J Gambl Stud

DOI 10.1007/s10899-009-9139-7

ORIGINAL PAPER

Using Neural Networks to Model the Behavior

and Decisions of Gamblers, in Particular,
Cyber-Gamblers

Victor K. Y. Chan

Springer Science+Business Media, LLC 2009

Abstract This article describes the use of neural networks (a type of artificial intelligence)
and an empirical data sample of, inter alia, the amounts of bets laid and the winnings/losses
made in successive games by a number of cyber-gamblers to longitudinally model
gamblers’ behavior and decisions as to such bet amounts and the temporal trajectory of
winnings/losses. The data was collected by videoing Texas Holdem gamblers at a cyber-
gambling website. Six ‘‘persistent’’ gamblers were identified, totaling 675 games. The
neural networks on average were able to predict bet amounts and cumulative winnings/
losses in successive games accurately to three decimal places of the dollar. A more
important conclusion is that the influence of a gambler’s skills, strategies, and personality on
his/her successive bet amounts and cumulative winnings/losses is almost totally reflected by
the pattern(s) of his/her winnings/losses in the few initial games and his/her gambling
account balance. This partially invalidates gamblers’ illusions and fallacies that they can
outperform others or even bankers. For government policy-makers, gambling industry
operators, economists, sociologists, psychiatrists, and psychologists, this article provides
models for gamblers’ behavior and decisions. It also explores and exemplifies the usefulness
of neural networks and artificial intelligence at large in the research on gambling.

Keywords Neural network
Gamblers’/Cyber-gamblers’ behavior and decisions

Successive bet amounts
Cumulative winnings/losses
Gamblers’ fallacies

Introduction

Gambling, or gaming as it is also known, is a human activity that can be traced back
through prehistory and a multitude of gambling forms are apparent in many different
cultures (Dewar 2001). Gambling is often claimed to have positive effects, in that not only
is it a lucrative and profitable industry worldwide in its own right, worth billions of US

V. K. Y. Chan (&)
School of Business, Macao Polytechnic Institute, Rua de Luis Gonzaga Gomes, Macao,
People’s Republic of China
e-mail: vkychan@ipm.edu.mo

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dollars per annum (American Gaming Association 2008b; Moss et al. 2003), but it also
fuels tourism (MacLaurin and MacLaurin 2003), employs a considerable amount of labor
at different skill levels (Gill et al. 2006; MacLaurin and MacLaurin 2003; Siegel and
Anders 1999), and is a major source of government revenue in many economies (Gill et al.
2006; Layton and Worthington 1999; Siegel and Anders 1999). Unfortunately, gambling is
coupled with a series of negative socio-economic problems. For example, it financially
afflicts low-income individuals (Layton and Worthington 1999). Furthermore, there is
evidence that certain forms of gambling create pathological gambling (alternatively known
as compulsive gambling, addictive gambling, disordered gambling, or problem gambling)
through addiction, lead to suicide, attract criminal elements, foster corruption (Feigelman
et al. 2006; Layton and Worthington 1999; Friedman et al. 1989) and facilitate money
laundering (Hugel and Kelly 2002).
The total impact and incidence of both the positive contributions and the negative
problems have been intensified by the advent of cyber-gambling on the internet in the mid-
1990s, given that cyber-gambling makes gambling substantially more prevalent and per-
vasive in society by essentially relaxing the constraints on gambling times and venues (Gill
et al. 2006). In particular, with regard to alleviating the related problems, whilst traditional
terrestrial gambling is subject to strict legal and governmental regulations enforced within
the associated jurisdictional boundaries, cyber-gambling renders these restrictions rela-
tively unenforceable because of the absence of boundaries in cyberspace. In summary,
cyber-gambling scales up both the contribution and the problems of gambling. As a matter
of fact, cyber-gambling has been growing since its inception in 1995 (American Gaming
Association 2008a; Dewar 2001) and the magnitude of its annual turnover worldwide is
now tens of billions of US dollars (American Gaming Association 2008a; Dewar 2001)
with nearly 23 million people having gambled at well over 2,000 cyber-gambling websites
as of 2005 (American Gaming Association 2008a).
Given such a conjunction, namely that the gambling industry is already a multi-billion
dollar industry and still rapidly expanding, in particular, as a result of the speedy prolif-
eration of cyber-gambling websites and cyber-gamblers in the last decade, how to strike a
balance between gambling’s contributions and problems has been undeniably controversial
both socio-economically and politically (Smith 2004; Layton and Worthington 1999).
Needless to say, both the contributions and the problems of gambling depend on gamblers’
behavior and decisions, in particular, their bet amounts and their temporal trajectory of
cumulative winnings/losses. Specifically, on the one hand, gambling’s contributions to the
gambling industry’s profit, the industry’s employment and government revenue are directly
derived from gamblers’ bets and losses. On the other hand, gambling’s problems with
regard to the gamblers’ financial affliction, pathological gambling, and possible suicide
stem outright from the gamblers’ cumulative losses. Therefore, gamblers’ bet amounts and
their temporal trajectory of cumulative winnings/losses become one of the determinants of
the aforementioned gambling-related controversy. In the face of this controversy, models
for gamblers’ bet amounts and their temporal trajectory of cumulative winnings/losses can
assist the work of related government policy-makers, gambling industry operators, econ-
omists, sociologists, psychiatrists, and psychologists. In particular, such models help
government policy-makers in reformulating related government policies and putting for-
ward new legislation to regulate the gambling industry in a bid to secure sufficient gov-
ernment revenue while at the same time containing gambling-related problems (American
Gaming Association 2008a; Smith 2004; Hugel and Kelly 2002; Dewar 2001; Jones et al.
2000; Siegel and Anders 1999). Such models also enable gambling industry operators and
their employees to reposition and redesign their games so as to optimize the profit and thus

