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Gambling

Introduction

The word ‘gamble’ can be used to describe any risky action. An act of gambling is often referred to as placing a bet. Informally this could be as simple as a single person or a social group predicting success or failure (e.g. ‘I bet you that doesn’t work …’) in which case the gain if successful is psychological and ego based. It could refer to a more  complex endeavour where a commercial entity takes a decision such as to invest in a new and untried technology in the hope of future high demand. In these cases, there is no agreement with a second party on specific terms for success or what exactly is to be won or lost.

On this page, we are concerned with the more formal type of gambling in which two or more parties agree to bet on an event whose outcome is uncertain. They need to agree on the criteria for winning or losing the bet and on what reward the loser(s) will give to the winner(s). This reward is known as the stake and often it is a sum of money. One can gamble on a natural event or a contest such as a race, or use equipment designed to produce an unpredictable outcome such as dice or playing-cards. In the specific context of games, gambling is playing a game with the aim of gaining a reward for winning while risking a corresponding loss if one does not win.

From their earliest origins in the late 13th century playing-cards have been used for gambling. The rapid spread of playing-cards across Europe after their introduction in the late 14th century can be traced by observing the dates when prohibitions of playing-cards were added to the existing laws against gambling in various cities. Although it has often been illegal, gambling on card games has remained popular to the present day.

But not all card games are gambling games. Many people play cards purely for pleasure or as a contest of skill. Even when card games are played for stakes, the amount of money involved is often very small, and is used mainly as a convenient method for keeping score. The stake also provides an incentive to play to win. Technically and legally, playing for any stakes, even inconsequential amounts, is likely to be considered gambling, but playing for money is relatively harmless provided the stakes are well within what the players can afford to lose. Problems arise when the possibility of winning money is the player’s main motive for taking part in the game.

Card games designed for gambling normally have a substantial luck component, because if the most skilful player always wins the others will have no reason to play. In many gambling games, although the player may be offered choices the outcome is entirely a matter of luck. The attraction of such a game lies simply the thrill of winning or losing.

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Gambling privately or as a business

Gambling has been a widespread human activity since ancient times. No complex infrastructure is needed. Any group of individuals with the time, the means and the desire to gamble can arrange to do so. Dice have been used for gambling for thousands of years and Backgammon and related table games date back at least 1500 years to the Byzantine Empire. Although gambling has now become a sizeable industry, many gambling games are still often organised and run privately. Common examples nowadays are Poker, which since the 19th century has been widely played in North America and subsequently around the world, and Mah Jong, which has been popular in East Asian cultures for over 100 years.

There are and have probably always been professional gamblers who make a living, honestly or dishonestly from gambling. There is also a long history of legal prohibition of gambling. Sometimes this has been on moral or religious grounds, or to preserve public order where gambling has been associated with violent disputes, or to prevent people wasting time and energy gambling rather than engaging in more productive activities.

Legitimate gambling businesses such as casinos and bookmakers provide a service to gamblers of ensuring fair and orderly play, and in return take a profit. Most jurisdictions in the world now have legalised businesses offering gambling on games of chance as a form of entertainment. The types of gambling that have been legalised vary from place to place. On this page we provide descriptions of the more common types of gambling business and of some popular casino games. Our Gambling Links page provides a directory of further resources.

Gambling can be dangerously addictive. Some players cannot resist the associated thrill, and those who lose may be tempted to risk money they cannot afford in a futile attempt to recover their losses. You can find further information and advice on our Responsible Gambling page.

Gambling as an online business

The evolution of the internet and the development of reliable online payment methods has brought most types of gambling into the online arena. Thanks to personal computers, tablets and more recently internet capable mobile phones, most people who wish to gamble have instant access to gambling services. This ease of access comes at the expense of social interaction, with online gambling mostly being a solitary activity. While some multi-participant games like poker or live dealer games have a chat facility to allow communication with other players, for the most part when playing online the player will never be aware of the other players using the same game.

One significant difference between the online and offline gambling businesses is the legality of the enterprise. Licensing has been slow to evolve, and for several years online gambling has existed in a legal grey area in many jurisdictions. More governments are now taking an interest in the regulation of online gambling, partly because of the high potential tax revenues that can be made by licensing this industry. This page provides comments on the legality of online gambling in various jurisdictions.

Popular Casino Games

Blackjack – This is a card game in which the objective is to get a total closer to 21 than the dealer’s hand without going over. The namesake hand is a starting hand of a Ten value card and an Ace, which beats all hands other than another Blackjack. Most payouts in the game are 1 to 1 however a Blackjack is paid at 3 to 2 and Insurance is paid at 2 to 1. Bets in Blackjack can take several minutes to resolve and vary depending on how quickly the players at the table choose to play their hands. Generally an average of one round per minute would be a fairly fast paced game, but if you can play at a table by yourself you can increase this pace significantly.

