Presidential Gambles

Steven Abt, Student, Harvard Law School

Russell Goldich, Student, Anderson School of Management, UCLA

Charles Nesson, Weld Professor of Law, Harvard Law School

Over the past few weeks, as market conditions deteriorated rapidly and negotiations on a federal bailout reached a fever pitch in Washington, much of the media and public seemed caught off guard by the contrasting responses of John McCain and Barack Obama. McCain’s positions seemed to change hour to hour, culminating in his unprecedented decision to temporarily suspend his campaign and his brief attempt at delaying the first debate.  Obama’s response, on the other hand, was notably calm, and earned him charges of being dispassionate about the financial crisis from some commentators and insiders.  Neither of these responses should be surprising. Any gambler can see in Senators McCain and Obama traits that are easily recognizable among enthusiasts of the games that the two candidates profess to enjoy.

The campaigns of McCain, who has a well known affinity for craps, and Obama, who once described himself as “a pretty fair poker player,” have proceeded in ways that reflect remarkably the calculations and strategies inherent to gambling, and offer insight to the way each might govern as president.  In short, we subscribe to the old axiom that you can tell a lot about a man by the way he acts when the chips are in the middle.

As any dedicated craps player will tell you, craps is a game of hot and cold streaks, and high risks and high rewards.  Like most casino games, craps is a game that cannot be beaten over the long run. The house has a mathematical edge that makes winning over an infinite number of trials impossible to achieve.  The game’s appeal, though, lies in the fact that when winning comes, it comes in bunches. Step on the floor of any casino in Las Vegas, and it is a fair bet that the loudest cheering is coming from a craps table with a shooter on a hot roll.  Players take large risks with negative expected values, but when they pay off, the player is rewarded handsomely.  Many gamblers will tell you there are few experiences more enjoyable than the rush that accompanies an epic craps win.

Unlike craps, poker is a game that can be beaten. The best poker players in the world may have losing sessions or even losing months, but over longer horizons virtually always come out ahead.  As such, skilled poker players know that they need not overreact to short-run negative swings, and know that “pressing” is almost never a good bet.  While the dramatic all-ins and giant bluffs make for great television, a good poker player knows to choose his spots and to tread cautiously, content to make money picking up lots of small pots until someone is foolish enough to make a play on him when he is holding the best hand.  Barack Obama, who has used poker throughout his career to make friends and expand political ties, has certainly demonstrated a knowledge of this basic strategy.

John McCain, with his “maverick” persona and his reputation as a gambler’s gambler, fits the craps player archetype perfectly.  Most craps players know going in that they’re playing a losing game, but they also know that few other games offer the potential for returns as high and fast as craps.  Whether or not such returns are justified by the risk, one roll of the dice can generate huge winnings, and a few fortunate rolls in a row can earn the gambler thousands of percent on an initial investment. At heart, craps is a game that rewards the courage to go for broke, and the best gamblers are the ones who know that even though they’ll lose more often than they’ll win, when they do win, they win big.  McCain, down in the polls and facing a crisis far from his comfort zone of foreign affairs, made a risky gambit likely to have a high probability of failure, knowing that if his number hit, the election could be his for the taking.  It remains to be seen if McCain hit his point, but for now it looks like he may have crapped out.