Before you decide to participate in gambling at an online casino, make sure that you understand the math. Gambling sites can be a lot of fun, as long as you do not spend (aka “lose”) more than you can afford to. Ah, but you plan to win. Okay … let’s go with that.
In gambling, the expected loss is the mathematical average loss. Mathematicians call it expected loss, but in reality, it is the average loss.
How to calculate the average loss?
Average Loss = Rounds per hour * Amount Bet * House Edge * Number of Hours
$189 Average Loss = 700 spins on a slot machine * $2.25 per spin * 6% * 2 hours
Why the expected loss is not the amount you expect to lose?
As I said previously, the expected loss is the average loss. That means that some people will lose more while other people will lose less or even come out ahead (win money, sometimes even win big).
Your loss becomes more the “average” the longer you play.
The longer you play, the more you will hit the average. If the average loss on an hour play of a slot machine is $63, you don’t expect to lose $63 each hour that you play. That would make the game too predictable (aka, too boring). If you didn’t have a chance to win, you wouldn’t play.
In other words, in the short term, you have a chance to win … even win big. But in the long term, the law of averages kicks in.
House edge simulator
House edge on a slot machine can be anywhere from 0% - 17%. On progressive machines (the jackpot gets higher with each play), the house edge is between 5% - 17%. In Atlantic City, the minimum payout of a slot machine is $0.83 for each $1 paid into the machine or 17%. But in reality, on average, the slot machines in Atlantic City payout at 88.7% which some paying out as high as 91.89.
In Las Vegas, the best slot machine pays out at 93.42, while the worst payout at 85.02. Can you take a wild guess where the worst slot machines are located at? If you guessed the airport, you would be correct. Think captive, bored audience -- same reason why drinks, food, and everything else in airport stores are more expensive -- lack of true competition.
So why do people play if the mathematics of the game says that they will lose?
Shooting games. Let’s look at the psychology of shooting games. During the last month, there were 3 massive shootings in the US. After these events, there are always discussions on what causes them and how to prevent them. Some people blame shooting video games and believe that these video games should be banned. The reason the banning advocates use is that these games allow future mass shooters to practice shooting, so, therefore, these shooting games are evil and civilized society should be void of them.
But I look at things from a different perspective. I once worked at a job. At the end of each workday, a group of about 5 or 6 other employees used to log onto the internet and play one of these networked shooting games where players could play against each or even as a team within the game. I once asked one of my co-workers, “Why do you play these games? They are so violent.” I will never forget his response. “Isn’t it better for us to release our frustrations of the day in these games rather than release them through road rage?”
That answer actually made a lot of sense. We are talking about a group of people who had a solid head on their shoulders, and their reasons for playing the game were to release pumped up frustrations before putting themselves behind the wheel of a car. In other words, it was a controlled release valve.
Can the same theory be applied to online casino games? I think that the answer can be yes, especially in the area of social gambling sites and online casino game sites that allow players to set up safety limits -- the total amount you can spend (aka lose) in a day, week, month, etc.
In other words, if you reach your total loss, the system either prevents you from continuing to play or it restricts you to “monopoly money” playing or just winning coupons from paid sponsors.
As long as you play smart (don’t spend money you don’t have), online casino sites can be a lot of fun and a great way to decompress at the end of the day.