Tan Kin Lian's Blog: Betting - getting the right payout

Thursday, October 22, 2009

Betting - getting the right payout

Gambling is a game of chance. It is fun. Many people enjoy it. A common type of gambling is a bet.

When you bet on an outcome with a friend, you have the choice of taking either side of the bet. You do not have to incur any expense. What one person gains is the loss of the other person.

When you place a bet with a betting house, you have to incur a spread. For example, you may lose $100 when you win the bet but only win $90 when you lose the bet. The spread in this case is 10%. The betting house needs the spread to cover its expenses and to make a profit.

The betting house is ready to take you bet at any time, but the odds may change according to the time that you placed your bet.

When you place a bet on a sporting game, there is the risk that the party that collects the bets may bribe the player towards an outcome that is profitable to that party. This is called "fixing the game" and is a crime. You have to be careful about betting on a game that can be fixed. In that case, you will get less than your fair payout.

When you bet on certain type of games in a casino, you can calculate the actual odds of winning or losing the bet, based on the physical characteristics. For example, the chance of drawing an ace in a pack of cards is 1 in 13. The chance of getting the right number on the roll of a dice is 1 in 6. The chance of picking the right number in a rouletter is 1 in 38 (i.e. 36 numbers plus 0 and 00).

You can pick on any outcome, but the reward for getting it right will be based on the actual odds, less an expense margin.

For example, in roulette, you will win $35 for each $1 that you have bet although the chance of losing is 1 in 37. If there are equal bets on the 36 numbers, the casino will break even on 36 out of 38 cases and win all the entire bets on 2 out of 38 cases. The spread is nearly 5%. This is used to cover the expenses of running the casino and producing a profit.

Note: you should avoid bets where the payout is not fair to the better, or where the spread is higher than the entertainment value.

Tan Kin Lian

4 comments:

Anonymous said...: The one casino game where a skilled player has a slight mathematical advantage is blackjack.

A skilled player has to keep track of the type of cards that have been played. This is called "card counting".

Casinos usually declare "card counting" to be illegal. And card counters (once identified) are usually banned from entry by casinos.

The point being - the rules & games favour the house or casinos.

But at least it's still more transparent than structured financial products.

Gamblers don't usually delude themselves into thinking they are safe from losses because they are "investors" who are in it for the 'long term".

Arguably, the biggest gamblers are really the long term investors.

You could maybe make a fairly good guess as to the direction of the stockmarket one month from today.

But it's sheer hubris and ignorance to believe you can predict the stockmarket prices 10 years from today. But this is exactly what "buy & hold" and "invest for the long term" really means.; October 22, 2009 1:24 PM
Vincent Sear said...: Card counting outlawed? How's that possible when a good player can count and memorise the cards previously dealt and shown? I think that's just an urban legend.

In fact, in many casino card and dice games, they actually provide the players with paper and pencil if they wish to record previous outcomes in order for them to decide what'd be their next bets.; October 22, 2009 11:09 PM
Casino said...: Betting in casino is thrilling. I really like betting as the experience of winning the bet is just great.
You have given quite good information here on betting. I will keep visiting your blog for more good information.; March 26, 2010 1:30 AM
Unknown said...: Great post. I have been playing online casino games since a pretty long time. Right now I'm more into online games. Giving a break from these games for a while.

games; September 09, 2010 7:45 PM