By
Alexander Carl on July 30, 2010
The Solvency Shark recently overhead a conversation in which a woman recounted how she lost $1200 gambling in Biloxi (“which is a lot for me,” she said), and then made $1800 the next night. “So really, I won.”
This got the S.S. wondering:
can you actually make money gambling in the long-term?
(Before we begin, understand that the answer is
no. Nobody claims that setting foot in a casino is a productive way to manage your money!)
The reason people gamble in the first place (whether betting, playing the lottery or casino games) is
the chance of a large payout. We hear stories about lottery winners, or see casino visitors toting buckets of tokens, and think, “that could be me!”
Odds are you won't be, literally. Sure, big payouts happen from time to time. Like the woman in Biloxi, you could make money in the short-term (that is, if you gamble in just a few instances). But there are two big things going against you—
It's really difficult to gamble “a little”. Have you ever heard of a person playing video poker “once or twice,” or popping into a casino “just for a few minutes”?
Gambling is intoxicating! It's supposed to be. Those who run the games want to maximize your time playing. Which leads me to how:
The odds always benefit the house. The folks who designed gambling games weren't imbeciles— if mega payouts were common, they'd be bankrupt in a matter of minutes.
Instead, each game of “chance” benefits the house after many repetitions. Their long-term payout is called the
house edge, commonly known as the
vigorish.
While a few games have tiny edges (blackjack yields only a 0.5% profit), most have “interest” rates that make credit card companies envious: roulette is around 5%, slot machines around 15%, and keno around 25%!
But can't you beat the odds with strategy? Yes, but to a tiny degree, and mostly in the short-term. Long-term, the house still rules.
Well, you're no fun. Sorry. Any money you plan to gamble, you might as well assume is already gone.
There's a better way to grow your money, with greater possible payouts:
investments.