Earlier this month, I went to Vegas for my buddy’s bachelor party. I had a great time, even if that city was a lot more appealing to 20-something me than it is to 30-something me. Still, I love gambling. It combines two of my favorite things: games, and stakes. Things matter when you have skin in the game.
Don’t believe me? Try playing poker without money sometime.
I came home with more money than I left with, somehow. And the bachelor was the big winner: I has a seat next to him Saturday night (well, Sunday morning) as he went on a fantastic run at a blackjack table. As we stumbled home, he was up over five hundred bucks.
Still, thanks to some unbelievably cold dealers and, of course, our stupidity in adding an Andy Reid-led football team into every possible tease and parlay, we ended up losing money as a group. It would be weird if we didn’t: Vegas is built on the idea that the house comes out ahead in the end.
But if a lot of the games give odds that approach a 50/50 proposition, why is that? If blackjack or craps have odds that favor the house by only a percent or two, why don’t 48% of gamblers come home as winners?
The reason why comes from one of my favorite terms in mathematics: the Gambler’s Ruin.
The Gambler’s Ruin states that even in a game that is truly a 50/50 split, say, gambling on a coin toss, one gambler is going to eventually lose all his money, if they keep playing long enough. Given enough random outcomes, one side will eventually have a very unlucky streak that costs him all his money. And with no more cash to bet, the gambling is over.
Given the reality of limited funds, the Gambler’s Ruin