Gambling, without a doubt, is an appealing form of entertainment. Add in the opportunity to win money, and you’ve got yourself an activity that will interest the masses. Unfortunately, the glamorization of gambling leaves out many important details, and most of us end up forgetting that the activity of gambling is a business. In 1992, Canadian gambling brought in $2.37 billion in revenue . Fast forward to 2009, and the gambling business recorded a revenue of $13.8 billion! This huge jump in revenue not only shows us how normalized gambling became, it also warrants a closer look at what the gambling business does to ensure such success.
The common perception is that gambling is a good way to make money. Unfortunately, for the people gambling, this just isn’t the reality. Gambling is a business, and it is designed to be profitable for the business, not the consumer. When gambling, the odds of losing are always in your favor. Let’s go over some terms that might help to make some sense of the gambling business.
We might remember this term from our high school math class. When we talk about odds, it’s the possibility of something happening. In gambling, odds are basically your chances of winning compared to your chances of losing. Do you purchase Lotto 649 tickets? What do you think your odds are of winning the main jackpot? Would you be surprised to hear that your odds of winning are exactly 1 in 13,983,816? That means you have exactly 13,983,815 chances of LOSING. We encourage you to look into your favorite games and better understand your odds. You might be surprised at what you learn!
Probability is the likelihood that an event will occur, and it’s usually documented in the form of a percentage. For example, when you flip a coin, the probability of that coin landing on heads is 50%. The likelihood of that event occurring is 50% because there are only two outcomes, heads or tails. Let’s bring it back to Lotto 649. The probability of you winning the Lotto 649 jackpot is 0.0000000714285%, which is way LESS THAN 1%! Better understanding the odds and probability of the games that you play promotes safer decision making. If I am struggling to pay my bills, buy groceries for my family, and pay rent, it’s probably not a safe decision to buy Lotto 649 tickets in hopes to become rich so that I can pay my bills. A healthier decision for me might be putting the cost of that ticket towards buying food for my family.
Randomness is a big concept for the gambling business. This is the idea that something happens by chance, with no plan, pattern, or purpose. Slot machines and VLT’s are often referred to as “games of chance” since nothing the user does affects the outcome of the game. This is possible because of something called a random number generator, or an RNG for short, which is a computer that lives in the core of the slot machine. The RNG shuffles through thousands of numbers every single second, making it impossible to predict the results of the next spin of the reels. Randomness can also be achieved by rolling dice, shuffling cards, or spinning a roulette wheel. Randomness is crucial for the gambling business because it ensures that players have NO IDEA when the next win might be.
The tricky part about randomness is that our brains are constantly looking for patterns. We often try to find meaning in these random events which may compel us to keep gambling. For example, if we flip a coin four times and get heads every time, we might start to believe that tails is “due.” Unfortunately, randomness dictates that the probability of getting tails is exactly the same as each attempt before, regardless of what happened in the past or of the patterns we think we see. Our brains might tell us tails is due, but in reality, each time we flip the coin, we have the same 50/50 chance as the time before.
Even “games of skill” have elements of randomness built into them. Poker is a game of skill, meaning a player’s knowledge of the game can improve the player’s outcomes. However, even games of skill have elements of randomness to them. You can never be 100% certain what card will be drawn from the deck, how other players might bet, or what sports team may win any given match. No bet is ever a guarantee.
This is a term used to describe the mathematical advantage that the gambling game, and therefore, the commercial gambling venue (casino or “house”), has over you as a player. The goal of any business is to make money, and with house advantage, the gambling business ensures their security over the long term. We as the players see short term wins, but over the long run, the business is the true winner. The house (or the business), achieves this advantage through the rules of the game and by paying back LESS than the true odds of winning. This is probably one of the most confusing of the four concepts we are learning about. Let’s use two different games to breakdown examples of house advantage.
Blackjack– Through the rules of Blackjack, an easy example of house advantage is seen when a player busts (your cards add up to more than 21) AND the house busts. You as the player still lose your entire bet, even though BOTH parties busted and went over 21. Don’t forget that the house never has to bet anything to begin with, that’s your job.
Roulette– Another example to explain house advantage is with roulette. With American roulette, there are 38 numbered slots (1-36, 0, and 00). The payout should be 37 to 1, in that you will lose 37 times but win once. However, casinos can’t make a profit on that, so instead, the odds are set to 35 to 1 so that profit can be made. In European Roulette (what we see in Canada), there are 37 numbered slots. The payout should be 36 to 1, but instead, the payout is also 35 to 1.
House advantage is in every single game available, and it’s all about profit. Therefore, every SINGLE bet that you place on any game will automatically LOSE a percentage of that bet to house advantage over the long term.
Better understanding these four concepts will help you keep your gameplay safer as you can constantly reflect back on them the next time you are gambling. You can ask yourself: “What are your odds of winning in your game of choice? What is the likelihood of you actually winning that jackpot? How is randomness being achieved in each game that you play? What percentage of your bet is kept for house advantage?” These are just some of the many questions that you can ask yourself before you gamble. In doing so, you can keep yourself in check about the reality of gambling. As a general rule, if you choose to gamble, there should be no expectation you’ll come out a winner, especially over the long term.