1. HOW MUCH DOES IT COST TO GAMBLE?
• What would happen to a business if it lost more money than it made?
• So, how does a gambling business make sure it makes more money on
average than it pays out?
House advantage.
• Gambling businesses sell the chance to gamble and give different kinds of
entertainment. Gambling businesses set the rules for playing games in such
a way that, on average, the business wins more times than
the player. This is called the “house advantage”. (The “house” is the
gambling business or operator.)
House advantage does not mean that the operator of the business is
cheating you.
It does not mean that no-one will ever win.
It's the cost of playing the game.
Simple mathematics is applied to ensure that gamblers will
always lose to the house in the long run.
• The player's “loss” is the price that the player pays for the entertainment
or excitement got from gambling. Knowing when to stop, that is knowing
how much they can afford to spend, enables players to manage their
gambling risks more sensibly.
• The house advantage means that the house (business) is guaranteed to
make profits over time.
• Just as with any other form of entertainment, it will cost you money to gamble.
• It is the core business of gambling operators to make money. The business
mathematically calculates the costs gamblers are willing to pay for the
excitement of the game. Although a player, of course, wins from time to
time, the house always wins in the long run.
• The easiest way to think of house advantage is to think of how much
you would lose if you bet money on all possible (and equally likely)
outcomes. This means that you will always win something, but the money
you have lost, expressed as a percentage of all the money you bet, equals
the house advantage.
Grade 9 | Unit 9.4 | Page 9
Unit 9.4
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2. • Example 1: house advantage in coin tossing
There is a 50-50 chance of the coin landing on heads or tails. This fact
never changes, even if heads has appeared six times in a row. A casino
or gambling operator might charge you R1 to bet on the outcome of the
toss of a coin. The rules of the game are that if you bet correctly and win,
the gambling operator will pay you the original R1 plus another 80c, i.e.
you will get a total of R1.80.
• Are you likely to make money in the long run?
• Example 2: house advantage in roulette
In a standard “single 0” roulette table there are 36 numbers plus 0, a total of
37 options. Say you place a R1 bet on all 37 possible numbers. At each spin,
you are guaranteed to win and each time you win the operator pays you
R36. So, you pay R37 each time to bet on every possible outcome but win
back only R36. That is, the house takes R1 every time you play in this way.
• Are you likely to make money in the long run?
• The house advantage ensures that the operator is able to make a profit in
the long run and to stay in business. But it also means that in the long run,
the gambler pays and pays and pays …
Increasing your ability to manage risky behaviour and
decreasing the risks of developing a gambling problem
Mathematics shows us that:
• In random processes, the probability of each of the outcomes remains the
same.
• In random events there is no “pattern” of outcomes. Each outcome is as
likely to come up now as it is in any time in the future.
• In games where there is a house advantage, the house will, over time, take
in more money than it pays out.
• The longer a player gambles, the more the player's total costs will rise.
• Since there is no pattern in the outcomes of the games, and since the house
advantage is against the player, there is no “control” a player can exercise
over the outcome.
Grade 9 | Unit 9.4 | Page 10
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