet on the opposite position must lose £1,000 However, we come to the heart of the matter here, which is the stock exchange (broker). Its commission causes the players to get less from the system than they put in because some of this contribution ‘melts’ into a commission.