PLAYING IT SMART by ALAN KRIGMAN

Why Do So Many Gamblers Lose Money at the Casinos?

Ask your friends why they think so many gamblers lose at the casinos. The most common answers will likely be 1) the odds are with the casinos, 2) almost nobody bothers learning to play properly before tossing money around, 3) players bet too high for their bankrolls, and 4) those who get ahead become greedy and try to break the bank, giving back whatever they've already won.

These factors are all true. But they don't really account for the preponderance of solid citizens who claim to bring only as much money as they can afford to lose, then proceed to do just that.

People lose at the casinos mainly because others win. The imbalance, many more vanquished than victorious, results from offsets in amounts involved. Lots of folks lose small while a few win big. And that's the way the gaming public wants it.

Before considering why this is the primary loss mechanism, think about the lesser significance of the conventional explanations.

Strictly speaking, it isn't "odds" that are with the casino, but "edge" or "house advantage." And players still lose at games like blackjack and craps where they can push that edge below half a percent. At this level, it takes 200 rounds before the edge amounts to the average bet during that period. Blackjack players who average $10 per hand, at tables with three other players, would lose $10 to the edge after two and a half hours. Clearly, this isn't what sends them to the lockers on their bad days.

Even playing poorly, or at a game with a higher edge, this isn't a major factor. Roulette and most slot machines get over 5 percent, where the house has theoretical earnings of one bet in 20 coups. A moderately fast slot player might have 600 spins per hour, worth the equivalent of 30 bets to the casino. Wagering $1 per spin, the edge only accounts for a player being $60 behind after two hours. On a typical $100 bankroll, down but not out.

Overbetting a bankroll can work either way -- bringing in as well as sending out the bucks. This doesn't affect players' chances. It swings their fortunes up or down further and faster.

How about greed? Players who get ahead and keep going tend to believe that patterns of past success will continue. Told-you-so armchair quarterbacks, who lecture everyone about quitting when they're ahead, tend to believe the law of averages always snatches defeat from the jaws of victory. Both are wrong. In casino gambling previous results don't anticipate the future one way or another. Earnings can continue to climb or they can drop. Unpredictably.

As for the major cause of so many players going broke, take the four minor elements out of the picture. No house edge, no skill required to play, any size bet, and intermediate results ignored.

To keep things simple, say that 1,000 people each start with $100 and gamble until they reach some earnings target or exhaust their stakes. The pool they'll divvy-up is $100,000. If they all have modest goals of $100 profit, 500 will succeed and finish with $200 while 500 will fail and leave with nothing. Instead, pretend that the players set their earnings goals at $900. Now, 100 will go home with $1,000 each and 900 will be wiped out. Carry it all the way to each person investing $100 in a shot at $100,000. Now, one will strike it rich and 999 will bite the dust.

In a "fair" game with no edge, there's an inverse relationship between starting and ending amounts if the downside is losing it all. As above, to multiply a bankroll by two, the chance is one out of two. To multiply it by 10, it's one out of 10. And by 1,000, the odds are one out of 1,000. Edge, coupled with the other factors, modifies these figures but they remain good approximations. Does this imply it's best to seek small wins and corresponding good chances of success? It does to some. But it's also legitimate to gamble with the fantasy of striking it rich. Either way, the bard, Sumner A Ingmark, was right when he wrote:

A proverb that only a fool would impeach:
The higher a target, the tougher to reach.

(c) 2005, ICON/Information Concepts Inc

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