Roulette – Roulette is played with a spinning wheel with 37 or 38 numbered pockets and a ball. The wheel is set spinning in one direction while the ball is spun in the opposite direction. Prior to the spin the player places wagers on a table layout depicting the individual pockets and different pocket combinations. If the ball lands in a pocket that the player has a bet on the player wins. Payouts in this game vary far more than most other table casino games with the most frequently occurring possibilities (Even or Odd number, Red or Black, 1-18 or 19-36) paying out at 1 to 1 and rarest events (betting on a single number) paying out at 35 or 36 to 1. Bets on Roulette can take several minutes to resolve between the spinning of the wheel and paying out a potentially large volume of bets at different stakes.

Craps – Craps is a dice game, a streamlined version of the medieval game Hazard. The players place bets on the possible results and then one player, designated the ‘Shooter’, will roll the dice. Players at the table can bet both with and against the Shooter and depending on the bets placed the outcome can be determined in a single roll or over multiple consecutive rolls. Given the community atmosphere that Craps creates it is far more popular offline than it is online.

Baccarat– Baccarat is a casino card game that is especially popular in Asian cultures. The player can bet on either the Player or Banker hand or indeed place a bet that the hands will tie. The deal and play of the hands follow pre-defined set rules, so once bets have been placed there are no player decisions regarding how the cards are played.

Poker – Poker is generally a player versus player game that is played commercially in poker rooms most often situated within casino complexes. There are many versions of this game with different rule sets but within the poker room the players will play a round against one or more opponents. The house will often provide a dealer for the game and wagers are placed into the centre of the table (this is often called the ‘pot’). At the end of a round when the winner has been decided a percentage of the total pot is taken to pay for the room and dealer. This percentage is usually called the ‘rake’.

Video Poker – Video Poker is a console based card game. Unlike most other poker games it is not played against another poker hand. Instead the outcome of the wager is determined based on whether the final hand matches a combination listed on the game’s paytable. After placing a bet the player will generally be dealt 5 cards. The player is then given the option to discard up to 5 cards and have them replaced. After any replacement cards have been delivered the final hand is then compared to the paytable. Payouts for Video Poker games vary significantly with more common hands paid out at 1 to 1 the rarest hands (such as a Royal Flush) often paid out at thousands to 1. Video Poker games are generally very quick to resolve and an experienced player can play between 10 and 20 hands per minute.

Slots – Slots games are the most common games found in casinos today. Originally the name derived from having to insert a coin into a slot on the machine before each spin, but methods of fund taking have advanced since this point and the machines can generally be pre-loaded with a chosen amount of credit. Usually slots games will have either 3 or 5 reels of symbols. When the player starts the round the reels will spin. When they come to a stop, if matching symbols line up from the left hand side on a payline (a marked  line passing through one symbol on each reel) this will trigger a win. The payouts vary dramatically from game to game and some machines have jackpots that run into multiple millions.

Probabilities, Odds, House Edge and Return

To make rational choices about whether and where to gamble, a player needs to know something about the chances of success and the corresponding rewards. The probabilities of the various possible outcomes and the ratio of rewards to risks can both be described in terms of odds.

To take a simple hypothetical example, suppose a casino were to offer you the chance to play a game in which you draw one card from a shuffled standard 52-card deck of playing-cards. If you draw the Ace of hearts you win, if you draw any other card the casino wins. The casino is more likely to win than you are so to compensate for this they offer you odds of 50 to 1 on a bet of $1, meaning if the casino wins win you pay them $1 but if you win they pay you $50.

If you play this game you may win or you may lose, but in the long run the odds favour the casino slightly. If you play 52 games then on average you will lose 51 times and win once, so you will be $1 poorer. The average amount you stand to lose per unit bet is known as the house edge. In this game the casino has an edge of 1/52 or approximately 1.92%. It is largely through the house edge that the casino makes a profit and stays in business. The same information can be expressed as the return on a bet, sometimes known as RTP, which is the expected percentage of money bet that is Returned To the Player. The above hypothetical game has a return of 51/52 or approximately 98.08%.

Calculating the house edge or return is one basic way to compare different games in terms of how much advantage the casino has in each. It does not however provide the whole story. Other key factors are the variance of the outcome and the potential for a player to increase the bet during a game. These will affect the total amount of money (bankroll) a player is likely to need in relation to initial bet size order to survive a run of bad luck.

In formal gambling settings the way that payouts are described varies from country to country and by game type. On this page we describe some of the more common terminology used to describe payouts.

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This page is maintained by John McLeod, john@pagat.com   © John McLeod, 2018, 2021, 2023. Last updated: 14th March 2023

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