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guarantee employment (Moss et al. 2003). At the same time, economists and sociologists
can better estimate the socio-economic value of the gaming industry based on the infer-
ences provided by such models regarding bet amounts and cumulative winnings/losses,
whereas psychiatrists and psychologists can better chart the behavior and decisions of
gamblers according to such models so as to improve the treatment and rehabilitation of
pathological gamblers (Ladouceur et al. 2007; Gill et al. 2006; Nelson et al. 2006; Slutske
et al. 2003, 2005; Breen and Zimmerman 2002; Layton and Worthington 1999).
This article documents research on aforesaid models based on neural networks or, more
exactly, artificial neural networks, which are a type of artificial intelligence emulating
biological neural networks (Nikolaev and Iba 2006; Ananda Rao and Srinivas 2003; Arbib
2003), used to model the aforementioned bet amounts and temporal trajectories of
cumulative winnings/losses. Such neural networks were and needed to be trained by an
empirical data sample on the amounts of bets laid and the winnings/losses made in suc-
cessive games by each of a random sample of cyber-gamblers. The data sample was
collected from a legally licensed, well-established cyber-gambling website (sometimes
referred to as an e-casino) where international gamblers played Texas Holdem among other
poker games. This research aimed at letting the neural networks construct the following
two models:
• M1: the model for successive bet amounts, which longitudinally models and thus
predicts the bet amounts in the successive game laid by each individual Texas Holdem
gambler based on his/her winnings/losses in a number of immediately preceding games
and his/her current gambling account balance.
• M2: the model for the temporal trajectory of cumulative winnings/losses, which
longitudinally models the temporal trajectory of cumulative winnings/losses of each
individual Texas Holdem gambler based on his/her cumulative winnings/losses in a
number of immediately preceding games.
Despite the fact that Texas Holdem games are more than games of chance in that the
outcomes depend on gamblers’ intellectual decisions, which, believe it or not, in turn are
generally thought to depend on individual gamblers’ skills and even strategies (Harrington
and Robertie 2004), it was to the author’s surprise that the neural network for M1 upon
training turned out to be able to predict a gambler’s bet amounts in successive games
accurately to more than three decimal places of the dollar on average for each of the six
gamblers in our data sample across the board. More importantly, the neural network for M2
upon training was also able to track the temporal trajectory of a gambler’s cumulative
winnings/losses, i.e., successively predict the gambler’s cumulative winnings/losses, with a
similar accuracy again for each of the six gamblers in our data sample across the board.
Undoubtedly, considering the structure of the two neural networks, which will be elabo-
rated on later in the article, the above findings empirically strongly suggest that the
influence of a gambler’s skills, strategies, and personality on his/her successive bet
amounts and cumulative winnings/losses is almost totally reflected by the pattern(s) of his/
her winnings/losses in the first few initial games and his/her gambling account balance.
These conclusions at least partially invalidate gamblers’ various illusions and fallacies
(Clotfelter and Cook 1993), as detailed in the subsection ‘‘Economic/Psychological
Models’’ below, that they can outperform other gamblers or even bankers (e.g., casinos,
cyber-gambling websites, etc.) For gamblers, the implication is that it is not worthwhile to
excessively and endlessly experiment with their skills, strategies, and personalities in an
attempt to outperform other gamblers or even bankers. For casinos and cyber-gambling
websites, the implications are that their profits can be better maximized through

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emphasizing the provision of particular games and redesigning their games based on the
different predicted temporal trajectories of typical gamblers’ cumulative winnings/losses in
different games and/or games of different designs.
In addition, from a broader point of view, such neural networks can serve related
government policy-makers, gambling industry operators, economists, sociologists, psy-
chiatrists, and psychologists in the manners discussed above. Such application of neural
networks also explores and exemplifies the usefulness of neural networks and artificial
intelligence at large (Hu et al. 2007; Kaklauskas and Zavadskas 2007; Schocken and Ariav
1994), apart from traditional parametric statistics, in the context of gambling research and
socio-economically and politically controversial issues in general.
The remainder of this article proceeds as follows. The section ‘‘Literature’’ discusses the
literature relevant to this article’s research. The section ‘‘Methodology’’ develops the
neural networks underlying this research. The section ‘‘Data’’ delineates the empirical data
sample to be fed into the neural networks for training and testing, followed by the section
‘‘Results’’ which interprets the results. The implications of the results are further elaborated
in the section ‘‘Discussion and Conclusions.’’

Literature

Previous research into gamblers’ behavior and decisions can be subsumed under two
categories, which the author refers to as economic/psychological models and sociological
studies, respectively, and which are briefly outlined in the following subsections ‘‘Eco-
nomic/Psychological Models’’ and ‘‘Sociological Studies.’’ The subsequent subsection
‘‘What ‘Gaps’ Does This Research Fill’’ highlights the ‘‘gaps’’ in the foregoing previous
research that this article seeks to fill.

Economic/Psychological Models

Traditional economics assumes that human beings are rational agents with a view to
maximizing their advantage. In view of the huge expenses and profit of (Ladouceur 2004)
as well as government tax on casinos and gambling websites (American Gaming Asso-
ciation 2008c), it is crystal clear that the total losses of all gamblers on gambling at a
casino or a gambling website must substantially exceed their total winnings. In other
words, gambling does not maximize gamblers’ advantage, so traditional economics per se
falls short of being able to explain gamblers’ decision to gamble in the first place.
Behavioral economics, however, as a relatively newer branch of economics (with Nobel
Prize laureate D. Kahneman as one exponent), assumes bounded-rationality of humans
with one consequence being that judgment under uncertainty often relies on heuristics
which are sometimes prone to biases (Kahneman 2003; Kahneman et al. 1982). Gamblers’
decisions to gamble may be an exemplification of such judgments. Although not explicitly
articulated, Delfabbro et al. (2006) carried out empirical research to prove the existence of
particular gamblers’ mentalities that could be regarded as being implied by behavioral
economists’ bounded-rationality assumption. Further to heuristics and biases, behavioral
economics theorized decisions under risk by the prospect theory (Kahneman 2003;
Kahneman and Tversky 1979), which critiqued and was an alternative to the rather dated
expected utility theory of traditional economics. The prospect theory introduced the con-
cept of decision weights, which took the place of probabilities in the expected utility
theory. Decision weights are generally lower than the corresponding probabilities, except

