Gambling, by definition, involves risking something of value on an uncertainevent. This can be a roll of the dice, a turn of a playing card, or the outcomeof a sporting event.

In that respect, gambling always involves a certain degree of luck.

Simplifying things a bit, a slot machine is a random number generator which picks a number between 0 and 100 randomly when the punter puts in a coin and presses a button. If the number is above 55, the punter “wins” and there is some payout — otherwise the house “wins” and keeps the coin. The Random Number Generator (RNG) is the brains of the slot machine. While most players know that there is a computer chip picking the numbers, they do not fully understand how it works and this can lead to some of the many myths and misconceptions about a slot machine.

But when you start examining the role of probability and decision-making ingambling, you can see that skill becomes an important aspect of gambling, too.

In fact, if there were no skill involved in gambling, the casinos wouldn’t beable to make consistent profits.

So is gambling a skill or based on luck and random chance? This post examinesthe role of both skill and luck in various types of gambling.

Everyone knows that the winner of the World Series of Poker or the WorldPoker Tour wins because he outplayed the other rounders. In fact, everyone knowsthat poker is a game of skill.

But poker is also a game of chance.

What’s the difference?

Short-term versus long-term thinking is the difference between luck and skillwhen it comes to gambling of all kinds.

Let’s say you’re playing at a table with nine players, and you have pocketaces. In a no-limit hold’em game, you’d want to go all-in and hope that all theother players also went all-in.

You’ll win this hand only 1/3 of the time. Most of the time — 2/3 of thetime, in fact — the other players are going to draw out on you.

But look who’s going to win the most money in this situation.

Assume that every time you do this, you have $100 in front of you.

With nine players at the table, you’ll win $800 on three out of nineoccasions, or $2,400.

You’ll lose $100 on six of those hands, or $600.

That’s a profit of $1,800 over nine hands, or an average of $200 per hand.

Most situations in poker aren’t that cut and dried, but it’s a perfectillustration of how skilled play means you’ll profit in the long run.

But in the short term, some of the time — even most of the time — someoneelse will win.

It’s all about long-term expectation.

Casino Games Are an Example of the Casino Having More Skill Than the Player

All casino games pay out bets at odds lower than the odds of winning. Theclassic example is roulette, where you get paid off even-money on a red or blackbet.

If the probability of winning that bet were 50%, you’d break even in the longrun.

But the real probability of winning that bet is 47.37%. That’s because only18 of the 38 numbers on the wheel are red. (18 of them are black, too, but twoof them are green.)

All casino games have a gimmick that gives them this edge over the long run.

In the short run, say half an hour or an hour, it’s relatively easy to walkaway from a game like roulette as a winner.

But if you keep playing long enough, eventually, thehouse edge will win out.

In this example, the skill doesn’t involve being good at predicting whichnumber will come up. THAT is a matter of pure chance or luck.

It also doesn’t involve changing the size of your bet based on what happenedon previous spins of the wheel.

And it doesn’t involve the casino having any means of controlling where theball lands.

The skill is simply in recognizing the mathematical inequity.

Games like roulette are strictly chance and luck-based, but they have along-term edge for the house.

You’ll often see gamblers or gambling experts quoted as saying that blackjackis the one game in the casino where a skilled player can get an edge over thehouse.

This is not entirely true.

If you play PERFECT blackjack, making the mathematically perfect move onevery single hand, you’ll reduce the house edge to a low percentage — less than1%.

But the house STILL has an edge.

In a low-volatility game like blackjack, a low house edge means that you havea closer to 50% probability of having a winning session than you would inhigher-volatility games or in games with a higher house edge.

That probability, though, is still less than 50%.

There’s an exception, though.

If you count cards in addition to playing with perfect basic strategy, youcan get an edge over the house.

Here’s the thing about that edge, though. It’s a long-term edge.

In the short run, even a skilled card counter can lose lots of money. And byshort run, I’m talking about a single session, several short sessions, or asingle casino trip.

