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Apples and odds

19 November 2004

Dear Mark,
In simple layman's terms, exactly what do you mean by "odds"? I find it sometimes very confusing. Linda R.

You are not alone, Linda; many folks run afoul of "odds" — partly because the word has been kidnapped and put to a somewhat distorted use that blurs the difference between true odds and what the casino pays to a winning bettor.

Essentially, true odds express the likelihood that something will happen. Say you have a sack with five apples in it, one each of five different varieties, and you challenge brother Burt to reach in and blindly pull out one of a specified variety, a Granny Smith for example. He has one chance in five of succeeding, and four chances of failing. If you were betting on the outcome, he'd owe you a buck if he failed, and you'd owe him four bucks if he succeeded. But if you were a casino and had to make money over the long haul, you'd have to pay him less than what the true odds called for – $3.50, for example. And the use of the word "odds" in connection with that sort of diminished payoff does lend to confusion.

But, Linda, understand one thing; the casino "odds" are always, repeat, always, in favor of the house. To illustrate, the casino's take on a slot machine can be as high as 30%. This means that on a slot machine that holds 30%, if you bet $100, you can expect to walk away with only $70. The more you play, Linda, the more you will lose. Granted, some gamblers do occasionally win and are temporarily ahead even on a tight machine that holds such a high percentage, but in the long run the casino "odds" will prevail, and the gambler will lose.

Before I shuffle: Next week I am going to share an exception to that rule. I know a person, her name is Kimmy, who actually won 47 times in a row in a casino, and I saw much of it with my own, lasik-enhanced eyes. It's documented, so stay tuned.

Dear Mark,
Our state lottery had a jackpot of $20 million dollars. Recently there happened to be two winners. Each split around four million dollars, far less than the advertised 20 million. Could you please explain the discrepancy? Shouldn't it have been $10 million each? Clark G.

Though your e-mail didn't specify which state lottery you were speaking of, there is some variation in payoffs. But in general, to win the grand prize in a typical Lotto game you buy a dollar ticket, and then correctly match six numbers drawn randomly from, for example, forty-nine numbers. This is called a 6/49 game. The probability of any one ticket winning the jackpot in 6/49 lotto game is one in 13,983,816.

Lottery agencies typically fish out 50% of each dollar wagered, some of which covers expenditures, but the rest is turned over to the state for civic-minded programs like education.

Per your example, with $20 million in the Lotto jackpot kitty, the state grabs half of that figure instantly, leaving the other half for cash prizes, including smaller cash awards for matching fewer than six of the numbers. What you're left with, Clark, is roughly $8 million for winning a 14 million to 1 bet. If around 20 million people were playing the game that week, it is probable two people would win, splitting that pot, which in your illustration was $4 million apiece.

Gambling quote of the week: "Winners stay cool: they have the guts to face the envy and hatred of the losers and the wrath of the gods." Lyle Stuart, Winning at Casino Gambling

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Best of Mark Pilarski
Mark Pilarski

As a recognized authority on casino gambling, Mark Pilarski survived 18 years in the casino trenches, working for seven different casinos. Mark now writes a nationally syndicated gambling column, is a university lecturer, author, reviewer and contributing editor for numerous gaming periodicals, and is the creator of the best-selling, award-winning audiocassette series on casino gambling, Hooked on Winning.
Mark Pilarski
As a recognized authority on casino gambling, Mark Pilarski survived 18 years in the casino trenches, working for seven different casinos. Mark now writes a nationally syndicated gambling column, is a university lecturer, author, reviewer and contributing editor for numerous gaming periodicals, and is the creator of the best-selling, award-winning audiocassette series on casino gambling, Hooked on Winning.