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in the range of low probabilities. In other words, low probabilities, say, of wins in gambles
are over-weighted in human decisions under risk, leading to decisions to take gambles or
the like.
A further direct consequence of bounded-rationality, heuristics, and biases is the various
illusions and fallacies of gamblers, which can be categorized as follows:
• the misconceived dependence between successive gamble outcomes, which the famous
term ‘‘gambler’s fallacy’’ is coined to describe (Clotfelter and Cook 1993; Ladouceur
2004), e.g., a win being reckoned to be very likely after a series of losses, a certain
recently occurred outcome being believed to be unlikely to recur in the near future,
• illusions of control, e.g., opining that the gambler himself/herself has more control over
a gamble’s outcome than other competing gamblers or even the banker (Ladouceur
2004), and
• superstitions, e.g., thinking that some rituals or other unrelated happenings bear on the
outcomes of gambles (Ladouceur 2004).
All these three categories of illusions and fallacies of gamblers end up with gamblers
believing that their own skills, strategies, and rituals can beat competing gamblers or even
the bankers.

Sociological Studies

There has been research into the macroscopic, cross-sectional analysis of socio-economic
factors determining gamblers’ gambling propensity (Gill et al. 2006; Delfabbro et al. 2006;
Layton and Worthington 1999). Although there is also research that aims to take a lon-
gitudinal perspective, their actual contribution concerns comparing and contrasting gam-
blers’ gambling propensity before and after a certain event, such as the opening of a casino
(Jacques and Ladouceur 2006), in a macroscopic manner. The author is aware of no
research specifically performing longitudinal or time-series analysis to microscopically
model gamblers’ behavior and decisions as to their successive bet amounts. Again, whilst
there has been research into the macroscopic, cross-sectional analysis of how different
demographic factors or the like of individual gamblers impinge on their trajectories of
developing pathologic gambling (Nelson et al. 2006) and also research into the classifi-
cation of gamblers based on the trajectories of their gambling propensity over age (Vitaro
et al. 2004), the author is aware of no research microscopically modeling temporal tra-
jectories of gamblers’ cumulative winnings/losses.

What ‘‘Gaps’’ Does This Research Fill?

It is more than indisputable that both the economic/psychological models and the socio-
logical studies depicted above have been substantively contributing to gambling research.
The economic/psychological models are primarily analytical in the sense of explaining the
motivation behind gambling by means of economic/psychological theories. In contrast, the
sociological studies are cross-sectional, macroscopic, or for the purpose of gamblers’
classification and are consequently macroscopically modeling and predicting a gambler’s
gambling propensity based on some socio-economic and demographic factors or the like.
So far, there is no research directly modeling gamblers’ behavior and decisions. Nor are
there any models that are quantitatively predictive in this aspect.
In summary, there has been no previous research on longitudinally modeling or pre-
dicting gamblers’ behavior and decisions microscopically and quantitatively as to their

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successive bet amounts. Nor is there any previous research on longitudinally modeling or
predicting the temporal trajectory of gamblers’ cumulative winnings/losses. This research
aims to fill this gap by developing such models.
In addition, as there are no grounds to assume linearity or a particular type of non-
linearity (e.g., exponential) when developing these models, traditional parametric model-
ing techniques, which make such a presumption, are regarded as insufficient for these
models. As such, this research employed the non-parametric modeling technique of neural
networks, which is a type of artificial intelligence, on the grounds of their ‘‘black-box’’
(sometimes referred to as ‘‘model-free’’) nature, which does not presume linearity or any
particular type of non-linearity. Therefore, another contribution of this research is its
application of non-parametric modeling and artificial intelligence in this area as opposed to
traditional parametric modeling techniques, such as least squares regression, which are
widely used in the aforesaid previous research.
However, for the author, the most far-reaching contribution of this research is that the
various illusions and fallacies of gamblers, as enumerated in the subsection ‘‘Economic/
Psychological Models’’ above, can be partially invalidated by the models constructed in
this article. This research also explores and exemplifies the usefulness of neural networks
and artificial intelligence at large (Hu et al. 2007; Kaklauskas and Zavadskas 2007;
Schocken and Ariav 1994), apart from traditional parametric statistics, in the context of
gambling research and socio-economically and politically controversial issues.

Methodology

Like neural networks employed in forecasts for financial product pricing (Bennell and
Sutcliffe 2004), backpropagation neural networks are employed in this research. The
reason for this approach is that backpropagation neural networks are the most popular
neural network paradigm (Walczak 2001) and have long been demonstrated as universal
approximators (Hornik et al. 1989; White 1990). Moreover, past research has indicated that
backpropagation neural networks have superior performance to other neural network
paradigms (Walczak 2001).
Shown in Fig. 1 below is the structure of the fully connected backpropagation neural
network adopted in this research for M1: the model for successive bet amounts. Also in
Fig. 1 are the definitions of the related variables. Simply speaking, this network tries to
predict the normalized bet amount betik to be laid by a particular gambler k in the next
game i based on his/her normalized winnings/losses wini-1,k, wini-2,k,…, wini-n,k in his/
her n immediately preceding games and his/her current gambling account balance bal_sik.
Such a predicted, normalized bet amount is denoted by b^ etik in Fig. 1.
Whereas readers can refer to relevant literature on neural networks for details (Nikolaev
and Iba 2006; Ananda Rao and Srinivas 2003; Arbib 2003), the basic use of the neural
network in Fig. 1 is as in the following steps:
1. Collect and prepare an empirical data sample consisting of wini-1,k, wini-2,k,…, wini-
n,k, bal_sik and betik for game i = n ? 1, n ? 2,… and for each gambler k.
2. Out of the data sample in step 1, select a sub-sample for training the network. Here, a
sub-sample means wini-1,k, wini-2,k,…, wini-n,k, bal_sik, and betik for some particular
set of selected (i, k)’s.
3. Train the network by inputting wini-1,k, wini-2,k,…, wini-n,k and bal_sik into it for
each (i, k) in the training sub-sample of step 2, calculate the mean square error (MSE)

