Baccarat is a slow-paced card game of high stakes that has gained popularity in casinos around the world. Aside from blackjack and poker, it is one of the few games that rely heavily on random chance rather than player skill or decision making during the hand itself. This makes it a popular choice for players looking to push their luck. In the past thirty years, Baccarat has become a staple in American casino floors. The game is characterized by large oval-shaped tables that seat up to 14 players and have betting areas labeled for player, banker, and tie wagers. Baccarat’s origin is unclear and there are multiple theories as to its evolution. Some believe that the Italian version of the game created by Felix Falguiere was based on a legendary Etruscan game of life or death in which a player threw a nine-sided die to determine their fate. Others believe that the earliest versions of the game were played with tarot cards since Falguiere was a fanatic for this ancient divination system.
The game is slow-paced and has a ritualized feel to it, punctuated by the presence of the three dealers and a caller who manages the game and announces results. There are several nuances to the rules that should be familiar to a player before playing. The most important of these is the fact that the resulting outcome of the game (player or banker) is determined by a series of rules, and not by the player’s or banker’s actual total. Picture cards count as zero points, and numbers from two to nine count as their face value, with aces counting as one point. The goal of the game is to get closer to nine than the other team.
Despite its Bond-dipped mystique, the game is not without its risks and it can be difficult to differentiate between a winning and losing streak. As such, it’s not uncommon for a player to place a large amount of money on a single outcome in order to increase the likelihood of winning. This is known as the “hot hand” fallacy and has been shown to be particularly prevalent in baccarat gambling.
We analyzed data from 17,970,830 baccarat games played by real customers in their casino of choice. These customers were selected based on their level of engagement with the game: placing more than 70 bets per day demonstrates substantial activity and visiting the table on at least three days reveals repeated participation over time. We randomly divided this dataset into a control group and an experimental group and analyzed each of these groups independently.
The results show that the majority of our customers follow a trend-following strategy in baccarat, as evidenced by their higher odds of betting on the consecutive outcome than the nonconsecutive outcome. These findings provide further evidence of the prevalence of the hot hand fallacy in baccarat and its potential implications for problem gambling. Furthermore, our results support the hypothesis that the adherence to the following trend strategy in baccarat is reinforced by an erroneous belief in positive recency.