I used to give a lesson on gambling to my junior high school students, but I was told to stop it because some parents mistakenly thought that I was teaching their kids how to gamble, which I wasn’t. The state lottery commission didn’t like it either. But – this is what everyone should know about gambling before going to Las Vegas or buying lottery tickets.

HOME GAMES VS. HOUSE GAMES.

In games you play at home: chess, checkers, Monopoly, etc.; winning depends on your skill and luck. Each player has an equal chance of winning. Casino or house games are designed to look like the odds are also 50/50, but house games all have a built-in advantage to the casino. The house odds are usually not obvious and are usually difficult to calculate, but the odds are always in the house’s favor. In other words, the longer you play, then the more certain it is that the house will win, and you will lose.

      Blackjack – It looks like the odds are 50/50. Whoever gets the highest hand without busting wins. The odds may look equal, but the house’s advantage comes from the fact that if both you and the dealer both bust; the dealer gets your money before he busts.

      Roulette – The numbers 0 & 00 give the house a significant edge.

      Poker – House takes a ‘rake’, or a portion of the pot, when players bet against each other.

IT AIN’T LUCK!

You may find this hard to believe, but a lot of people don’t understand how casinos make money. Many people think casinos make money because the house is ‘luckier’ than the players or because players make mistakes. Most people do not understand that all the games offered in casinos are house games. This is what I wanted to explain to my students. If not me, somebody else should do this because most Americans now live within 50 miles of a casino, including Indian casinos. If you have kids, have you explained to your kids how casinos make money? Have you just assumed that they understand what a ‘house game’ is and that their odds of winning when playing house games is not 50/50. This isn’t something they are going to learn at school, and they certainly aren’t going to learn it at a casino.

‘GAMING’?

Casinos and state lotteries like to refer to gambling as ‘gaming’, but gambling is not “gaming” in the usual sense of the word. Monopoly money isn’t real money. Gambling is also not ‘recreation’ or ‘entertainment’ in the way most people use those words. People don’t lose their life savings playing softball or hopscotch.

OLD SAYINGS ABOUT GAMBLING.

There is an old casino saying that goes: “When somebody loses money gambling, he tells 2 people. When he wins, he tells 200.” You will always hear more stories about people winning than losing, but for every one winner, there are dozens or hundreds of losers. It serves the interest of the gambling business for there to be occasional big winners.

Another old casino saying goes: “All gamblers die broke.” Virtually all famous professional gamblers die broke.

And another wise one: ‘Never gamble with money you can’t afford to lose.’

LOTTERIES.

Lottery tickets are not ‘just a buck’ as the ads claim. That’s because there is no limit to how many lottery tickets you can buy. I knew a man who owned a gas station in Oakland. He told me that he had customers who bought 10 lottery tickets every day on his way to work. And when there was a big jackpot, he bought more lottery tickets. Lottery ticket sales always spike when there’s a really big jackpot. Surprisingly most multi-million dollar lottery winners are broke within 5 years. Why?

1.  Winners tend to ‘spend off the top’. If you win a jackpot in a lottery, the  amount you get in cash to spend after taxes is just a fraction of the stated amount of the jackpot.

2.  Jackpots are usually paid over many years, sometimes 20 or 30 years and without interest or any allowance for inflation. Most states allow big winners to take a lump sum payment, but that can be just a fraction of the stated jackpot.

3. A $1 million jackpot may actually only be $20,000 a year for 30 years, and that’s before taxes.

4. Claims and lawsuits by friends, relatives, and coworkers are common. When someone buys lottery tickets with money from or with others, how do you know who’s money paid for the winning ticket?

5. Gambling winnings are subject to state and federal income tax at the highest rate, You cannot deduct your gambling losses from your winning unless you can prove that you are a professional gambler, and that is very hard to do.

Compulsive gambling may have been responsible for the United States winning the American Revolution. During the American Revolution, the British Navy was, by far, the most powerful in the world. They had hundreds of warships. It was headed by the First Lord of the Admiralty, John Montagu, the 4th Earl of Sandwich. Montagu was a compulsive gambler. He did not like to stop gambling to eat so he had servants bring him meat between 2 slices of bread so he could hold food in one hand while holding playing cards with the other hand, thus creating the sandwich. He was especially fond of thinly sliced corned beef between 2 slices of dense bread. (That also sounds good to me!) Captain James Cook named the Sandwich Islands (Hawaii) after him. Mantagu ignored his duties at the Admiralty because of his gambling until the war was lost on both land and sea.