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wini − n , k where
means a neuron;
.
. k = the gambler number;
. i = the game number, starting from n +
. . 1 for each gambler k;
. . = the normalized (see later
wini − 3, k winik
beˆtik paragraphs of this Section) WINik ;
wini − 2, k bal _ sik = the normalized BAL _ Sik ;
beˆtik = the normalized BEˆ T ;
ik
wini −1, k
output layer WINik = the winnings of gambler k in his/her
bal _ sik game i if positive and the loss in
his/her game i if negative;
BAL _ Sik = the gambling account balance of
hidden layer
gambler k at the start of his/her
input layer game i;
BEˆ Tik = an estimate of BETik as predicted
by this neural network;
BETik = the total bet amount of gambler k in
his/her game i, covering all rounds
Note 1
of bets in the game ; and
n = the number of each gambler’s
preceding games’ winnings/losses
Note 1: A Texas Holdem game consists to be included as inputs into this
of several rounds of betting. neural network.

Fig. 1 The structure of the neural network for M1

between the predicted output b^ etik and betik over all (i, k)’s in the training sub-sample,
and adjust the network parameters intrinsic to the nodes in the network (Nikolaev and
Iba 2006; Ananda Rao and Srinivas 2003; Arbib 2003) so as to minimize MSE which
is defined by
1 X
MSE ¼ etik  betik Þ2 and NTR ¼ the size of the training sub-sample:
ðb^
NTR ði;kÞ2training
sub-sample

4. Repeat step 3 above by a large number of episodes until the network converges, i.e.,
until its parameters stabilize.
5. Out of the data sample in step 1, select the remaining sub-sample (i.e., observations
not in the training sub-sample) for testing the network.
6. Test the network by inputting wini-1,k, wini-2,k,…, wini-n,k, and bal_sik into it for each
(i, k) in the testing sub-sample of step 5, and calculating the mean magnitude of
relative error (MMRE) (Foss et al. 2003; Conte et al. 1986) between BET ^ ik (i.e., the
predicted output b^ etik after denormalization) and BETik (i.e., betik after denormaliza-
tion) over all (i, k)’s in the testing sub-sample to measure how accurately the network
predicts BETik where



1 X

BETik  BET ^ ik


and NTE ¼ the size of the testing sub-sample: ð1Þ
MMRE ¼
NTE ði;kÞ2testing
BETik

sub-sample

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The smaller the MMRE, the more accurately the network predicts.
Readers must have noticed the word ‘‘normalized’’ in Fig. 1. Normalization of the
inputs and outputs of the neural network here is necessary to guarantee that the values of all
the inputs and outputs are confined to a certain range, say, [0, 1], to which the network
would be tuned during training in steps 3 and 4 above, and thus no extrapolation would
occur afterwards (Nahvi and Esfahanian 2005; Drew 2004). Normalization of, say, WINik
to the range [0, 1] is done by the formula below:
WINik  WINmin
winik ¼
WINmax  WINmin
where WINmin = the minimum of WINik over all (i, k)’s in the whole data sample of step 1;
and WINmax = the maximum of WINik over all (i, k)’s in the whole data sample.
Conversely, denormalization is done by WINik = winik (WINmax - WINmin) ? WINmin.
Likewise, normalization and denormalization are done analogously for other variables.
Also, whilst the numbers of input layer neurons and output layer neurons in Fig. 1 are
obviously n ? 1 and 1, respectively, readers may notice that the number of hidden layer
neurons therein is free to choose. On the advice of Morphet (2004) and Azoff (1994), the
number of hidden layer neurons was set to
• 5 if the number of input layer neurons is less than 10, and
• nþ12 þ 1 otherwise where b xc = the largest integer less than x.
Another kind of leeway is that a certain transfer function (Nikolaev and Iba 2006;
Ananda Rao and Srinivas 2003; Arbib 2003) is attached to each hidden and output layer
neuron, and such a transfer function is again free to choose, usually, among the pure-linear
function, the log-sigmoid function, the sigmoid function, etc. Upon experiments on these
various functions, the sigmoid function was found to give rise to the highest prediction
accuracy or the smallest MMRE (as defined in (1)) for our data sample, so the sigmoid
function was chosen for all the hidden and output layer neurons. Likewise, the value n is
discretionary. Again the criterion for choosing its value was to render the highest pre-
diction accuracy or the smallest MMRE for our data sample. The section ‘‘Results’’ below
will show the MMRE for each value of n within a reasonable range. By the same token, the
network inputs wini-1,k, wini-2,k,…, wini-n,k, and bal_sik in Fig. 1 were not arbitrarily
determined at the very beginning of the research, but were the result of an extended
searching process of trial and error. In fact, beti-1,k, beti-2,k,…, bal_si-1,k, bal_si-2,k,…,
etc., as network inputs were all tried but wini-1,k, wini-2,k,…, wini-n,k, and bal_sik pre-
vailed in the end based on their highest prediction accuracy or the smallest MMRE for our
data sample.
Figure 2 below shows the structure of the fully connected backpropagation neural
network adopted in this research for M2: the model for the temporal trajectory of cumu-
lative winnings/losses. Also there are the definitions of the variables in addition to those
defined in Fig. 1. Simply speaking, this network tries to predict the normalized, cumulative
winnings/loss cwinik of a particular gambler k immediately after the next game i based
on his/her normalized, cumulative winnings/losses cwini-1,k, cwini-2,k,…, cwini-m,k
immediately after each of his/her m immediately preceding games and his/her random walk
indicator RWIi-1,k immediately after the last game i - 1. Such a predicted, normalized,
cumulative winnings/loss is denoted by cwin ^ ik in Fig. 2. Again, of course, the network
inputs cwini-1,k, cwini-2,k,…, cwini-m,k, and RWIi-1,k in Fig. 2 were not determined at the
very beginning but were the result of an extended searching process of trial and error
analogous to that for Fig. 1.