The long run doesn’t really kick in until 1,000 hands, and even then, yourresults can be off by 1% or more in either direction.

To be confident that you’re looking at your actual long-term results, youneed to get in at least 10,000 bets.

Even if you’re playing heads-up against the dealer and getting in 200 handsper hour, you’re looking at 50 hours of play before you can be confident thatyour results are truly long-term.

If you’re playing at average tables, where you’re getting 50 to 100 hands perhour, you’re looking at between 100 and 200 hours of play.

What About Gambling on Your Own Performance?

Everyone knows that you canbet on sports,but it’s tough to pick winners the 53% or more of the time needed to generate aprofit.

But what if you’re the athlete?

Some people participate in darts tournaments, for example. If you’ve everplayed darts with someone who’s good at it, you’ll understand that it’s a gameof skill.

But no one throws a bullseye every time he throws a dart, either.

The outcome is uncertain, especially if you’re dealing with someone of thesame skill level. Often, handicaps will be involved when playing darts in atournament.

This same line of thought applies to games like billiards and shuffleboard,or even in more sporty endeavors like touch football or soccer.

Yeah, you can shoot pool in a bar with someone for money, and yes, it’s agame of skill.

Some of the skills involved might be more involved than just putting theballs in the pockets, too. Some psychology might be involved.

Watch a couple of movies like The Hustler or The Color of Moneyto get a clearer idea of how that works.

Purely Random Games Like Slot Machines and the Lottery

Probability Of A Slot Machine

You can gamble on some games where luck is the sole factor. Slot machines andthe lottery are both examples of these kinds of games.

When you play a slot machine, not only are you unable to use skill to improveyour probability, but you can’t even choose one game over another. Identicalslot machine games might be programmed with entirely different probabilities.

For example, you might play a game where you have a 1 in 2000 probability ofwinning the top jackpot of 1000 coins, but the identical machine right next toit might only give you a 1 in 2200 probability of winning that same amount.

Modern slot machines use a random number generator (RNG), which is a computerprogram that generates the results on gambling machines. This random numbergenerator can be set to provide whatever kind of payback percentage the gamedesigner and the casino prefer.

It’s entirely random, still, but the house gets an edge because of thediscrepancy between the payout odds and the odds of winning.

The lottery, on the other hand, is a game where you can calculate the odds ofwinning. In fact, if the jackpot gets big enough, you could be playing a gamewhere your mathematical expectation is positive.

With Mega Millions, for example, the odds of winning are based (at least inpart) on the number of tickets sold. If the jackpot gets between $220 millionand $260 million, you’re looking at a game with a break-even expected value.

The bigger the jackpot gets beyond that point, the higher the expected valuebecomes.

The problem is that the odds of winning are so small that expected valuebecomes irrelevant.

If you bought $150 million worth of tickets, you might have a 50% probabilityof winning the jackpot and showing a profit. But who really has that kind ofmoney to wager?

But if you wager just $1,000, you’re still looking at odds of winning thatare comparable to being struck by lightning.

That’s not skilled gambling.

That’s plain insanity.

I could list examples of the roles played by skill versus luck in the lotteryall day, but I know you’ve got to get back to work. And so do I.

I’ll leave you with this, though. Gambling is almost always a negativeexpectation bet, so you should never bet money you can’t afford to lose.

Even the most skilled gamblers are only pressing the smallest of edges, andthey can go broke even when the odds are in their favor.

by John Grochowski

At first glance, there’s a large gap – or is it a gaping chasm? – between slot machines and table games.

You can see cards being dealt and dice being rolled, but you can’t see random numbers being generated. That leads to the impression that slots can adjust on the fly, making sure players can’t win too much in ways that can’t be done with cards, dice or roulette wheels.

Nonetheless, slots and tables share common ground that makes them more similar than players realize. Both give the house an edge by paying less than true odds on winning bets. The casino share comes from losing bets, of course, but the winners don’t quite offset the losers because they’re paid at less than the true odds.

Not only that. Slots and table games both arrive at expected results through normal probability.

