Baccarat, the game of choice for high rollers, is one of the few casino games in which a skilled player can beat the house. The game, which originated in Europe and found a new life in Asia, is now available in more casinos around the country than ever before. The game is simple enough for anyone to learn and has three possible outcomes – Player win, Banker win, and tie. Players bet on the winning hand by placing their chips on the appropriate box, either Player, Banker or a Tie.
Each hand is dealt two cards, and the total value of the hand determines its winner. The values of the cards are determined by adding the number of each digit together: Nine is worth 9 points, 10s and picture or face cards are valued at 0 points, and the ace is worth one point. The goal of a player is to bet on the hand that will come closest to 9.
A croupier deals out eight standard 52-card decks from a special box, known as a shoe, or in some cases, a large circular table. Each seat on the baccarat table has a designated number, and each participant places their betting chips in a small circle on the floor of the table, which marks their assigned box. When everyone is ready, the dealer shuffles and then deals a card to each box, revealing it in the Player box first followed by the Banker box. Each box must contain exactly two cards before the game begins.
After the cards are dealt, the croupier will follow specific rules for drawing the third card in each hand. The hand with a sum of digits closer to 9 is declared the winner, and a bet on either the player or the banker will pay off according to a fixed payout structure. There is also a third bet, called the Tie, which pays off if both hands equal the same number, but this has a much higher house edge of over 14 percent.
The current study provides empirical evidence of the pervasiveness of the following-the-trend strategy in baccarat gamblers, as well as evidence that positive recency is a powerful driver of this phenomenon. In addition, we also find that customers tended to decrease their bet size when betting against the trend following a streak of consecutive player or banker wins, although this effect was smaller than for those who merely bet on the same outcome as the previous one (Analysis 3). These results suggest that baccarat gamblers believe that the probability of an event may not be constant but instead fluctuates over time, and that the occurrence of a hot outcome can serve as a cue to this hidden Markov process. However, this theory cannot fully explain the results of our experiment, because we did not observe any significant increase in the rate of bet size decrease with increasing streak length. Therefore, additional research with cognitive modeling approaches is needed to test this hypothesis.