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cwini −m ,k where
means a neuron;
.
. k = the gambler number;
. i = the game number, starting from m + 1
. . for each gambler k;
cwini − 3, k . . = the normalized CWIN ik ;
cwinik
cwiˆnik
RWI i −1,k = the random walk indicator of gambler
cwini − 2, k k immediately after his/her game
i - 1, as elaborated in later
cwini −1, k paragraphs of this Section;
output layer cwiˆnik = the normalized CWIˆN ik ;
RWI i −1,k i
CWIN ik = ∑ WIN
p =1
pk
= the cumulative

hidden layer winnings of gambler k immediately

input layer after his/her game i if positive or
his/her cumulative loss
immediately after his/her game i if
negative;
CWIˆN ik = an estimate of CWIN ik as predicted
by this neural network; and
m = the number of the gambler’s
cumulative winnings/loss to be
included as inputs into this neural
network.

Fig. 2 The structure of the neural network for M2

The random walk indicator is recommended as a predictor in the field of finance for
predicting quantities of a cumulative nature. In view of cwinik in Fig. 2 being cumulative
albeit unrelated to finance, the random walk indicator RWIi-1,k of gambler k immediately
after his/her game i - 1 is included as an input to the neural network and is define by
Dcwini1;k
RWIi1;k ¼ pffiffiffiffiffiffiffiffiffiffi ð2Þ
Dcwink i  1
where cwini-1,k = cwini-1,k - cwin0,k; cwin0,k = the normalized CWIN0,k; CWIN0,k =
the cumulative winnings of gambler k immediately after his/her game 0 (i.e., at the very
beginning before his/her game 1) if positive or his/her cumulative loss immediately after
PNk
jcwinp;k cwinp1;k j
his/her game 0 if negative : 0 by definition; Dcwink ¼ p¼1 Nk ; and Nk = the
total number of consecutive games played by gambler k.
The basic use of the neural network in Fig. 2 is analogous to that in Fig. 1 except that
the inputs and outputs are different accordingly. Consequently, the MMRE to measure how
accurately the network in Fig. 2 predicts cwinik becomes



1 X

cwinik  cwin ^ ik


:
MMRE ¼ ð3Þ
NTE ði;kÞ2testing
cwinik

sub-sample

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Data

Like all backpropagation neural networks, those used in this research required an empirical
data sample for training and later testing of prediction accuracy. Such a data sample was
collected from a legally licensed, well-established cyber-gambling website www.betxxxx.
com, part of the website’s name being concealed by the ‘‘xxxx’’ for anonymity. There,
international gamblers uniquely identified by their registered identifiers played poker games
like Texas Holdem, Omaha High, Omaha Hi-Lo, and Seven Card Stud round the clock. This
website was chosen because it was one of the very few cyber-gambling websites where the
unique identifiers of all gamblers in an ongoing game together with the gamblers’ origins
(i.e., cities or countries), their successive bet amounts, their decisions (e.g., to fold, raise,
etc.), and their gambling account balances were all displayed. This research focused on
Texas Holdem because of the top popularity of this family of games in major gambling
markets (Clark 2006) so as to make our research the most representative of general gam-
blers’ behavior and decisions.
The collection of the data sample involved two stages, in the first of which ongoing
Texas Holdem games at the aforementioned website were videoed using a screen capture
software package. In the second stage, such videos were replayed to identify gamblers who
played a long enough series of consecutive games for the purpose of our longitudinal
modeling. It was found that most gamblers played for a short while, whereas only a small
proportion of them played as many as around 100 consecutive games, which seemed to be
the practical maximum. In fact, from the long videos we managed to identify only six such
‘‘persistent’’ gamblers, totaling 675 games. For each of these persistent gamblers, his/her
bet amounts, gambling account balances, etc., throughout his/her series of games were
noted during the replays. As an example, Table 1 is an abridged copy of such data for one
of the persistent gamblers whose identifier was ‘‘Trevor38.’’ Subsequently, Table 2 shows
the data derived from Table 1 for the construction of M1: the model for successive bet
amounts with the number of preceding games’ winnings/losses n = 6 as an example, the
data here being before normalization (see the section ‘‘Methodology’’ above) for easier
visualization. Similarly, Table 3 shows the data derived from Table 1 for the construction
of M2: the model for the temporal trajectory of cumulative winnings/losses with the
number of preceding games’ cumulative winnings/losses m = 6 as an example, again the
data here being before normalization (see the section ‘‘Methodology’’ above) for easier
visualization.

Results

M1: The Model for Successive Bet Amounts

Table 4 shows the MMREs (as defined in Eq. 1) of M1 with n = 6, 7,…, 20. They are all in
the order of 10-2 and thus are rather small, especially when n = 6, 7, 8, 13, or 14,
indicating rather accurate prediction of BETik by M1. In fact, their small magnitudes imply
that the mean magnitude of the error in the prediction of BETik is only around 1–3% of the
magnitude of BETik. It is noteworthy that analogous to any other neural networks for
prediction purposes, the neural network for M1 only tries to predict the main trend of a
gambler’s normalized bet amount betik by picking up the pattern(s) (presumably non-
linear) as reflected in the predictors wini-1,k, wini-2,k,…, wini-n,k, and bal_sik, which
concern the gambler’s normalized winnings/losses in his/her n immediately preceding

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Table 1 Data collected for gambler ‘‘Trevor38’’ whose gambler number k = 1

Game (i) BAL_Si1 BAL_Mi1 BETi1 = BAL_Ei1 = BAL_Si?1,1 WINi1 =
BAL_Si1 - BAL_Mi1 BAL_Ei1 - BAL_Si1

