Casinos as a Business Model

Applied Satisologie: Casinos, Social Networks, and Insurance Companies.

On the Odds

Casinos,
Insurance Companies, and
Social Networks powered by advertising
all have something in common:
they operate on the odds.

Casinos

Casinos sell an unfair (worse than even) chance to win a prize. With iterated attempts, the odds are “forever in their favor.” The house does not always win, unless you play infinite times, then the house is winning 51% plus.

Insurance Companies

Insurance Companies play a similar game, based on the observation that a promise is a sellable good, and with enough statistics about various events occurring and their likelihoods, one can sell an unfair (worse than even) chance to retrieve the value of the promise.

Social Networks

Social Networks powered by advertising actually have two clients with two different products: the lure, the atmospheric access, the fish, and the fishermen.

The lure is for the fish, and the atmospheric access is for the fishermen.

A social network is like a beautiful coral reef, “free” to all the fish who wish to hang out there. Of course, the people tending to the reef also sell access to the reef to fishermen looking to hunt for fish. The fish receive something without paying up front, while the fishermen receive an unfair (better than even) chance to find worthwhile fishing. And by fishermen/fisherwomen/fisherpeople, I mean advertisers.

Access and Availability

Just as much as it sucks for a 4th grader to move house to a different town with no familiar faces there yet, it sucks for people to migrate from one online social network to another. The network grip is the gravity of molecules keeping pizza dough in one contiguous glump. It’s tempting to leave the coral reef when you see your friends getting picked off by spearfishing, but a lot of your friends are still there, and you met some new fish, too. Maybe bots, maybe not. But who cares.

Say you want to buy a loaf of bread.
Or some iron.
Or a bicycle.

Which do you buy first?

Why, whichever one increases your reach, of course.

Because when you increase your reach, you increase your options. Your access and availability actually get an upgrade. If something on your to-do list has the potential to significantly resort your to-do list, it likely ought be done earlier than later.

Satisfaction-flows

Wants and Needs, Limbic Resonance as Thirst

I would contest that insurance is more of a need and less of a want. While I would also contest that gambling is a want and less of a need. But in the case of social networks, Elon Musk mentioned that we engage in social media because it satisfies or generates limbic resonance. In a way, we cannot live well without limbic resonance. The limbic system is in charge of emotion and memories, based on my cursory knowledge of the inner sensorium of we humans. It is a type of hunger, a type of thirst, not directly satisfied without other people: a funny meme, a video of a cute animal, a story of consternation or a story of success; we fulfill an inner satisfaction through engaging with others in mutually meaningful ways, and our overall experience of life can improve. Plus, it is an indeterminate hunger, or an indeterminate thirst, in that we do not know exactly how it will be fulfilled when we go to the community center, or a church, or the zoom meeting — we simply know we are in attendance, perhaps with some prioritized plans in mind, perhaps not, but how the gathering unfolds is largely organic within the bounds and possibilities of the locale or spot or platform.

Lotto Tickets

An economist once taught that if people were truly utilitarian, lotto tickets would never be bought, because they have such a small expected value, such a small payout, that it would be ridiculous to play the game given the cost. Other economists found this interesting, and actually found that the dopamine spike one receives upon getting a lotto ticket, scratching off the foil leaf, and looking for a loss or a win, is actually worth more to them than the dollar they spent on the ticket.

Shocks and Peanuts

Chimpanzees also prefer indeterminacy. If there’s a button that always shocks you when pressed, a button that always dispenses a peanut when pressed, and a button that dispenses peanuts and shocks 50/50, the chimpanzees gravitate toward the fairly balanced shock/peanut result button. While I have not the time nor the inclination to verify this research or look for a publication, I do recall it from years ago and wonder if it is true in a broad sense. The indeterminacy of failure and success can be an addictive quality, one that we are but liminally aware of, increasing the excitement, enticing us to play our lives on the odds.

Odd Odds

I hope the above discussion on three different “business” models is illuminating — casinos, insurance companies, and social networks funded by advertising money all have a remarkably similar model, where “customers” (or advertisers in the case of the social network) pay for a chance to retrieve or extract value from the system, as decided by odd odds. That is, based on a calculation of “risk” or “return” that ensures the lights stay on at the casino. Unstacked odds would make casinos transient, unreliable structures, while stacked odds ensure that a casino remains a piece of the desert furniture for a long, long while. The same is true of insurance companies and social networks that endure the squashing gait of time.

“Why do the wealthy work at all?”

Recently on Reddit someone asked why people with great wealth bother working day jobs at all? Why does Elon keep working day and night towards his goals when he has enough wealth to sit back comfortably, to forever “Netflix and Chill” for the rest of his mortal sunsets and sunrises? The person asking the question came to the conclusion that it was a mix of biases, fears, and misapprehension of their situation that kept them going. It was a bit difficult for me to read — someone had missed the obvious: to live a meaningful life is primary, all else secondary.

Whether that meaning feels like the dopamine rush at the casino, the relaxed drive to the park with the knowing one has the promise of insurance, or the limbic resonance one achieves commenting and “like-ing” various posts on the social thumb treadmills, one still achieves a small taste of the meaningful life. But for those who step back from the screen for a hot minute, assess the impermanence of our situation, and the miracle of this stable yet ephemeral platform upon which to inquire and inspect with our most bless’ed human lens for awareness, we must ask what is the chaff and what is the wheat? What will make a dent, a lasting and worthy impression?

Shoveling Sand at the Beach

Every day he gets up, goes down to the beach, and starts shoveling sand full-force. The tide comes in and undoes his work. Others see he feels important doing the digging and the shoveling, and start to join him. Every morning they rush down to tho shore, only to find him there first, shoveling and shoveling away…

One day, our main character stubs his toe on the way down to the beach and must sit above the beach, on a rock, helplessly observing while others move past him to start shoveling. At first he is annoyed, losing his most precious spot to others, but gradually, it dawns on him: “Wow, we’re all shoveling sand at the beach. The tides wash it all away. Our hard work does not seem to make a dent here.”

Is it wrong to pursue anything then? No, it is only wrong to pursue the wrong things in the wrong places. To shovel earth and clay anywhere else would leave a more lasting impression. To assist someone, to jolt them out of their mindless stupor is to make a dent. To invest in oneself and keep making strides in one’s skills and way of relating with the world is to make a dent. To contemplate how best one can make a dent is also to make a dent. As a parting remark, focus on what will leave a lasting impression. The treasures of the earth are ephemeral, the treasures of the spirit by ocean water are not washed away.