WAKE UP WEASELO!
Ok, that’s a little better. Now, today’s topic is an Intro to Gambling. Pay attention as your future epic Vegas stories and fortunes may depend on this.
Gambling can be subdivided into two major categories: Games of Chance and Games of Skill. The secrets to success are different for each one. However, they both depend on one thing: the chance of something happening a.k.a. the odds.
We will address each type of Gambling separately.
GAMES OF CHANCE
In games of chance, the odds of something happening are known. You pick an outcome and if it happens you win and if it doesn’t, you lose. Seems simple enough.
However, the trick is in how the house (the entity making the bet with you) pays you. In all games of chance, the house will pay you at a rate LESS than the actual probability of the outcome happening.
Let’s use an example: in American roulette, there are 36 numbers, a 0, and a 00, so a total of 38 possible outcomes. The odds of picking a correct number are 38 to 1.
The casinos, though, pay a correct outcome at 35 to 1. This means that, over time, they pay out less than they take in and thus make a profit. This is called the house advantage or vigorish or “vig” for short. It’s typically expressed as a percentage and the higher the number the bigger the advantage to the house.
Different games of chance have different percentages and individual betting options within those games also have different percentages.
Given this basic understanding of how the games work, the question now becomes: How can one win at these games?
This brings up the second fundamental piece to understand about games of chance: outcome distribution.
When you toss a coin, the probability of it landing heads or tails is 50-50 as there are only two sides. However, it doesn’t go in any kind of order. It doesn’t go tails then heads then tails and so on in a regular pattern. You will have runs where you will get a bunch of heads in a row and vice versa.
Any outcome in games of chance is subject to random streaks. This is where the winning strategy lies. The key is to catch a streak, profit from it, and then walk away. Easier said than done.
In future courses, you will learn strategies and techniques for the most common games of chance: Roulette, Craps, and Keno/The Lottery.
GAMES OF SKILL
The key differentiator between games of chance and games of skill is that in games of skill the probability of an outcome happening is generally not known exactly. One side sets the odds it will pay at and the other side determines whether those odds are correct (in effect, if the bettor believes his/her calculation/evaluation of the odds is better) and bets accordingly.
Wining strategy is built on the confidence the bettor has in his/her evaluation of the odds versus the posted payout.
Let’s take an example out of the world of sports betting. The Steelers are favored to beat the Jaguars by 7 points. In general, sportsbooks set the lines so that as close to 50% of the betting money as possible goes to either option. That way, the losses are cancelled out by the wins and the vigorish/profit is steady.
So, the house is essentially saying there is a 50% chance the Steelers win by 7. Now, given that you have followed the team your entire life and that you know how shitty they play in home playoff games, you may think that the probability of them winning by 7 is actually 30%.
In that case, you would feel you have an advantage as you would be paid HIGHER than the expected probability. You would then bet on that expected advantage.
Keep in mind that this advantage is all in your head. No one knows the true odds of the Steelers winning by 7. You cannot make mathematical calculations like in games of chance. That’s why they are called games of skill. The skill comes in evaluating/calculating odds of outcomes either as close to the unknown true odds as possible or at least closer to the unknown true odds than what is offered.
This is applied in different ways in sports betting, blackjack, and poker depending on the rules of the game. In fact, in blackjack, if you are smart enough and good enough in math and maybe have partners, you can count cards in an effort to increase the accuracy of your evaluation. This is, of course, frowned upon by casinos.
Future courses will go into detail on the rules of each individual game and how the evaluation of odds differs for each.