1 90.16 89.16 1.00 89.16 -1.00

2 89.16 87.66 1.50 87.66 -1.50
3 87.66 87.66 0.00 87.66 0.00
4 87.66 87.41 0.25 87.41 -0.25
5 87.41 86.66 0.75 88.08 ?0.67
6 88.08 86.83 1.25 86.83 -1.25
7 86.83 86.83 0.00 86.83 0.00
8 86.83 86.83 0.00 86.83 0.00
9 86.83 85.83 1.00 85.83 -1.00
10 85.83 85.33 0.50 85.33 -0.50
11 85.33 83.83 1.50 88.03 ?2.70
12 88.03 87.78 0.25 87.78 -0.25
13 87.78 87.53 0.25 87.53 -0.25
14 87.53 86.78 0.75 86.78 -0.75
15 86.78 86.78 0.00 86.78 0.00
16 86.78 86.53 0.25 86.53 -0.25
17 86.53 85.53 1.00 85.53 -1.00
18 85.53 85.03 0.50 85.03 -0.50
19 85.03 84.78 0.25 84.78 -0.25
20 84.78 82.78 2.00 89.38 ?4.60
: : : : : :
: : : : : :
BAL_Si1 = ‘‘Trevor38’s’’ gambling account balance at the start of his game i
BAL_Mi1 = ‘‘Trevor38’s’’ gambling account balance in the middle of his game i after laying all rounds of
bets in the game
BETi1 = ‘‘Trevor38’s’’ total bet amount in his game i, covering all rounds of bets
BAL_Ei1 = ‘‘Trevor38’s’’ gambling account balance at the end of his game i, which is equal to BAL_Mi1
plus the received winnings in game i, if any, noting that here the received winnings refers to the money
received upon winning the game
WINi1 = ‘‘Trevor38’s’’ winnings in his game i if positive and the loss in game i if negative, noting that: (1)
here the winnings differ from the received winnings mentioned in the definition of BAL_Ei1 above in that, in
a game, the winnings (WINi1) is the received winnings net of the total bet (BETi1), and (2) here the loss must
be equal to BETi1 upon losing the game
Note: The currency for the games played by ‘‘Trevor38’’ as listed in this table happened to be the Great
Britain pound (GBP), so all monetary variables in this table are in GBP. Nevertheless, the international
gambling website www.betxxxx.com underlying this research has games in various other currencies, e.g.,
US dollars (USD), euros (EUR), etc. It is obvious that the validity of this research is not confined to any
particular currency

games and his/her current gambling account balance. Nevertheless, the network is not
capable of tracking any extraordinary bet amount laid by the gambler in a particular game,
say, due to his/her exceptionally strong hand of cards in that game when he/she would tend
to bet exceptionally heavily or vice
versa.
Therefore, it is true that occasionally the

ik BET^ ik

magnitude of relative error MRE ¼
BETBET ik

for some game i played by gambler k in our
testing sub-sample was as large as over 1 or 2. The foregoing MMREs in the order of 10-2

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 J Gambl Stud

Table 2 Data derived from Table 1 for the construction of M1 with, say, n = 6
Game (i) Using game i of ‘‘Trevor38’’ to either train or test M1

Upon normalization, these are inputs Predicted output,

eti1 ; upon
b^
denormalization,
estimates
WINi-6,1 WINi-5,1 WINi-4,1 WINi-3,1 WINi-2,1 WINi-1,1 BAL_Si1 BETi1

7 -1.00 -1.50 0.00 -0.25 ?0.67 -1.25 86.83 0.00

8 -1.50 0.00 -0.25 ?0.67 -1.25 0.00 86.83 0.00
9 0.00 -0.25 ?0.67 -1.25 0.00 0.00 86.83 1.00
10 -0.25 ?0.67 -1.25 0.00 0.00 -1.00 85.83 0.50
11 ?0.67 -1.25 0.00 0.00 -1.00 -0.50 85.33 1.50
12 -1.25 0.00 0.00 -1.00 -0.50 ?2.70 88.03 0.25
13 0.00 0.00 -1.00 -0.50 ?2.70 -0.25 87.78 0.25
14 0.00 -1.00 -0.50 ?2.70 -0.25 -0.25 87.53 0.75
15 -1.00 -0.50 ?2.70 -0.25 -0.25 -0.75 86.78 0.00
16 -0.50 ?2.70 -0.25 -0.25 -0.75 0.00 86.78 0.25
17 ?2.70 -0.25 -0.25 -0.75 0.00 -0.25 86.53 1.00
18 -0.25 -0.25 -0.75 0.00 -0.25 -1.00 85.53 0.50
19 -0.25 -0.75 0.00 -0.25 -1.00 -0.50 85.03 0.25
20 -0.75 0.00 -0.25 -1.00 -0.50 -0.25 84.78 2.00
: : : : : : : : :
: : : : : : : : :
Note: The variables in the headings of this table are as defined in Table 1

are just the means of the MREs averaged over all the games played by all the gamblers in
our testing sub-sample. In other words, the network’s prediction tracks the overall trend of
any gambler’s successive bet amounts well even if occasionally there are considerable
prediction errors (or ‘‘residuals’’ if deliberately using the terminologies of statistical
regression, which is a more popularly used prediction method than neural networks).
Similar things are, for example, true of financial market prediction models which are,
however, regarded as acceptably useful and accurate if they are able to track the overall
trend of the market well, even if they fail severely during periods of financial turmoil.
In addition, it is worthwhile to point out that only one single trained neural network for
M1 was devised by using our training sub-sample covering all the six gamblers, and the
high prediction accuracy above was achieved by applying this identically trained neural
network to our testing sub-sample, which also included all the six gamblers. This implies
that the relationship between the main trend of betik and the pattern(s) in the predictors
wini-1,k, wini-2,k,…, wini-n,k, and bal_sik as represented intrinsically by the post-training
parameters inside this trained neural network, is almost the same for all the six gamblers in
our data sample. In other words, if there is any difference in the main trend of betik between
the six gamblers, such ‘‘idiosyncrasy’’ is reflected not predominately by the aforesaid
relationship but almost totally by the difference in the pattern(s) of wini-1,k,
wini-2,k,…, wini-n,k, and bal_sik between these gamblers. The influence of a gambler’s
skills, strategies, and personality on his/her successive bet amounts is almost totally
reflected by the pattern(s) of his/her winnings/losses in the several immediately preceding
games and his/her gambling account balance.

