Gambling odds and probability analysis

Gambling Odds

Casino gambling in the United States is growing rapidly and shows no signs of abating. Since the first casinos opened on Native American reservations, many states have seen the potential revenue that gambling can add to its coffers. When Pennsylvania decided to add casino gambling in 2006, it was with the idea that it could generate enough revenue to supply some tax relief. But within just five years, eleven casinos have opened in the state brining in a total of $3.66 billion in revenue, surpassing New Jersey to become the second-largest casino destination in the country behind Nevada (Walters). This remarkable surge in gambling would not exist if not for the desire of average people to make large amounts of money in a short time. Every person who enters a casino seems sure that their large payday is imminent and they continue to spend, reasoning that eventually one good hit can make up for previously accumulated losses. The reality of the situation is, of course, much different. Casinos are in the business of making money and they would soon close up if they were in the habit of giving it away. The odds at a casino are gamed so that the vast majority of visitors will leave with less money than they had when they arrived. In spite of this, an army of gamblers continues to believe that they are the exception to this rule. They get caught up in the moment and focus more on luck than they do on the real reason for their mounting losses: the house edge.

Odds of Casino Games

Most people entering a casino are there to spend a little of their hard-earned money and have a good time so, for them, the slot machines with their bright lights and loud noises, including the sound of coin payouts, are the ideal destination. These machines are placed near the entrances to the casinos to entice people to begin spending money immediately upon entering. This is the ideal situation for casinos, since slot machines have the worst odds in the house and casinos derive approximately two thirds of their profits from slot machines alone ("The Odds of Gambling"). Because of this, slot machines are strictly for "recreational" gamblers.

Those who are serious about wanting to make money at the casinos eschew these machines and head to the areas where they believe their odds are inherently better. At least, that is what the prevailing wisdom seems to be. However, upon closer inspection this may not be the case at all. Casinos have built into all of these games a so-called house edge, or house advantage. This can be defined as the percentage that the house takes out of every dollar bet on average (Eadington 179). This house edge can range from blackjack, with its fairly modest 0.50% average advantage, up to keno, with a whopping 28% (Eadington 179). From simply perusing these numbers, one might determine that blackjack offers an almost even chance of winning, but this appearance is deceptive as there is more to the equation.

There are many different ways to play blackjack, with the so-called "perfect strategy" being the preferred method of serious players ("The Odds of Gambling"). This strategy was derived by computers and is based on the law of large numbers, which states that over time averages and tendencies gain strength. By utilizing this method, players can move the house edge slightly in their favor, setting it at 1.2% to 2.0% ("The Odds of Gambling"). By using a method of counting cards, the house edge becomes even lower, ranging from 0% to 2.0% ("The Odds of Gambling"). But, for normal players who do not know these rules or methods, 10% to 20% is the normal house advantage ("The Odds of Gambling"). From these numbers it is easy to see how varied the house edge actually is. Regardless of the method utilized, however, the odds still remain in the house's favor, even against the best opponents.

The games of chance are even harder to manipulate in the player's favor than are the skills games. For example, roulette, a game that relies solely on the bounce of a small steel ball, has a house edge of 5.26%. So for every $100 spent you will lose $5.26 on average. Slot machines range from 2.0% to 35% house advantage ("The Odds of Gambling"). The one potential exception to this house advantage may lie within the game of craps. While the game of craps can be exceedingly complicated and the odds vary based on the type of wager laid, the opportunity to bet on the odds gives the player some advantage. For example, if a player bets the pass line and the dice thrower establishes a point, the bettor then has the option of laying a bet on the odds, sometimes for up to 100 times the original bet but usually at least for twice the amount (Brisman 132). If the thrower makes his point, the bettor would win both his original bet and the odds bet. The advantage of this is that, while the original bet remains with the original 1.4% house advantage, the subsequent odds bets are even with the house. Therefore it makes sense to put as much money as possible on the odds bets to decrease the overall house advantage (Brisman 132).

Why People Continue to Gamble

Most people entering a casino are blissfully unaware of such statistics. They are usually there to have fun and spend some time and money without worry. But many others come to the casinos with the expectation of earning a big payday and never having to worry about money again. These people seem to think that, is they are losing it is only a matter of time before their luck changes and they will start winning. If they begin to win some money, they begin to think that their luck will never run out and start betting even larger sums.