Baccarat is a popular casino game that requires minimal skills to play. It is a card game in which gamblers bet on the player or banker, with the aim of winning a hand that totals closest to nine. The game has a long history and has become one of the most popular games in Asia, Europe and Latin America. It was also a hit in the US in the 19th century and remains popular today. It is played with six decks of cards and a table that has from seven to 14 seats for players and a dealer’s area. The cards are shuffled together and the game follows strict drawing rules. The player and the banker are given a pair of hands that will be dealt. The gamblers bet on the hand they think will win and are allowed to place multiple bets, but simultaneous betting is not permitted.
Gamblers’ prediction of future outcomes in baccarat may be influenced by an erroneous belief in positive recency, the tendency to predict more frequent or higher quality events following a sequence of similar outcomes. This phenomenon is well established in the literature and has been shown to contribute to an increase in risk taking behavior (for example, Langer, 1975; Tversky & Kahneman, 1974). It is important to understand the role of this bias, as it can reinforce maladaptive gambling behaviors.
Our study aims to provide empirical evidence of the pervasiveness of this trend-following strategy in real-world baccarat. To do so, we analyzed large-scale field data from a casino, collected from 17,970,830 baccarat games played by customers. We selected customers who placed 70 or more bets in a day and visited the casino on three or more days. These criteria indicate a reasonable level of engagement with the game and a high degree of continuity of bet placements. We then split the dataset into two, allowing for independent validation.
A key advantage of our dataset is that it includes detailed information on the outcome of each baccarat round, including the number of bets won and lost. This enables us to examine the effect of different aspects of the game on the likelihood of following a trend, such as the frequency or streak length of past outcomes.
The results of our analysis showed that baccarat gamblers are significantly more likely to follow trends when the frequency of previous outcomes is higher, but not when the streak length is shorter. This result suggests that baccarat gamblers exhibit an adaptation of the hot-odds fallacy and shows that the determinants of positive recency are more complex than previously thought.
It is possible that factors specific to the baccarat environment promote this pattern of behavior, such as the highly stimulating casino environment or the tendency for customers to observe their peers’ decisions. We are currently examining whether these factors influence the likelihood of following a trend and hope to offer new insights into how cognitive biases shape gambling behaviors in real-world settings.