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Smart Gambling

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Every once in awhile a new site will pop up and add to Lazy Man and Money from their blogroll. I'm a little obsessive about checking my Technorati page to see who is linking to me. Yesterday, I noticed that Money Millionaire was one such site.

While the theme isn't exactly what I would choose they wrote about becoming a millionaire by gambling. I was pleased that they weren't advocating the idea. In the Hall of Fame of Bad Ideas, gambling to get rich was a unanimously voted in on the first ballot. With that said it got me thinking. If you were going to allot some money to gambling in an attempt to win, how might you best do it... again considering there is no good way.

I first went to roulette. It's an easy game that most people understand. Plus it has that fantastic hypnotic spinning wheel. There are many different best to go with roulette, but as I understand them, the odds are more or less the same with all of them. If I were there, I'd pick one number and hope that it lands on it. If it does, you win 35 times the amount you spent. So in order for me to win 1.5M (let's call it a million after taxes even if that's not the case), you'd have to hit the number exactly 4 times in a row. Since the probability of winning one time is 2.63% your odds of winning four times are are 1 in 2,092,050 (someone feel free to check my math there).

Another way to gamble is the lottery. Powerball is popular lottery in a few states. It's tough to calculate the same odds with lotteries because the jackpot are always different. However, this site has the math that shows your odds are 1 in 146,107,962. That's a little bit worse that roulette isn't it? The good news is that you'll make more if you are that lucky. It's just that you won't make enough, and you could be in real trouble if someone is lucky when you are lucky because then you'll have to split the jackpot.

This is all to say that in general the house odds for a casino are better than lottery. If you were thinking of buying a lottery ticket, you might want to consider the casino. It's rare that go to the casino, but when I do I find that I have more fun than if I just played the lottery - it's simply a prolonged experience. The downside with the casino is that your money may or may not help out the state as much as the state's own lottery. States make a lot of money off of lotteries and that money funds schools and repair roads.

Lastly, please remember, gambling is for entertainment. It is not an investment.

Last updated on February 27, 2008.

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19 Responses to “Smart Gambling”

  1. Matt says:

    Realistically the only two ways to make money ‘gambling’ are to count cards while playing blackjack (which is cheating and illegal in some places) and the other is becoming a good poker player. Although I’m not sure if I’d consider poker really gambling either. The reality is counting cards and being a great poker player are hard to do. Just not really feasible.

    I used to work with a guy who had an interesting definition for playing the lottery – ‘Its a tax on the stupid’

  2. Jeremy says:

    We just went to one of the new casinos built by us, and they have an official world poker tour room, so that is where we’re starting to spend time. This way you don’t have to worry so much about the house odds, and it is basically you against real people and the luck of the cards.

    I wouldn’t consider myself a great player, but I’m good with probability and risk management, so with my small amount of money I play with, I usually come out ahead. My wife and I walked away from the table with almost $200 in winnings the other week. That won’t make me a millionaire, but it is better than losing $200 in 30 minutes just dumping it into some slot machine or playing another game with a high house edge.

    Speaking of poker, we have a tournament tonight, so hopefully I can continue my winning streak.

  3. Dan says:

    I calculate the odds at (1/38)^4 = 1 in 2,085,136.

    I go to Vegas annually, but I don’t try to get rich there. There is a problem with your probability logic, though. There are 36 numbers, a zero, and a double zero on the typical roulette wheel (some just have one zero). Your odds of picking the right number on your first bet are 1/38 (2.63%) on a double zero table and 1/37 (2.7%) on a single zero table. Your odds of picking the right number on your second bet are 2.63% and 2.7%, respectively. You have the same odds on every bet. This is a very important distinction. Consider this:

    The single best thing to happen to roulette (from casinos’ perspective) in the last 50 years is the invention of the historical display. Why? Because people think of cumulative odds such as what you used to calculate the 1 in 2 million chance of winning. People see a roulette table that has come up red 5 times in row, and think “what are the odds that it will be red 6 times in a row?” Technically, the probability is (18/38)^6 = 1.13%. So they think there’s a 98.9% chance the next spin will come up black. In fact, the odds that the next spin will come up black are 18 in 38. The roulette wheel doesn’t remember what it landed on last, it doesn’t act according to odds.

    The only certainty in a casino is that you lose money on each bet. With your example of picking a single number, you’re odds of being right are 1/38. The payout is only 35 to 1. Since you get your bet back, you receive 36 units for every unit bet. This means the house edge (casino’s charge for letting you bet) is 2 units or 2/38=5.26%. This is the edge on almost all roulette bets (it’s higher if you bet the 0,00,1,2,3 combination), which means for every $100 you bet on the roulette wheel, you should expect to lose $5.26. The longer you play, the closer your results will be to these true odds. That is how the casinos get rich, making a nickel on every dollar bet. When you get the feeling you’re gonna get rich, just walk outside and look at all of the billion-dollar buildings around you and remember who makes the money in Vegas. Then go back in and have fun without losing everything and without being disappointed you’re not leaving with millions.

