Baccarat is the world’s number one casino game. From sticky-floor California card rooms to tuxedo-laden tables in Monaco, casinos around the globe make more money from this game than any other, including those on the Las Vegas Strip. In fact, last year Macau casinos produced more win from baccarat than all the Vegas Strip properties combined. Despite its popularity, few American gamblers know what the game is all about.
The game is simple enough: seven to 14 seats are available, with two areas for players to place bets on the player or banker hand. The cards are dealt face up, and the goal is to win based on which hand comes closest to nine. Ten value cards have zero points, and aces count as one. When the total of all the pips is added up, the winner must have a value of eight or lower.
Traditionally, the dealer and floor supervisor inspect each new deck of cards before they can be introduced into the game. This is a time-consuming process, especially when introducing eight new cards at once. To speed up the process, some operators use pre-shuffled cards. This allows them to be inserted into the game immediately, rather than having to wait for the cards to be inspected and manually shuffled. Other innovations to the game have also made it faster, including special formats like Speed Baccarat and Lightning Baccarat.
In addition to placing bets on the player and banker hands, customers at some casinos also make high-risk side bets on a player pair and a banker pair, which have different probabilities and payouts independent of the regular bets. These bets are not included in the present study, but future research may explore their effect on behavior.
This experiment tested the effects of positive recency in baccarat, using data from a real-world casino. The sample was a group of 6625 baccarat-playing customers who met certain criteria: they placed 70 or more bets in a day, and visited the game on at least three days within a week. This criterion was chosen to capture both substantial activity and repeated participation.
Our results show that customers who place bets on the same outcome as their previous bet tend to increase their wagers. This pattern is consistent with the hot outcome fallacy, and supports the theory that positive recency is a driving force behind this behavior.
We also found that customers who bet against the trend tended to decrease their bets, but this was only a small percentage of the population (Analysis 3). This result suggests that some customers are able to resist the influence of positive recency and bet against the streak.
The strong influence of positive recency in baccarat can be explained by the law of small numbers, which is a common cognitive bias in which people believe that small samples should reflect the properties of larger populations. However, this account does not explain why the belief in positive recency is more common in baccarat than in other casino games such as roulette and lotteries, which are unequivocally governed by chance processes.