Who: This post is for people who want to make money gambling or people who do NOT want to lose all their money gambling.
What: This will be a mini-series of posts. The first posts will discuss many myths of gambling and the truths behind these myths. The second set of posts will discuss how to gamble intelligently and give you some tips on how not to go broke.

At some point in our lives, most of us have dabbled in gambling. For the most part, this dabble ends with a some lost money. For some, this loss of money piles up. For others, losses are kept to a minimum. For those of you who gamble and lose lots of money, this mini-series is for you. If you gamble for entertainment only, (and that’s your prerogative) this post isn’t for you. In this first post on Gambling Intelligently, I will highlight some very common gambling myths and the truth behind them. Probability is a funny thing and it confuses many people and tricks people in many ways. I promise you that these myths are indeed myths. Do your best to give me the benefit of the doubt and read the explanations behind the myths. If you’re open to the truth, you just may change your entire outlook on gambling.

Myth 1: You’re sitting at the roulette table minding your own business and you see one of those drunk college kids. He stumbles over, looks at the board and sees that the last 8 spins have landed on red. He proclaims to his other chuckling buddies “I am gonna win it big here boys, it’s obvious that this wheel is going to land on black next since it has landed on red the last 8 times. Watch this!” He proceeds to take out that 100 dollar bill he got for his allowance and boldly demands that the dealer “PUT IT ALL ON BLACK” with a smug grin on his face. Don’t lie, you know you have seen this before. I think I see it 8 times every time I go to a casino. The funny part is that it actually goes exactly like that.

Truth 1: This is a classic example of the Gambler’s Fallacy. Many people incorrectly assume that if an event has not occurred for a long period of time, it is more likely to occur. Conversely, many also incorrectly assume that if a random event has just occurred, it is less likely to occur. This is a huge load of crap. If I flip a fair coin, it doesn’t matter, whether or not it has landed heads or tails a dozen times in a row before. Each trial is independent and each trial has an independent probability for success. What does this mean for you? FOR THE LOVE OF GOD, DON’T BE THAT DRUNK COLLEGE KID. In games where previous outcomes have NOTHING to do with the future outcomes, (roulette, slot machines, craps) treat every roll or spin as an INDIVIDUAL event and DON’T think that you can figure out some neat little trick to get ahead because of the Gambler’s Fallacy.

Myth 2: A lot of very intelligent people think they know how to win tons of money from slot machines. They pick “hot” machines that have been paying out. Others look for the “dry” machines because they know it is bound to pay off the jackpot soon enough. Others have their own machine and consistently play on it. Why? Because it’s obvious that if they only play on one machine, and play on it ALL the time… It is bound to hit the jackpot EVENTUALLY. And guess what? They’ll be sitting on it.

Truth 2: This is somewhat related to the Gambler’s Fallacy as well. I just think this one is more pathetic because many very intelligent people think they can actually beat the slot machines. And old people. They think so too. Anyway, I also promise that nothing in the above myth is true. Why? Let’s examine how slot machines work. Slot machines have a payout rate. This payout rate is almost always less than 100%. A 98% payout means that the expected value of the machine’s return is 98 cents for every dollar that is put into the machine. If we use the case of a very simplified slot machine that either ate your $1 (dollar slots) or spit out $50,000. If the machine’s payout rate was 98%, then on average, you’d need to take 51020 pulls to win the $50000 (50000/.98 = 51020). This doesn’t seem like a very profitable game, does it? Let’s say the person on the machine pulls 51,019 times (you decided it would be smart to keep count) and then left, after being very frustrated. The idiot in you tells you to go pull the lever because 51,020th time’s a charm. But, according to the gambler’s fallacy, you need to remember that the probability of hitting the jackpot is STILL 1/51,020 even after the poor guy in front of you loses all his money. The basic gist of this is that you’re never going to “consistently” beat slot machines. If you hit a jackpot, and you’re up money, you should quit. Just remember that on a 98% return slot machine, for every dollar you put into the machine, you’re throwing away two pennies. It adds up. Does anyone want to see a post on the mathematics of slot machines? If so, sound off on the comments and let me know.

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