123
 Table 3 Data derived from Table 1 for the construction of M2 with, say, m = 6
Game (i) Using game i of ‘‘Trevor38’’ to either train or test M2
J Gambl Stud

Upon normalization, these are inputs Predicted output, CW IN

^ i1 ;
upon denormalization, estimates
CWINi-6,1 CWINi-5,1 CWINi-4,1 CWINi-3,1 CWINi-2,1 CWINi-1,1 RWIi-1,1 CWINi1

7 -1.00 -2.50 -2.50 -2.75 -2.08 -3.33 * -3.33

8 -2.50 -2.50 -2.75 -2.08 -3.33 -3.33 * -3.33
9 -2.50 -2.75 -2.08 -3.33 -3.33 -3.33 * -4.33
10 -2.75 -2.08 -3.33 -3.33 -3.33 -4.33 * -4.83
11 -2.08 -3.33 -3.33 -3.33 -4.33 -4.83 * -2.13
12 -3.33 -3.33 -3.33 -4.33 -4.83 -2.13 * -2.38
13 -3.33 -3.33 -4.33 -4.83 -2.13 -2.38 * -2.63
14 -3.33 -4.33 -4.83 -2.13 -2.38 -2.63 * -3.38
15 -4.33 -4.83 -2.13 -2.38 -2.63 -3.38 * -3.38
16 -4.83 -2.13 -2.38 -2.63 -3.38 -3.38 * -3.63
17 -2.13 -2.38 -2.63 -3.38 -3.38 -3.63 * -4.63
18 -2.38 -2.63 -3.38 -3.38 -3.63 -4.63 * -5.13
19 -2.63 -3.38 -3.38 -3.63 -4.63 -5.13 * -5.38
20 -3.38 -3.38 -3.63 -4.63 -5.13 -5.38 * -0.78
: : : : : : : : :
: : : : : : : : :
i
P
CWINi1 ¼ WINp1 = ‘‘Trevor38’s’’ cumulative winnings immediately after his game i if positive or his cumulative loss immediately after his game i if negative; and
p¼1

RWIi-1,1 = ‘‘Trevor38’s’’ random walk indicator (see the section ‘‘Methodology’’ above) immediately after his game i - 1. Its value for each game is omitted here for the
sake of simplicity, given that it is not meaningful to include it here in that it cannot be derived trivially from Table 1 but can only be calculated using the complicated Eq. 2

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Table 4 MMREs for M1 with n = 6, 7,…, 20

n 6 7 8 9 10 11 12 13

MMRE 0.01 0.0103 0.0138 0.0171 0.026 0.0208 0.0174 0.014

14 15 16 17 18 19 20

MMRE 0.013 0.0241 0.0226 0.0227 0.0235 0.0183 0.0322

Bold values represent the best results

M2: The Model for the Temporal Trajectory of Cumulative Winnings/Losses

Table 5 is an M2 counterpart of Table 4 where the MMREs here are as defined in Eq. 3.
The MMREs are all in the order of 10-3 or 10-2 and thus are rather small, especially when
m = 6, 7, 8, or 13, indicating quite an accurate prediction of CWINik by M2. In fact, their
small magnitudes imply that the mean magnitude of the error in the prediction of CWINik is
only around 0.8–4% of the magnitude of CWINik. When interpreting such MMREs, readers
are reminded to refer to the noteworthy point stated in the case of M1 above.
In addition, it is worthwhile to point out that only one single trained neural network for
M2 was devised by using our training sub-sample covering all the six gamblers, and the
high prediction accuracy above was achieved by applying this identically trained neural
network to our testing sub-sample, which also included all the six gamblers. This implies
that the relationship between the main trend of CWINik and the pattern(s) in the predictors
cwini-1,k, cwini-2,k,…, cwini-m,k, and RWIi-1,k, as represented intrinsically by the post-
training parameters inside this trained neural network, is almost the same for all the six
gamblers in our data sample. In other words, if there is any difference in the main trend of
cwinik between the six gamblers, such ‘‘idiosyncrasy’’ is reflected not predominately by the
aforementioned relationship but almost totally by the difference in the pattern(s) of
cwini-1,k, cwini-2,k,…, cwini-m,k, and RWIi-1,k between these gamblers. That is to say, the
influence of a gambler’s skills, strategies, and personality on his/her cumulative winnings/
losses is almost totally reflected by the pattern(s) of his/her cumulative winnings/losses in
the several immediately preceding games.

Discussion and Conclusions

Summarizing all its regulations, a Texas Holdem game involves only one type of behavior
or decisions of a participating gambler, which is the amount of bet to be laid in the game
(Harrington and Robertie 2004). Even the decisions to fold and to raise are just particular

