While, it can be amusing to watch your dog chase

I can't be sure why this is the case, but I have theory.

Dogs are predators, well mostly. Let's face it, the average domestic dog holds onto a bunch of hunting behaviors, but for the most part, has lost the ability to be a truly effective hunter. Yes, there are exception, but by and large, the domesticated dog is a rather inefficient hunter. This is because they have been bred over thousands of years to do specific tasks. Most of these tasks are variations of their natural hunting ability. Retrieving is a sort of modified hunt, and so is herding, and so on.

We expect that our working dogs have a high degree of success when working. In fact, we have bred them to be incredibly persistent. In doing so, we have removed a natural response to a failed hunt. A wolf will only pursue his prey so far and with so much vigor before he wisely recognizes that he is burning more energy than he can hope to recover from his prey animal, or that his chances of actually catching the prey are not worth the effort. In other words, his prey drive shuts down after a time.

Domestic dogs are not so good at this. Their drive shuts off when they achieve their goal.

A common tactic used in training protection dogs is the keep frustrating the dog by denying him his quarry until he becomes entirely single-minded in his desire to sink his teeth into the agitator. However, once a certain level of dedication to the hunt has been achieved, it is important that the dog have a high rate of success as hunting these human varmints. You see, it is important for the dog's mental stability that he get the reward of actually catching his prey, otherwise he becomes frustrated and unstable.

Applying this to the laser pointer game, it is clear to see that the pointer is a hunt that can never end. No matter how persistent the dog is, no matter how fast or skillful, he will never catch the light. As a result the prey drive never goes to sleep. The dog gets ramped up, and stays that way. The circuit is never completed and the dog enters into what can only be described as an unnatural state of existence.

The net result is that the dog is thoroughly frustrated and mentally agitated. The dog, needing to close the circuit, will begin to engage in other behaviors, which ultimately will not successfully close the circuit. And so the cycle continues. These dogs can be rehabilitated but it is a lot of work. It is much better to simply avoid the problem by avoiding the cause. Play tug, throw the ball, or engage in some other game your dog can actually complete, but for the love of your dog, don't play with the laser pointer!

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