Volume III, #7

I had the pleasure of attending law school in New Haven right after legalized gambling was introduced to Puritan New England in the form of the giant Foxwoods Casino in nearby Ledyard, CT. During my first year of law school, I attended the opening of the rival Mohegan Sun and remember thinking how fortunate to attend a law school that grades on a pass/fail basis.

But I didn’t take advantage of the situation as much as my brother and my other roommate. Many Friday afternoons I’d return home to a note that read “Gone to Foxwoods” or sometimes just “Foxwoods” (if they were in a real hurry). They were perfect gambling partners. My brother – somewhat impulsive, prone to making bets he shouldn’t make, and appearing shocked and/or stunned every time they didn’t pan out. My roommate – the instigator but a conservative Yankee at heart, would badger my brother into leaving and then provide consolation as it dawned on both of them that my brother would complete law school with more student loan debt than expected.

Their game was blackjack. They’d spend 5-6 hours at a table without taking a break. They’d typically return at 3:00 or 4:00 a.m., wake me up and regale me with tales of doubling down, splitting and then splitting again, and ultimately some brush with a dealer or pit boss that – so the story went – had earned them the ire of the entire Pequot nation.

After a year, they developed an interest in more exotic table games. I have a distinct recollection of watching my brother play Pai Gow Poker, the only non-Asian at the table. He made a valiant effort to explain the game to me, but the rules never penetrated my brain.

They were never much for slots, bypassing them every time on their way to the table games, dismissing them as entertainment for senior citizens. I’m not so sure they’d do the same today. On a recent visit to Las Vegas, I was amazed at the transformation of the slot machine. What I remember as a single genus of one-armed bandits, most with bars, cherries and lemons, has evolved into species that look, feel and sound remarkably distinct from one another.

Today, these machines are by far the busiest and most popular form of gambling at casinos, and generate 85% of industry profits. Slots and other video machines are the game of choice for 90% of Gamblers Anonymous attendees in Las Vegas. And slots aren’t just for seniors anymore. Among gamblers ages 36-50, 73% play slots while only 15% play table games. For 21-35 year-olds, 69% play slot machines and 18% play table games. Every day, Americans pump more than $1 billion into slot machines.

What’s changed? It’s not just that there are more slot machines. On my first visit to Las Vegas in 1989, my father booked us a room at the Aladdin – an aging hotel-casino with acres of torn-up red carpets that seemed to be waiting for a new era. Indeed, Steve Wynn had just opened the Mirage across the street. But the Aladdin’s casino floor was already crammed with slot machines.

Nearly a quarter century, a tiger mauling and 10 Cirque de Soleil shows later, it’s clearly not just about accessibility (although there are now 850,000 machines in the U.S., twice as many as ATMs). It’s about how technology and research have made slot machines more addictive.

In 1976 the digital/video slot machine was born, ushering in an era of simplistic, immersive, and distraction-free gambling. Why does digital technology have such an impact? By establishing a relationship with the player that exploits our psychological traits. Natasha Dow Schull of MIT describes this as an “embodied relation” in which a gambling machine becomes an extension of the gambler’s own cognitive capacities and spatial skills.

According to a recent paper in the Journal of Gambling Studies, the digital hooks are as follows:

  1. The illusion of control: pressing buttons to produce the outcome.
  2. Appearing to operate on a variable payout: fooling the player into thinking that they more they play, the more likely they are to win.
  3. The near-miss: games are programmed to tease players with near misses about 30% of the time and according to research, a near miss provides almost the same high as a win.
  4. Increased arousal: bells and whistles matter.
  5. Perhaps most important, immediate gratification: there is no waiting for another person, no interruptions – speed means more bets, and that means more excitement.

Despite the fact that slots provide the worst odds in the casino (or tied at the bottom with keno), gamblers are increasingly flocking to slots to lose money. You’d think they would learn.

Perhaps by applying the lessons of slot machines, in a few years they’ll be able to do just that.


The traditional classroom is like a blackjack table. You must visit the facility in order to participate. Sessions start when the leader says so. There are relatively complex rules in order to participate. The session proceeds in a manner that is not individually tailored to your preferences. And sticking with it requires a focus on the long-term goal (i.e., earning a degree, or winning back your money).

Online learning has changed some of these elements. You no longer need to visit the facility. And sessions start much more frequently. But the harder parts (complex rules, not individually-tailored, long-term focus) remain constant. It’s the equivalent of 1989 at the Aladdin, replete with torn-up red carpets.

Enter digital technology. As in gambling, technology is important in higher education not in and of itself, but because it enables three developments that will make learning much more effective, and perhaps addictive. They are:

Competency-based Learning: While competency-based learning is theoretically possible in a non- technology-enabled environment, it’s not nearly as simple and appealing. Competency-based programs that will emerge over the next several years will be entirely online, simple and effective for self-directed learners. The Department of Education recognized this last month with a Dear Colleague letter that spelled out the rules for institutions looking to launch competency-based programs unhinged from clock and credit hours.

Adaptive Learning: Emerging adaptive learning systems meet students where they are, for example, by serving up more challenging learning objects as a result of high performance on formative assessments. And when students struggle, adaptive systems throttle back until the student is ready for more. Adaptivity helps students build and maintain confidence. And with the advent of tablets and the immersive (non-browser-based) app environment they enable, adaptivity will become even more powerful. Tablets know if a student is moving the tablet, touching the screen, ambient noise levels, if there is a human facing the screen, location, or change in focus (switching from one program to another) – all coming under the umbrella of “telemetry” data. Telemetry data will be instrumental in determining which learning objects and sequences are conducive to learning and which are not.

Gamification: While competency-based and adaptive learning will increase efficacy, gamification may prove to be the most transformative trend. In videogames, goals are clear and feedback is immediate. Focus is the result of interactivity and competition. If you’ve ever tried to pry a teenager from a game console (or a friend from a modern day slot machine), you’ve borne witness to the power of gamification: the inclusion of game-like elements into learning. Successful next-generation online learning models will employ rewards and recognition to provide students with the sense they can succeed, and to propel them onto the next unit without regard to their ability to stay focused on the long-term goal of earning the degree.

As online learning programs, courses and experiences evolve to incorporate these elements, it’s not ludicrous to believe that this kind of learning will one day constitute 85% of the higher education market.


State governments are now pushing slot machines like crazy to raise much-needed funds. If they do direct any of this incremental revenue to higher education, they’d be well-served to not only take the revenue, but also apply what we’ve learned from slots and direct state systems to apply funds to next- generation online programs that push the boundaries of learning technology.

If states do this, higher education will become much more integrated into everyday life. Adults who are not continuing to earn value-bearing credentials will become the exception, not the rule. And this may prove to be the best path to a better-educated population less prone to popping coins into slots.

Co-written by Peter Enestrom, Vice President at University Ventures.

University Ventures (UV) is the premier investment firm focused exclusively on the global higher education sector. UV pursues a differentiated strategy of ‘innovation from within’. By partnering with top-tier universities and colleges, and then strategically directing private capital to develop programs of exceptional quality that address major economic and social needs, UV expects to set new standards for student outcomes and advance the development of the next generation of colleges and universities on a global scale.