What is the boundary between investment and gambling? Part ② Casino edition - Tokyo General Research Institute -

Hello everyone!

We are the Tokyo General Research Institute staff team!

This time we will talk about gambling, specifically casinos.

Casinos come in many kinds, each with its own characteristics.

In particular, by focusing on payout rates, we will look at whether casinos can be profitable and which games are the most favorable inside a casino.

Roulette

In roulette, a ball is spun on a wheel numbered up to 36, and players' winnings or losses are determined by the number it lands on.

There are various bets, such as red or black, or individual numbers.

If you bet on red or black and it hits, your stake is doubled and paid back.

Some might think, if the probability of winning is 1/2 and it doubles your money, the payout rate would be 100%, right?

However, roulette has 0 and 00.

0 and 00 do not belong to either red or black.

Therefore, predicting red or black means predicting 18 out of 38 numbers.

Thus, the payout rate is 94%.

Even betting on a single number has a 36x payout, so it still results in 94% payout.

Baccarat

In baccarat, two fields are pitted against each other, and you predict which will win or whether it will be a tie.

One field is the “Banker”

The other field is the “Player”

A tie is “Tie”

You can bet on any of them.

Banker payout is 1.95x

Player payout is 2x

Tie payout is 8x

and so on.

Each has different odds of winning.

The overall payout rate for bets on Banker and Player is 99%

The payout rate for betting on Tie is 86%

Therefore, the overall payout rate is 94%.

Blackjack

Blackjack is a game where you try to get as close to 21 as possible with cards.

Face cards 10 through King are all valued at 10, and Aces can be 1 or 11.

21 is the strongest, and if you go over 21, you lose immediately.

In a dealer vs. player setup, if the player beats the dealer’s hand, the bet is paid at 2x.

There are rules for the dealer.

• If the total is less than 17, the dealer must draw a card

• If the total is 17 or more, the dealer must not draw

So, what about the payout rate?

Remarkably, blackjack payout ranges from 96% to 102%.

Exceeding 100%!?

Some of you might think so.

However, in blackjack, it is possible to exceed 100%.

That logic lies in card counting.

In blackjack, generally high-valued cards like 10s or Aces are advantageous.

And since you can see the dealer’s and other players’ cards, you can keep track of the remaining deck to some extent.

Occasionally, a situation arises where good cards are more likely to come, and in that case the payout rate can exceed 100%.

Generally, you should bet small, and only go big in those favorable situations to win overall.

However, maximum bet limits are common, and many casinos ban card counting and expel players who are found doing it, so practical use is difficult.

Summary

We’ve looked at casinos—how was it?

Casinos offer significantly higher payout rates than public racing, but you still lose more the more you play, so it’s best to moderate yourself.

However, depending on methods like card counting, you may be able to keep winning, so researching it could be interesting.

That will be all for this time.

Next time we will look at lotteries.

Furthermore,

the author who has been in charge of Forbes monthly investment column for five years,

the Tokyo General Research Institute’s representative publishes this blog.

The knowledge of a 20-year active manager is condensed here!

For those who are bored with ordinary explanations, a must-read!