Casino Gambling in a Nutshell: The higher the payout, the worse the odds.
If you were new to gambling – had no clue what you were doing, really – and someone said, “Hey, don’t bet on that, it only pays 1 to 1. Put your money on this one. It pays 20 to 1!” What would you do? If you were an educated gambler, you’d probably scoff at them and keep your money where it is. But since you’re not, you may just scratch your head and say, “Yeah, I like those odds! I want to win 20x my bet, not just 1x.”
The payout might look pretty, but the odds say you’re making a tremendous mistake. That’s because the better the payout looks – the more dollar signs there are involved – the lower your odds of actually winning that bet will usually be.
Casino Gambling 101: Payouts vs. Odds
Every wager you can make will come with a payout ratio. The most commonly placed bets will pay 1 to 1, or even money. Betting on Red or Black in roulette, or winning a Pass Line bet at the craps table, for example. Others will pay more attractive amounts; everything from 3 to 2 for a natural blackjack, to 200,000 to 1 for a perfect 10-pick in BC, Canada’s Keno drawings.
If the chance to win 200,000 to 1 piques your interest, you may think selecting 10 numbers for just $1 is a great deal! But such attractive payouts always come with the worst possible odds. In this case, the chance of correctly picking 10 of 80 numbers is 1 in 8,911,712. Therefore, the 200,000 to 1 payout is nowhere near high enough to make it a valuable bet. In fact, at that payout, as seemingly high as it is, the casino would actually be achieving a house edge of 97.75%. Ouch!
Fortunately, it’s not quite that bad because players can win smaller amounts for matching at least half of the numbers chosen. Pick 10 and match 5 (1 in 20, or 5% chance), and you’ll receive a $3 payout. That lowers the house edge on 10-pick Keno to 80% (that’s still terrible, btw!).
Rarely do casinos rip their players off this badly, though. In fact, most bets (but not all) boast a house edge of somewhere between 0.5% and 6%. But again, the lower the payout for a win, the better your shot at actually winning the bet is.
Let’s take a look at European roulette. The house edge on every single bet is 2.7%. The odds of actually winning each bet, though – this varies a great deal. A wager on black has an 18 in 37 chance (48.65%) of winning. You’ll double your money with an even payout if you win it. A bet on a single number has only a 1 in 37 chance (2.7%) to win, and you’ll get 35x your bet if you do. But how many times will you have to place that bet before your ship comes in? Probabilities state 37 times, which would have your bankroll down 2 bet units by the time you won back all the money you wagered to win the 35x payout.
Probabilities Rule to Casino Roost
The simple truth is, the longer you gamble, the more probabilities will catch up to you. Sure, you could bet on the same number on roulette and it might hit on the 8 spin of the wheel, instead of taking 37 plays. This would deliver a tidy profit if you were stop then and there and keep the cash. Or, it could take 54 spins to hit, costing you even more money. This is what we call variance, and the less time you spend playing, the higher variance you will experience.
Spin a roulette wheel 1,000,000 times, though, and odds are the ratio of a particular number hitting will be extremely close to its 1 in 37 odds.
What I’m trying to say is that the more you play, the more you can expect the casino to win its ‘fair share’ of your money. The less you play, the better your odds that luck will work in your favor.
If you were to wager $1,000 over the course of 100 bets, $10 a piece, odds state you’ll lose $27 by the time you’re done, having $973 left over. It wouldn’t matter what you place your bets on, because you’re placing so many of them it counters variance. Or, you could place one $1,000 wager. You’d have a 48.65% chance of doubling up, with a 51.35% chance of losing the whole grand. I’d be willing to bet you’d see the beauty of bets that pay even money in that wager!