It’s that last part that gives many slot players trouble. They see that a slot game has an expected payback percentage – usually less than 90 percent on penny slots but more on higher denominations. And they hear that results are random.

That leads to the question, “How can slot results be both programmed and random? If there are big wins, doesn’t it take cold streaks to get back to the programmed percentage? That doesn’t sound very random to me.”

Some answers:

Slot Machines Don’t Work Like That

Game designers set the odds so that normal results will lead toward an expected average payback percentage.

That’s the same situation you face on a table game.

Take roulette. On an American double-zero wheel, the game is “programmed” with 38 possible results — 1 through 36 plus 0 and 00.The numbers come up randomly, and when you win on a single number, you’re paid at 35- 1 odds, a bit less than the true odds of 37-1. That gives the house an edge of 5.26 percent. That’s the same as saying a payback percentage of 94.74 percent.

There is nothing to keep your number from coming up two or three times in a row, and nothing that says it has to come up within several dozen spins or more. But given enough trials, the random results and the odds of the game will lead to something very close to roulette’s expected percentage.

Probability Slot Machine Random Picker

Slots work the same way, except there are thousands of possibilities instead of 38. For regular play on the reels, randomly occurring numbers are programmed, each corresponding to a reel symbol. To make up an example, the programmer might write it so that every time the random number one shows up, the reel shows a jackpot symbol; with numbers two, three or four, it shows a seven, with numbers five through nine, a triple bar, and so on. The possibilities are programmed, but when they turn up is random, just as it’s random when a 17 turns up in roulette.
After a big win, the machine doesn’t go into makeup mode. Over a long period of time, normal results according to the odds of the game will yield a normal payback percentage, and your big win fades into statistical insignificance.

Just as when a table games designer sets the rules of a card, dice or wheel game, the slot programmer sets the possible outcomes, and the pay table gives you back a little less than the true odds of hitting the winners. You can hit several winners in a row, or none, for a number of spins.

Results are random, but over hundreds of thousands of plays they will lead to something very close to the programmed payback percentage.

Cold Streaks After Jackpots Are a Myth

Casinos are there for the long haul, and they know that normal results in line with the odds of the game will take care of the percentages.

Probability Slot Machine Random Game

Imagine you’re betting three coins at a time at a dollar machine with a top jackpot of 10,000 coins, and that the machine is programmed to pay 95 percent in the long run. We hit the jackpot on our first pull. How low must the payback be over the next 999,999 spins to bring the overall percentage back to 95 percent for 1 million reel spins?

Would you believe a drop to 94.7 percent would do it? And if those 999,999 spins brought 95 percent, the overall payback including that first jackpot would be only 95.3 percent.

Normal results bring the overall payback percentage into normal range. The game doesn’t have to force any cold streaks.

Probability Slot Machine

That’s the same situation table players face. If I’m playing craps, betting on 12 and collect 30-1 payoffs several rolls in a row as the shooter rolls an unusual number of boxcars, does the casino have to force other numbers to come up for a while to make up for my streak? Of course not.

Probability Slot Machine Random Wheel Spinner

Someone might congratulate me on a nice win, but operators know that the 35-1 odds against rolling 12 coupled with day after day after day of play and normal probability will lead my streak to fade into statistical insignificance.

On a roulette wheel, if red numbers come up half a dozen or more times in a row and the whole table is betting with the streak, does the casino panic? No, because normal probability will lead the streak to fade into statistical insignificance and the game will pay something close to its normal percentage.

There is no mechanism to force cold streaks after big wins on tables, nor is there any such mechanism on slots. Forced results on slots are illegal in all American jurisdictions. Results have to be random, just as they are on tables.

Probability Slot Machine Random Games

But odds of the game can be set so that winners are less frequent than losers, and winners pay at less than true odds. Slots work that way, and so do table games. That’s enough for random results to give the house its edge.

John Grochowski has been covering casinos and casino games for nearly 40 years. He is the author of six books and his work appears in newspapers, magazines and websites around the world.

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