Table 5 MMREs for M2 with m = 6, 7,…, 20

n 6 7 8 9 10 11 12 13

MMRE 0.0079 0.0082 0.0083 0.0103 0.0116 0.012 0.015 0.0096

14 15 16 17 18 19 20

MMRE 0.0188 0.0191 0.0143 0.0204 0.0414 0.0346 0.0251

Bold values represent the best results

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cases to freeze the current bet amount and to increase the current bet amount, respectively.
If two gamblers lay the same amount of bet in each identical game (with the same hand,
etc.), then it can be said that the behavior or decisions of the two gamblers are identical or,
equivalently, the skills, strategies, and personalities of the two gamblers are identical as far
as Texas Holdem games are concerned. The findings from the section ‘‘Results’’ above for
‘‘M1: The Model for Successive Bet Amounts’’ are that all gamblers’ successive bet
amounts in the 675 Texas Holdem games of our data sample rather strictly obey the
longitudinal model M1 constructed in this research. Given that M1 relates a gambler’s bet
amount in a game with his/her gambling account balance at the beginning of the game and
the winnings/losses in his/her few (n) immediately preceding games, it can be concluded
that if some gamblers in our data sample have the same initial gambling account balance
and the same winnings/losses in their few (n) initial games, such gamblers will give rise to
almost the same subsequent time-series of bet amounts as predicted by M1. In other words,
such gamblers will have almost identical behavior and decisions, or equivalently, they have
almost identical skills, strategies, and personalities as far as Texam Holdem games are
concerned. Hence, such gamblers will lead to almost the same gambling winnings/losses in
the long run. Even if there is a difference, it will be negligible as attested by the small
MMRE in Table 4. In general, in respect of the aforesaid gamblers’ behavior and decisions,
the only substantial idiosyncrasy of an individual gambler lies in his/her gambling account
balance and the pattern(s) of the winnings/losses in his/her few (n) initial games, through
which his/her skills, strategies, and personality are practically fully reflected.
Even if a more result-oriented viewpoint is taken to focus only on the cumulative
winnings/loss just as most real-world gamblers do, a similar conclusion can be drawn. The
findings from the section ‘‘Results’’ above for ‘‘M2: The Model for the Temporal Trajectory
of Cumulative Winnings/Losses’’ are that all gamblers’ temporal trajectories of cumulative
winnings/losses in the 675 Texas Holdem games of our data sample quite strictly obey the
longitudinal model M2 constructed in this research. Given that M2 relates a gambler’s
cumulative winnings/loss immediately after a game with his/her cumulative winnings/loss
immediately after each of his/her few (m) immediately preceding games, it can be con-
cluded that if some gamblers in our data sample have the same initial cumulative winnings/
loss immediately after each of their few (m) initial games and thus have the same random
walk indicators, such gamblers will give rise to almost the same subsequent time-series of
cumulative winnings/losses as predicted by M2. Even if there is a difference, it will be
negligible as attested by the small MMRE in Table 5. In general, in respect of the foregoing
cumulative winnings/losses, the only substantial idiosyncrasy of an individual gambler lies
in the pattern(s) of the cumulative winnings/losses in his/her few (m) initial games, through
which his/her skills, strategies, and personality are practically fully reflected.
A combined further conclusion from the last two paragraphs is that a gambler’s skills,
strategies, and personality are practically fully reflected in the few (n or m) initial games.
Beyond these few initial games, both his/her behavior and decisions (in terms of the bet
amounts in successive games) and his/her cumulative winnings/losses are fairly accurately
predictable by M1 or M2. In other words, on the one hand, gamblers’ behavior, decisions,
and cumulative winnings/losses have substantive commonality among different gamblers
in that the inherent relationship between the inputs and outputs of M1 and that between
those of M2 are almost the same among different gamblers. On the other hand, the only
idiosyncrasies of individual gamblers are exhibited by the pattern(s) of the winnings/losses
in each gambler’s few (n or m) initial games, through which the influence of his/her skills,
strategies, and personalities on his/her behavior, decisions, and cumulative winnings/losses
is practically fully reflected. Therefore, this conclusion partially invalidates gamblers’

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various illusions and fallacies (Clotfelter and Cook 1993), as detailed in the subsection
‘‘Economic/Psychological Models’’ above, that they can outperform other gamblers or
even bankers through specific skills, strategies, and personalities. Although the conclusion
here cannot rule out the possibility of individual gamblers’ idiosyncratic performance
ascribable to their specific skills, strategies, and personalities, an implication for gamblers
is that it is not worthwhile or even relevant to excessively and endlessly experiment beyond
n or m games with the gamblers’ skills, strategies, and personalities in an attempt to
outperform other gamblers or even bankers.
From casinos and cyber-gambling websites’ viewpoint, the implications of this research
are that their profits can be better maximized through emphasizing the provision of par-
ticular games and redesigning their games based on the different predicted temporal tra-
jectories of typical gamblers’ cumulative winnings/losses in different games and/or games
of different designs as empirically verified by M2.
From a broader viewpoint, such models can assist the work of related government
policy-makers, gambling industry operators, economists, sociologists, psychiatrists, and
psychologists. In particular, through these models, they all can realize and even simulate
the temporal trajectory of a general gambler’s losing (or, less likely, winning) money in
such a gambling game as Texas Holdem in this paper and thus quantitatively determine
gambling’s political, financial, economic, social, psychiatric, and psychological contribu-
tions and problems in respect of the individual gambler himself/herself and society at large.
Since such models can be applied generically to other gambling games by just feeding into
it empirical data samples of gamblers’ bet amounts in successive games, etc., in such other
gambling games, different trajectories for different gambling games can be derived for
comparison and contrast between their aforesaid contributions and problems.
Such models also explore and exemplify the usefulness of neural networks and artificial
intelligence at large (Hu et al. 2007; Kaklauskas and Zavadskas 2007; Schocken and Ariav
1994), apart from traditional parametric statistics, in the context of gambling research and
socio-economically and politically controversial issues in general.
These models together with its predicted gamblers’ behavior and decisions can also
serve well as an educational tool for gamblers, in particular, pathological gamblers
undergoing rehabilitation, hopefully helping to partially uproot their irrational illusions
and fallacies, as elaborated on in the subsection ‘‘Economic/Psychological Models’’
above, that they can outperform other gamblers or even bankers through their specific
skills and strategies.

Acknowledgments The authors thank Macao Polytechnic Institute for generous financial support under
Research Grant RP/ESCE-6/2004 and Dr. Jonathan Fearon-Jones for his proof-reading. Thanks are also due
to Kai Piu Benny Chan and Chin Wa Tam for their assistance in data collection, data analysis, etc.

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