In studying the financial economics of gaming, it is essential to have at least a cursory knowledge of game characteristics. This appendix is by no means intended as a complete guide. Many websites and widely available books, including Schwartz (2006) on the history of gambling, contain far greater detail concerning the finer points of play strategy and money management (i.e., the number of units wagered at each betting decision). Tax consequences may also have some relevance.

Blackjack

In blackjack, alternatively known as twenty-one or vingt-et-un, the player’s goal is to receive cards totaling more than those of the dealer, but not exceeding 21 – and to do this before the dealer has to show his or her hand. An ace card can be counted as either 1 or 11, other numbers count as their actual values, and picture cards count as 10. Suits do not matter. The payoff to a winning player is equivalent to the amount bet (i.e., even money), except in the case of “blackjack” (a “natural” 21 on the first two cards), when the payoff is three units to two.

The game operator’s advantage in blackjack is difficult to compute at any point of play. However, from the top of a deck, blackjack ordinarily provides the house with an edge of a little more than 2%.