Betting Math Exposed
We’ve heard a lot of people bashing the gambling industry lately and one of their newest claims is that casinos do not offer a, “zero sum game.” If you don’t know what that means then we will make it easy on you; it’s essentially a mathematical term that says the winners and losers balance out evenly. For example, if you host a poker night at your home and invite over six suckers, err, we mean six friends that you care about greatly; this would be considered a zero sum game since the money between the winners and the losers balances out to zero.
To give a clearer description of what the term, “zero sum” means, think of ordering one of those fantastic thin-crust pizzas in downtown New York. When you receive that mouth-watering pie it is whole; a big circle of cheesy goodness just waiting to be eaten. Now, it doesn’t matter who actually eats the pizza or how many slices are left over at the end, because you can directly account for every square inch of your meal. For every person who ate a slice, one slice is deducted…it all balances out in beautiful harmony (well, not really…but it sounded like a cool thing to say).
So what does that mean in terms of casinos? Well, the only way that you’re going to find a zero sum game inside a casino is at the high stakes tables where you’re playing directly against the dealer. Sure, video poker and other single player games would also qualify as a zero sum game as well by the raw definition, but they are really not because your winnings do not depend on someone else losing that exact amount.
Would gambling at the poker tables be a zero sum game? It may seem like it at first, but remember that the house takes a small percentage of each pot since they are not personally gambling on each hand. Even though a part of that rake usually goes towards some type of jackpot paid by the casino, the house profit means that you’re never exchanging straight money between players.
Other forms of gambling do the exact same thing. Horse and dog tracks formulate the odds based on how much money is wagered on each contestant, but they are also taking a percentage of that total pool for operating costs as well. Sports betting uses a similar formula; the odds are based on the probabilities and then balanced out based on consumer interest. Even though your relationship with the kennel club or a bookie may appear to be zero sums, they are making a profit regardless whether or not you win or lose.
Now that we’ve pretty much determined that gambling inside a casino is not a zero sum game, there is a much more important question to answer- Why does it matter? After all, there is no such thing as a zero sum business in the world today; even those who claim to be non-profits still take revenue to pay a staff and to keep the power on. Churches, public utilities, the airlines, and every other commodity you can think of makes a profit from offering goods and services, so it should not come as a shock that casinos and sportsbooks make money as well.
So the next time you see a blog or forum post from someone talking about a zero sum game in gambling, be sure to point out that there is really no such thing in the real world. Gamblers know that the house always has a slight advantage and that they almost always win in the long run, which is why we bet big in small spurts and use strategy to turn the tides. If they still want zero sum then send them to New York for a pizza; just tell them to make sure they avoid Atlantic City while they’re there.
