Statistics For Dummies

Steven Levitt, author of Freakonomics, gave a talk in Singapore last month – and he had some interesting things to say in the Q&A session about the country’s casino gambling policy.

When asked by a member of the (mostly civil-servant-trainee) crowd what he thought of Singapore’s casino entry fee system, he pointed out one potentially major flaw – the $100-per-entry fee for Singaporean citizens might actually increase gambling losses, because if you pay $100 to get in, you’re going to want to feel like you’re getting value for money.

And the $2000 unlimited-entry yearly pass? “That’s just crazy. If you want to discourage something, you don’t give it a volume discount!” Cue rapturous applause.

The end result of all these regulations and entry fees and blacklists, it seems, has been the creation of a thriving market in circumvention methods. The Straits Times had a great piece a few days ago on one of the most inventive regulatory failures I’ve ever seen (hat tip to Tyler Cowen for spotting this, because the ST is pretty much the worst broadsheet in the world and I’ve basically stopped reading it):

[Salim] is one of a number of foreign employees being sent to the casino to gamble on behalf of their employers to feed their own habit, a Straits Times investigation has found.

Five bosses – some with exclusion orders against them – told The Straits Times that they have been handing workers cash, notebooks and mobile phones, then dispatching them to the casino. They claimed to know several other employers doing the same thing.

The ‘proxy gamblers’, dressed mostly in company polo T-shirts and jeans, get a cut of the winnings, but if they lose too much, their pay is docked.

In short, these business owners have been banned from entering the casinos, either because of an undischarged bankruptcy or because their family members have had them blacklisted for their own good. So instead of hitting the slots themselves, they send non-citizen employees (who don’t have to pay the $100 entry fee) to do the gambling in their place.

If you’re thinking that’s completely insane, you’re right. I’ve racked my brain and can only think of three possible reasons why these employers would let other people do their gambling for them:

  1. The employers genuinely are chronic gamblers (which is why they’ve been barred from the casino) and they genuinely think they can beat the house. The only solution for this is some serious counselling (and maybe a mandatory course of freshman statistics);
  2. The employers are laundering money (which is not entirely implausible, despite Singapore’s top-of-the-table cleanliness ranking from Transparency International); or,
  3. The profit-splitting arrangement between the gambling-addicted employers and the employees has some sort of wrinkle that we’re not being told about.

I have no idea which of these it could be, but I’d seriously like to find out. Anyone up for a field trip to the Marina Bay Sands?

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