From the course: Everyday Statistics, with Eddie Davila

The house always wins

From the course: Everyday Statistics, with Eddie Davila

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The house always wins

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- [Instructor] Vegas, gambling. Some lose money, some end up winners. But somehow, no matter how you do, the house always wins. They win so much, they give away rooms, food, and other perks, how do they do it? Casinos understand statistics. Let's consider many of their most popular games. Slot machines, the return on slot machines is estimated at 90%, so $10,000 goes into a slot machine, expect $9,000 to come out, the casino keeps $1,000. The real problem with slot machines is that the true odds are unknown. In some casinos, the estimated return might be 97%. In other casinos, it might be 80%. No one except the casino really knows. Think about that, imagine playing a game of dice. If you roll a one, two, or three, you win. But I can't tell you if it's a six-sided die or a 20-sided die, will you play that game? If you play the slots, you're playing with blind odds. Believe it or not, the best odds are on games like blackjack, craps, and roulette. In craps, if you bet the pass line, the casino has only a 1.4% edge. But there are so many other betting options on the table, and many of those give the casino a bigger edge. But they also yield a higher return for the gambler. So they're just oh so tempting. How about roulette, once again, if you bet red or black, the casino maintains a small edge. Why isn't it even odds, well, in addition to 18 black numbers and 18 red numbers, there are two green numbers on this table, advantage casino. And in roulette, just like in craps, while there are some decent bets, the more enticing and exciting bets are more favorable to the casino. Think of it this way, the casino is charging you extra for the more exciting ways to lose your money. The best odds are believed to be on blackjack. Most casinos have only about a 1% edge over the player. But again, there are things to consider. Only if you are a skilled player that knows how to play all the card combinations do you have a chance at those nearly even odds. But if you don't know the best strategies or decide to play against the odds, your probability of winning drops. In many cases, your lack of understanding might be the casino's biggest edge. And in some cases, the casinos alter the rules. Sometimes they make the game better for the gambler. Other times, they stack the odds more favorably in their direction. One other issue is the number of decks a dealer uses. One or two decks favor the gambler. Six to eight decks favor the casino. But even if the odds were only 1% in their favor, think about how the money stacks up, in one hour, a table with only three players could deal out 200 hands. If the casino only has 10 tables, in five hours that would be 10,000 hands. Suppose the average wager per hand is $20. $200,000 wagered, $198,000 to the gamblers, $2,000 for the casino, and that's under the best circumstances for the player. My two cents, don't bet. And if you do bet, well, maybe consider taking the statistics foundation courses first.

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