Gambling

One of the chapters in my new book is about the way adults waste money. Here is a section from one of the chapters.

Many years ago I recognized that gambling can be a lot of fun but I realized right away it is “nearly” impossible to beat the odds in the long run. We all have heard the idea that they don’t build those fancy casinos by losing to the common folks. Still, I knew that if I studied the industry I could at least reduce my losses to a minimum and even win from time to time. I checked out all the library books on the subject and soaked up the information better than Sponge Bob Square Pants would absorb a bathroom accident. Eventually, I became a very good amateur gambler.

I could expand on many of the lessons I have learned, but the most important one is this: There are only a few ways you can beat the odds and here are the ones I know about.

• The best one is to buy your own casino and be on the other side of the table.
• Become a card counter at 21. There are rare occasions when the deck will favor the player. In essence, you bet small amounts while you study the remaining cards in the deck. Then, when the deck finally has a sufficiently disproportionate number of face cards, you increase your bet substantially. There was a mathematics professor at MIT named Ed Thorp who developed and proved this theory in the 60’s. But, the casino bosses caught on and made some adjustments which make it a lot harder to duplicate his success.
• Become a highly skilled poker player. In the long run all players get essentially the same cards, but a few players (below 20% of them) grow their purses consistently while weaker players serve as their prey. But regardless how good you become, there are odds working against you in poker games too. The house takes a piece of every pot, known as rake, and most players tip the dealer with each winning hand. All this overhead makes it very difficult to overcome the daunting odds so the biggest winner is still the house.
• Get incredibly lucky. I know one lady who hit a Vegas slot machine for just under one-million dollars. Her payout is $47,000/year for 20 years. The problem was that she did not really understand how lucky she was. Millions of dollars have to be lost by other players in order to build the jackpot to that amount. In the meantime the machine had to cover all of the other smaller payouts along the way and earn a profit for the casino. Considering she was playing a quarter machine, and it only keeps about one cent per quarter, that is an astronomical number of losses. The first year, after she received her annual check, she tried to duplicate the feat, but she soon lost all of the money. The same thing happened the next year and the next. After that I lost touch with her, but I suspect she may eventually give all of the winnings back.
• Money management. The trick here is to observe streaks and bet a lot more when you are in winning streaks and a minimum when you are losing. The problem is the dice or cards have no way of knowing they are falling in any particular sequence and they have no obligation to continue in the pattern. Therefore, any new roll of the dice or set of cards has the exact same odds as any other. Your streak is just as likely to end as it is to continue. Still, anybody who has gambled a fair amount can tell you there are those occasions when the cards are especially cold or hot. If the gambler is astute enough to take advantage of the trends he can exaggerate his winnings and subdue his losses. This technique can be very successful in spurts, but it too is mostly a matter of luck and doomed to failure in the long run.
• Cheat. We have all heard stories about somebody who bought off an athlete, a coach or referee in a sporting event. Or, I guess someone could put doggie downers in the food of a lighting-fast greyhound and sway the outcome of a race. People have been known to shave the dice, so that one number is more likely to come up. Black jack dealers have been known to form partnerships with other cheaters and skim money. Others put invisible ink on the back of cards, and so on. This all sounds fascinating, but…I “bet” I don’t have to finish this sentence for you.

Everybody else is a net loser. The more you play the more you lose. The best you can hope for is an occasional good session and a lot of fun for your entertainment dollar. So dump the gambling bug unless you can accept those facts.

The lottery is your very worst gambling value. If you listen to the radio ads in Colorado and other places you will frequently hear this phrase: “Prizes equal 50% of sales.” Put another way, the house (the State) keeps 50% of all the prize money. The ruthless casinos give you much better odds than that. If giving up half the money is not bad enough, the “lucky” winner gets screwed even worse because the Feds and the State take another big chunk of the winnings in the form of income taxes; potentially over 40%. Good God, even the Mafia wouldn’t charge you that much. Still the state preys on the many lottery addicts who buy tickets week after week. Sadly, many of the people who live in this dream world are the ones who can least-afford it.

As far as I am concerned, there is nothing wrong with an occasional visit to Las Vegas or playing poker with friends a couple of nights a year. However, when the topic is wasting money, compulsive gambling is as bad as any other addiction. The hard-core gambler cannot get enough action, win or lose. In the worst cases, these people are known to lose everything they own and to destroy loving relationships. I have known three such addicts personally; two of them went broke and the third person could not get through the day without betting on all sorts of things. Obviously, anybody who has problems like these people needs to consult with qualified counselors before all is lost.

To close out this topic, let’s see if we can agree on something: Occasional small losses (let’s say $50 or so, a few times per year) can be a reasonable price to pay for entertainment at the gaming tables, and going to Vegas or Atlantic City can really be a lot of fun. It is okay to occasionally earmark a reasonable amount of money for this entertainment, but more than once per year, or losing regularly or losing large amounts, or buying any lottery tickets are among the worst things on which we waste our money.

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