Casino Gambling For Dummies. Swain Scheps

      Recognizing dependent events

So, you may be asking yourself, what constitutes a nonindependent or dependent event? Dependent events are occurrences that are more or less likely based on the previous occurrences. Imagine a bag of five black balls and five red balls. Before you pull a ball out, you know you have a 50 percent chance of pulling out a black ball and the same odds of pulling out a red ball. Then you reach in and pull out one red ball and toss it aside. Now the odds have changed — you no longer have a 50 percent chance of pulling either ball. Because you’ve removed a red ball, your chances of pulling out a black ball are now greater (56 percent). In other words, the probability of a single pull is dependent on previous events.

      So, in some situations, the past does affect the future. Another classic example is the game of blackjack, in which the composition of the remaining deck changes as cards are dealt out to players. As we’ll discuss in Chapter 7, your chances for getting a natural 21 get lower as more aces are dealt from the deck.

      

Almost all casino games consist of cards, dice, spinning wheels, or reels. These games almost always yield independent events. Blackjack is the rare exception, which is the main reason for its popularity.

      Factoring in the odds

      

To be a successful gambler, you must understand the intersection of statistics, probability, and the odds. In simple terms, that means you need to understand how often something is to happen (statistics), how likely that it can happen to you (probability), and what you’re going to get out of it if it does happen (payout odds). With a grasp of these concepts, you’re ready to tackle the casino with realistic expectations, and you can understand why some games should be avoided.

      Let’s return to our trusty coin flip. You probably know that heads and tails each have a 50-50 shot at turning up. You can communicate the probability of the flip in terms of odds. In the case of a two-sided coin, your odds of flipping heads are 1-to-1. In other words, with two possible events (outcomes), you have one chance to fail and one chance to succeed. Clear as mud? Here’s another example. Consider rolling a 6-sided die. What are the odds that you’ll roll a 3? The ratio is 1-in-6, so the odds are 5-to-1.

      When the true odds are greater than 1-to-1, that event has a less than 50 percent chance. The higher the first number, the lower the chance, so a 500-to-1 event is much less likely to turn up than a 10-to-1 event. You can also express odds for events that have a greater than 50 percent chance of occurring. If you had a bag with three black balls and one red ball, your true odds of pulling a black ball would be expressed as 1-to-3.

      

Odds is a word with two meanings in the casino. Don’t confuse payout odds with odds in the probability sense, which will sometimes be referred to as true odds. And when you start comparing payout odds with true odds, you’ll start to understand how casinos can afford lavish lobbies and waterfalls and Bengal tigers.

Examining How Casinos Operate and Make Money: House Edge

      Bad news: Casinos aren’t in the charity business. In fact, they exist to make money. Like all successful enterprises, they follow reliable business models. And the casino business model is one of the simplest and most successful of all time. With their intimate understanding of probability (and human nature), casino owners have created a catalog of entertaining games that are mathematically guaranteed to keep their pockets full and their bottom lines healthy.

      

So, you can’t beat the odds when the house arranges them in its favor, but you can understand the odds of winning inside a casino by arming yourself with information about the house edge. By definition, the house edge (sometimes known as the casino advantage or house advantage) is the small percentage of all wagers that the casino expects to win. Every game has a different house edge, and even certain bets within a single game have a better house edge than other bets.

      To put it a different way, casinos expect to pay out slightly less money to winning bettors than they take in from losing bettors. The laws of probability tell casinos how often certain bets win relative to how often they lose. Casinos then define the payout odds based on the winning probabilities — the true odds. The payouts are invariably smaller than the true odds, ensuring that, with enough betting action, the casino will take in a certain amount with every dollar wagered.

Table 3-1 shows the house edge for popular casino games and how much you can expect to lose for an average three-day weekend of playing $10 a hand on the most popular table games. As you can see, the higher the house edge, the more you can expect to lose. For example, you cut your losses by 80 percent if you switch from roulette to baccarat!

      This table makes a few assumptions. First, it assumes you’re playing the most advantageous bets for games like baccarat and craps. Second, it assumes optimal gameplay rules and payout odds for games like blackjack and video poker. Finally, you’re playing optimal strategy, which has a big impact on house edge in games like Let It Ride, three-card poker, and blackjack. (Check out the specific chapters later in this book for detailed strategies.) This next section looks at the three methods that casinos utilize to assist themselves in performing profitably.

TABLE 3-1 The Minimum House Edge for Popular Casino Games

Game	House Edge	Loss per $8,000 in Total Bets
Baccarat	1.06 percent	$85
Blackjack	0.50 percent	$40
Craps	1.36 percent	$109
Caribbean Stud Poker	5.22 percent	$418
Let It Ride	3.51 percent	$281
Pai Gow Poker	2.54 percent	$203
Roulette	5.26 percent	$421
Three-Card Poker	3.37 percent	$270
Video Poker	0.46 percent	$37

      Charging a fee

      With some games, casinos charge a fee or commission. Baccarat is a perfect example. If you bet on the banker’s hand and win, a 5 percent commission is deducted from your winning bet. This fee tilts the odds slightly in favor of the house and ensures that the