Here’s the thing about casino gambling for most people:
In the long run, it’s an expense.
It’s NOT a revenue stream.
Sure, some people get lucky and hit a progressive jackpot early in their casino gambling career. And some people learn how to count cards and get an edge over the casino
But, for the average casino gambler, playing casino games costs money.
The purpose of this post is to look at how much money casino gambling costs and whether it’s worth it.
The Concept of Negative Expectation
With almost no exceptions, every bet on every casino game is a negative expectation bet. This is a mathematical expression that refers to whether a bet is expected to win money or lose money. A bet that’s expected to win money is a positive expectation bet, and a bet that’s expected to lose money is a negative expectation bet.
And “expected” has a specific, mathematical meaning, too.
Here’s an example:
If you have a 47.37% probability of winning a unit and a 52.63% probability of losing a unit, you’re facing a negative expectation bet. Over time, you’ll have some wins and losses, but in the long run, you’re going to lose money.
The House Edge Is How Casinos Measure That Expectation
The casino house edge is a statistical average of how much you’re expected to lose per bet. It’s expressed as a percentage.
For example, if I tell you that the house edge for a game is 5%, then I’m saying that in the long run, you’ll lose an average of 5% of every bet you make. If you’re betting $100 per bet on the game, you’re going to lose an average of $5 per bet.
But that’s an average.
On any individual bet, or even over a short number of bets, you will almost certainly see wild deviations from the expectation.
The casino doesn’t care about this. That’s just luck. Mathematicians call it standard deviation.
The casino relies on a mathematical phenomenon called the Law of Large Numbers. That’s the idea that as you get more trials in, your actual results will start to look more like the mathematically expected results.
For most games in the casino, the house edge is a known factor.
You can look it up on any of multiple websites, and it’s also listed in better gambling books.
Smart Casino Gamblers Think in Terms of Entertainment Value
For me, the most important concept in casino gambling is the idea that gambling is fun and should be considered an entertainment expense. You should think of it that way. When you do, it becomes easier to decide whether it’s worth it.
That’s why 20% of the gamblers who go into the casino on any given day walk away with winnings in their pockets. The casino doesn’t mind this at all. After all, when 80% of the gamblers in your casino lose every day, you’re going to make plenty of profit.
But still, if you’re asking yourself whether a casino game is worth it, it’s nice to know the mathematically expected cost of playing that game.
It’s easy to calculate, too.
I cover that in this next section.
How to Calculate the Expected Cost of a Gambling Activity
The cost per hour for any casino game can be estimated if you know the following three pieces of information:
- The house edge
- The average bet size
- The average number of bets per hour
You just multiply those three factors together, and voila, you have the estimated cost per hour of playing that game.
Here’s an example:
You’re playing real money slots. You can assume that the house edge is 7%. You’re betting $3 per spin, and you’re making 500 spins per hour.
7% X $3 per spin X 500 spins per hour = $105/hour
Of course, you don’t know for certain what the house edge is on a slot machine game. It can vary widely from game to game and from casino to casino.
But it’s almost always at least 5%.
At the airport, it might be as high as 25%.
The question to ask yourself is whether you’re getting $105/hour worth of entertainment from playing that game. If the answer is no, walk away.
Let’s look at another example:
You’re playing blackjack (with perfect basic strategy). The house edge is 0.5%, and you’re betting $10 per hand. You’re playing 100 hands per hour.
0.5% X $10 per hand X 100 hands/hour = $5/hour
You’ll notice a couple of things.
One is that the house advantage in blackjack is dramatically lower than it is for slot machines. This is true even if you make some mistakes, but you might get closer to 2.5% if you play badly.
You’ll also notice that in this example, you’re betting over 3X as much per bet.
Finally, you’re making FAR fewer bets per hour at the blackjack table.
That all combines to make blackjack a game that only costs you $5 per hour to play.
You can ask yourself a couple of questions now:
- Is playing blackjack entertaining enough for me to lose $5 per hour playing?
- Is playing a slot machine $100/hour MORE entertaining than playing blackjack?
These aren’t the only factors in deciding whether casino gambling is worth it, but they are IMPORTANT factors.
What Kind of Gambling Do You Enjoy?
I think most of my readers will agree that casino gambling offers enough entertainment value that it’s worth it. If you’re one of the ones who decides it’s NOT worth it, you have my blessing.
Some gamblers like low volatility games. I have a buddy like that. He wants to win even money slightly less than half the time. He’s okay with losing even money slightly more than half the time. He spends a lot of time placing outside bets at the roulette table.
I have another buddy who prefers volatile slot machines. He’s only interested in winning jackpots. He’s willing to have plenty of losing sessions and lose slot machine pull after slot machine pull as long as he occasionally gets a big win of 100X or 1000X his wager.
Don’t Fall Into the Trap of Overvaluing Comps
The casinos will offer you all kinds of “free” stuff to keep you gambling. Trust me on this – they’ve done the math to make sure that you’re going to lose more money than the free stuff is worth. In most cases, it’s far more in losses than in freebies.
Also, they’ve set up their point awards in such a way that you’re almost certain to lose at least $100 or $150 before getting enough points to earn the $45 meal.
The trickiest thing they do is have tiers to their rewards program. I have a buddy who falls for this every time. He wants the upgraded room stay and the free rounds of golf, even though he could pay for both with less than he has to gamble to get to that third tier.
I like to think about the tiers in the VIP program as being similar to gaining levels in Dungeons and Dragons. And that’s one of the aspects of the game that make it so popular.
How Much of Your Budget Can You Use for Entertainment?
Earlier I suggested comparing casino games based on their projected hourly loss to decide which ones are worth playing and which aren’t.
But I also think you should compare the costs of other kinds of entertainment with casino gambling costs.
What does it cost to go to the movies per hour?
Could you buy a board game or video game system for the family and get more value per hour from it?
What about reading books? On a per hour basis, books might be the most affordable form of entertainment possible.
Finally, consider whether you’re meeting your financial responsibilities the way you want to. I’d suggest that if your bills are getting paid late, you might not be able to afford gambling at a casino.
Is casino gambling worth it?
That’s a decision you’ll need to make for yourself.
The best thing I can do for you is give you a new lens to think about that decision through. Educated decisions are better than making such decisions blindly.