In July, 2014, newspapers ran a copyrighted Bizarro cartoon by Dan Piraro with the caption, “Kirk and Spock travel back in time to 2014.”  The two Enterprise officers are standing on a street corner.  Two guys are pointing at them and laughing: “Ha ha! Where’d you get those old phones?!  Do they do anything other than make calls?”

When Star Trek® aired in 1966 flip-open “communicators” were an easy way to show viewers that the series’s adventures took place in the future.  Today, we know that those science fiction writers underestimated the impact that technology would have on communications, and most other areas of our lives.

Go back in time even further and predictions of future life seem strikingly more outdated.  Steampunk is a subgenre of science fiction that plays with the idea of how people in the 19^th century would envision the future, without knowing about the technology we now take for granted.  A best-selling series by Félix J. Palma features the 19^th century science fiction author H.G. Wells.  The series takes place in 1888 and Wells becomes suspicious of a supposed trip to the future, to London in the year 2000 AD.  Would there still be gas lamps, rather than electric lights (let alone steam-engine powered robots)?

But non-fiction futurologists also do not know what they do not know.  In 1894, horses had become an indispensable part of city life; the only readily available means for transporting goods and people.  The Times of London estimated that by 1950 every street in the city would be buried nine feet deep in horse manure.  One New York prognosticator of the 1890s concluded that by 1930 the horse droppings would rise to Manhattan’s third-story windows.  A public health and sanitation crisis of almost unimaginable dimensions loomed.

And no possible solution could be devised.

Although it is hard to be right about what the future holds, it is easy to be wrong.

How to Improve Your Odds of Being Right

The two most important steps in predicting the future are:

1)  Start with facts.  Basing predictions on ignorance or wishful thinking will inevitably result in incorrect conclusions.  Prof. Philip Tetlock at the University of Pennsylvania has been looking at thousands of predictions and running experiments for more than 19 years.  He has found that the best forecasters are not necessarily experts.  They are individuals who base their predictions on verifiable facts, who do not base their judgements on personal beliefs, and, who are quite willing to change their minds.  The worst forecasters are those who are strongly loyal to a particular ideology.

2)  Look for trends.  Technology is rapidly changing almost every part of modern life.  But even extremely disruptive developments, like the iPhone, still take years to have an impact on a majority of the population.  And older patrons, who are living longer, are the least likely to change their lifestyles.

For gaming regulators, these steps can be problematic.  The individuals who are most knowledgeable about what is happening in the industry are operators, suppliers and other insiders.  Their very jobs depend on getting in patrons and keeping them happy.

There are few objective experts, even in academia.  Most people who study an industry do so because they find it interesting.  There are few real objective outside experts; even journalists can become beholden to their sources.  If academics and others who make their living studying an industry are good at what they do, they almost inevitably eventually are hired as expert witnesses and consultants to significant actors in that industry.  And the money flows more easily from private companies then from government regulators.

This is most obvious in an industry like legal gaming, which is both highly lucrative and highly regulated.  Private operators need experts to be on their side.  Licensed casinos are exceptions to the almost worldwide universal prohibitions on gambling.  For the flow of money to continue, casinos need experts to be on their side, to help convince government decision-makers to allow the business to continue to exist at all.

But casino operators, especially those that are privately owned, have interests and goals that may be in direct conflict with those of government regulators.  The first duty of officers and directors of corporations is to their shareholders.  Other stakeholders, including employee, patrons and the general public are of much less importance.

The danger in relying upon industry insiders is that regulators can become captives.   Because technology and society are constantly changing, regulators have to be in close and continuous contact with executives in the business they regulate. It is easy for regulatory agencies to become overly friendly with the regulated.  The phenomenon is common around the world and across all industries.  It is known as regulatory capture:

A form of government failure which occurs when a regulatory agency, created to act in the public interest, instead advances the commercial or political concerns of special interest groups that dominate the industry or sector it is charged with regulating.  When regulatory capture occurs, the interests of firms, organizations, or political groups are prioritized over the interests of the public, leading to a net loss for society.  Government agencies suffering regulatory capture are called “captured agencies.”

Regulatory capture is not corruption.  It arises from the fact that operators and suppliers are organized and have lobbyists and lawyers, while patrons do not.  So, even when not trying to predict the future, regulators spend most of their time talking to people in the industry, including employees, if they are unionized.

Interestingly, from the operators’ viewpoint, their regulators are not captives.  When you are turned down nine times for a requested relaxing of the rules, you don’t feel you are in control when your regulator reluctantly grants your tenth request.

Casino executives are by no means seers.  Like other human beings, they can fall into the trap of believing that the world they see today will be the same tomorrow.  It is comforting to believe that changes will be only evolutionary, not revolutionary.

And trends do not always continue.  Success can lead to misreading the future.  Tremendous success can warp the recipient’s view of themselves and of the world.  One of the most dramatic examples in the gaming industry was MGM building City Center in Las Vegas, the most expensive privately funded construction project in the history of the United States.  Land values in Las Vegas had be skyrocketing for years.  But, even at the time, before the Great Recession, it seemed odd for a casino company to create giant competitors to its own existing casinos.  I asked an executive from another company why MGM would do this.  He answered, “They forgot what business they were in.  They thought they were in the real estate business.”  The result was near-bankruptcy.