  4. Give Me Blog says:

    I agree with Matt’s friend. It’s a stupid tax.

    Instead of the casinos, win money at my new site. You pay nothing and you get a chance to win hundreds of dollars. You just have to leave a comment. There’s no registration or fees.

  5. Mrs. Micah says:

    There’s actually a book at my library on how to maximize your chance of willing at Powerball. I want to rip that book from end to end, because we’re a poor county and it seems downright predatory to have such a book.

  6. I never gamble, but if I did, I would play the martingale strategy playing roulette. Red/Black double down.. ;-)

  7. Give Me Blog says:

    Yes the martingale strategy never loses…that is, except when you lose $2,550 trying to win $10.

  8. Jon says:

    Back in 2006 I made about 10K in two months doing something called online casino bonus whoring. It basically turned the casino house edge into an advantage for the gambler. I’ll see if I can explain…the casino would offer a match bonus of say $200 on a $200 deposit. The catch is you have to wager 20x the sum of the deposit and bonus…in this case 8000 ((200 + 200) x 20). You could play almost any offered game to clear the bonus, but the best one to clear the bonus was blackjack. If you played optimal blackjack (using a cheat chart if you have to) the house edge would be roughly 0.5%. So you would expect to lose 0.5% of 8000…or $40 of your total. So your expected take was $160. It was SOOOOOO easy to do. Not to mention many casinos had not just initial deposit bonuses, but monthly bonuses that you could do over and over again. Of course the US government, in their quest for securing freedom for its citizens, has passed the UIGEA act and made moving money around to these casinos extremely tough, if not impossible and killed the whole thing. Some people can still do it today with poker, although it is harder (and slower) to bonus whore via poker as opposed to casinos. People have told me that even before I started (in 2006), casino bonus whoring was even better – you could really make a full time income on it easily. Maybe our gov’t will wise up and get these conservative religious kooks out of office and get back to protecting our freedoms, instead of curtailing them.

  9. guinness416 says:

    Well I can tell you definitively how NOT to make millions by gambling, and that’s to back the Irish rugby team. A decade of losses can’t lie! Stuff like online poker and casino gambling has always left me fairly cold, personally. The odds may be better but between the lack of light, the garish decor and the unpleasant table-mates it’s no fun at all.

  10. Adfecto says:

    Every time I start to think I’m good at poker (and maybe should up the stakes) I take a bad beat. It is nature’s way to remind me that I can’t take the stress and frustration of putting any REAL money at risk to a game that involves luck and probability. Lady luck is never my friend for long.

  11. I know enough not to put money down on something that I suck at. So no gambling for me!

  12. I lost $100 playing online poker once. And I learned my lesson.

  13. California Beach Vacations says:

    I think a better idea for gambling, as other have said, is to play games that have some skill behind it. Blackjack, even if you don’t count cards, you can learn the best strategies for each playing situation, that can heavily increase your odds. Also, in poker, learning to play the game well will increase your chances to heavily win.

  14. MoneyNing says:

    I agree that the casino is MUCH more entertaining but I can pretty much buy a lottery for $2 while I cannot do much with $2 in a casino.

    With $2, I can go to the 1 cent slot machines and pretend I’m playing and get free drinks but that’s about it :)

  15. DebtKid says:

    Smart Gambling? Hmmm…sounds like an oxymoron to me. I gambled for awhile…that didn’t turn out so well…yeah…

  16. Mike says:

    The boom of TV Poker has added a new pool of gambling victims. As Jeremy said, poker puts you against other real people and the luck of the cards, not you against the house and the luck of the cards. An increasing supply of people hoping to become tv superstars, without having the skill, certainly favors poker players who know what they’re doing. I don’t limit my time in Vegas to the poker table because other forms of gambling are entertaining as well, but poker is the one game where I win the most often. Of course, as with all the games, I often lose at poker as well. Gambling to become rich, bad idea. Gambling for entertainment, in moderation, sure!

  17. Rory says:

    Roulette has one of the worst house edges in the casino for the player. Basic Strategy blackjack is one of the best for the player.

  18. smart says:

    I play Roulette for fun – My challenge is not spending all the money in a few spins. I don’t mind loosing a predefined sum as long as I enjoy. The same goes for blackjack since it is difficult to perform the advanced strategies, I know I’m about to lose.
    Poker is different, although it involves luck, it also depends on knowing your odds and your poker face.

  19. You make an excellent point. If you’re gonna gamble responsibly then you may as well enjoy it. Buying a lottery ticket is likely to offer less return in the long term than playing at a casino, because the odds will be better stacked. Personally my favourite is betting against horse racing outcomes. However I must stress that I do this perhaps once per month.

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