Baccarat, the casino game favored by the elites of Europe and Asia, is famous for its glamorous trappings. The table for the game is often located in a private alcove, away from the masses and the rest of the casino action. Unlike blackjack, poker or craps, the game does not require skill and is considered to be a pure game of chance. Yet beneath the Bond-dipped mystique, the game is actually one of the simplest and most statistically advantageous games in the world.
Like many casino games, baccarat offers several betting options. Players can bet on either the player or banker. Each hand is dealt two cards. The value of the total hand is determined by adding the values of the two cards. The side whose total is closest to nine wins, with the banker having a slightly lower house edge than the player. In addition, bets on the bank pay out a smaller commission than those placed on the player.
The game’s regal origins lend it an air of mystique, and it has indeed become the game of choice for the elite social classes in many European countries. In fact, the royal family in England has a long history of playing the game. One intriguing anecdote involves the future King Edward VII, who was called to testify in court after he was accused of cheating at Baccarat in 1891.
In our large-scale field study of real-casino baccarat data, we consistently found that gamblers tend to follow trends and bet on the same outcome that has just occurred. This behavior appears to be consistent with the heuristic of positive recency, and contrasts with previous research suggesting that negative or hot outcomes are the dominant factors in baccarat. However, our study did not control for frequency and so we cannot rule out the possibility that other influencing variables are at play.
Moreover, our results suggest that cultural influences may interact with specific features of the casino setting to promote trend-following behaviors in baccarat. Future research that explicitly examines the interaction of these variables is warranted.
In our analysis, we also found that baccarat gamblers place higher bets on the same outcome after a win than after a loss, supporting another heuristic of positive recency. This result differs from the hot-outcome fallacy and is a novel finding in gambling.