Apples and Odds
19 November 2004
By Mark Pilarski
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 5 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 percent
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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