It’s not sport betting, but I have worked for one of the largest online gambling companies. Our payout rate was in the range of 93.5% up tp 97%.
We still made an insane profit.
The casino always wins; and I have no doubt the sports betting industry is making money at the expense of the punters.
For every big winner, there are thousands of losers.
Right.
In more conventional accounting terms, 119B is gross revenue, 109B is cost of goods sold (winning bets paid out), and 10B is net revenue.
Profit is a smaller number yet, since that has all the other expenses of the business, including cost of capital, taken out. I didn’t dig into the details enough to find that number.
Sloppy terminology is always a PITA obstacle to understanding.
So one of the guys at the track had a couple of “hot tips” on Oaklawn today. He heard them from another guy. Yeah, the red flag went up in my mind. I did not wager on Oaklawn today, but keeping this thread in mind, I did pay attention.
Neither selection finished in the money, nor anywhere close to it. Each was priced at 20+, and belonged where they were priced, based on the finish.
Once again: never accept a “hot tip” from someone whom you do not know.
The payout rate HAS to be in the mid-90s for most types of betting, or the gamblers will drift away.
Heck, some casinos advertise 99% payout on slots (the advertised payout percentage has to be true, by the way), and they still make money.
Except, it seems, for state lotteries where the payout is much lower, sometimes around 50 percent
State lotteries are more akin to your church meat raffle than sports betting or casino games.
Which church has a meat raffle? Can I join? I’ll change any of my core beliefs (for a $2 chance at a rack of ribs)…
Quite common around here in New England.
Around here there are Fish Fries and Gun Bashes.
Hence “most types.”
A lottery attracts betters by virtue of being cheap to play with an enormous potential jackpot. If I can bet two or three dollars with the potential of winning an amount of money that would let me retire, the attraction is basically buying a dream once a week.
If you need the gambler to bet many times, you need to pay out on a regular basis. Forking over a few bucks a week at a convenience store is one thing, but the casino or sportsbook is making money by having regular clients. That requires the perception of frequent winning, especially for things like sports bets, blackjack, etc. where you generally win back your bet or a modest multiplier of it when you do win.
The great majority of gambling games on offer have a house edge ranging between about one percent to ten percent. Most are around 5-6. That’s not accidental, it’s just what seems to work. The very few that have worse odds are usually ones with enormous, if very unlikely, jackpots, like the lottery or Keno.
Be aware of the difference between the house edge and the house ‘hold’. The hold is how much of a customer’s money you actually get. For example, a gasme with an edge of only 1% can still have a ‘hold’ of 20% if it can induce a gambler to cycle his money repeatedly. In other words, if a slot machine hold is 20%, then the average person who sits down with $100 will walk away with $80, even though the house might pay out 99%.
Gambling losses == the house edge, multiplied by the number of times you play, multiplied by the amount of money put into action. The casino makes more money by raising the house edge, or by inducing you to play longer, or by getting you to make bigger bets. In slots they do this by plying you with drinks, making the odds on dollar slots better, making the odds even better if you play 5 coins at once, etc.
Raising the house edge lowers the amount of times you win, which might induce people to leave before the house ‘holds’ much money. There’s a minimax problem here where the casino balances all these factors to optimize profit.
If you want to gamble in Vegas without losing much money, find the slowest games with the lowest house edge and hte lowest minimums.
Well said.
In the case of slots specifically, there seem to be lots of players who simply intend to lose 100% of the money they start with. They’re essentially “competing” with the house to see how long it takes until the last dollar has been swallowed by the machine. If it takes 10 minutes they feel they’ve done badly. If it takes 3 hours they’re elated.
Modulo the occasional such player who hits a jackpot that materially exceeds their buy-in, who’ll (usually) quit while they’re ahead this one time. Which is in effect the exception that proves the rule that most slot players just keep at it until the money is gone. For those players, the house edge might be 1-2%, but the house hold is 100%. The players will ensure that’s so by their voluntary behavior.
My wife and I were playing poker in Vegas, and behind us there was a guy playing the dollar slots. He hit a big jackpot - and instead of quitting he started playing several machines at once because they were ‘hitting’. I commented to my wife that he’s determined to lose everything he has no matter how many jackpots he hits.
But the saddest scene is when you see people playing, they hit a big payout and have no emotion at all. They just switch to the machine beside them while the first one counts out the money, and continue on.
It’s just like pigeons in a Skinner box. Eventually the pleasure is gone, and only the compulsion remains.
The last time I played a slot, I took $20 in quarters, fed them in one by one, and let any winnings roll over to the next pull. When I used up all the quarters, I cashed out and got $19.75.
Best 25 cents worth of entertainment I’ve ever had.
Would you mind expanding on this? I’m not getting how the average player walks away with $80 if they pay out 99%, and I suspect I’m misunderstanding terms. Perhaps an example? (“Okay, five gamblers sit down at the slots…”)
Easy …
You start with $100 in slot tokens, at, say, $1 per play, so you get 100 chances to pull the handle. You lose most, you win some, but after your 100 chances are up, you have $99 of tokens sitting in the machine’s output hopper since the house payout was 99% and you happened to hit it exactly.
Now you start over, feeding those 99 dollars of tokens back into the machine again. You lose most, you win some, and at the end of all those tokens going in, you’ve got maybe $98 worth of tokens in the hopper. Or maybe only $80 worth, or maybe $125 worth.
Lather rinse repeat for multiple cycles. In each cycle you bet every bit of the last cycle’s winnings, one dollar token at a time. On average your stake is going down by 1% per cycle, but the variance is large.
Eventually at some point in time you’ll decide you’re hungry or need to poop or whatever. Or your butt is sore from sitting and you’re bored to tears. Or you decide that you’ve already lost (or won) all that you care to for this session. So you scoop up the tokens in the output hopper and take it to the casino cage to convert back into real dollars.
On average, in Sam’s example, the players cash out for $80. Leaving the house with $20 income for however many pulls it took them to get to the point where the player quit.
The hold is bigger than the payout because of players’ behavior; they don’t just run their original stake through the machine once then go home.
The casino lives or dies on how well they can persuade the player to keep cycling the money around and around from output hopper to coin slot.
I lived in Vegas for a decade. I’ve never read quite so poignant a description of a slot player in my life.
Very well said.
A few days ago I went to a local Native American casino here in greater Miami. The zombies at the slots were scary to behold. The video poker, video pai-gow, etc., players had slightly more light in their eyes, but not much.
This may be the most apt description of my buds who like to play slots that I’ve ever seen.
Mike will sit down with 300 bucks. He’ll play until it’s gone. Doesn’t matter that at one point he was ahead 500 bucks. He’ll keep playing, and when it’s gone, he’ll bitch that he never wins.
There was a plot point in the Ocean’s 13 film where they had biosensors to measure respiration, heart rate, and such, with the idea being a cheat won’t get all excited if he wins a huge jackpot, thus attracting the attention of the nice monitor men. Looks like in real life that isn’t a given at all.