There are stupid gamblers and there are professional gamblers.

The stupid gamblers believe this fallacy, and that's why they are stupid. It's the reason that casinos make monkey. It's also the reason no succesful professional gambler (or even a smart gambler) doesn't go within 20 feet of a chance-powered gambling device. They stick with card games and the like, because there, skill and intelligence play a role. You can make money off card games, but you can't with chance-powered gambling devices.

Incidentally, did anyone hear about the waitress at the casino who struck it rich?

See, there was this massive slot machine, with something like a million dollars for the payoff. She kept track of its payoff schedule. One day, it was due to go off. So she played it, and struck it rich. A smart woman, if you ask me.

There do exist slot machines with no payout schedule, but only in the same sense that there exist random number generators with an infinite period.
A friend of mine once employed the gambler’s fallacy for significant profit. The means by which he did so involve a certain game that used to be played on cruise ships. The game: called Horses (or, alternately, Horse Race) involved a track divided into eight lanes and about thirty squares in each lane. Each person would place a set amount of money on a particular horse and the horses would be advanced by means of one roll of the dice per set time period (often a day). The pool would then be divided between all those who had bet on the horse that reached the end of the board, representing the finish line first. Due to the gambler’s fallacy, very few people chose to bet on the horse that had won the preceding race. By always betting on that horse, my friend derived a statistical advantage great enough to ensure that, over a long time frame, he consistently made rather than lost money. This money was usefully applied to the purchase of alcoholic beverages.

The same statistical trick can be employed by any wily gambler. Just remember the fair bet equation: if the probability of winning (expressed as a fraction of 1) multiplied by the payout to you in case of victory equals a number greater than one, the bet is ‘fair’ meaning that you will make money doing it over and over or, at least, you will not lose money in aggregate. Clearly, with Horses, the fair bet equation only works if the size of the pool divided by the number of people betting on your horse (lower than the others due to the gambler’s fallacy) multiplied by (1/8) is greater than one. By simply making this calculation before each round my friend’s continued supply of spirituous beverages was ensured. The same tactic can be applied to any game with a set probability of winning: rolling dice, flipping coins, etc.

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