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Two years ago, last October 2023, I wrote an article where I described that the pera-normal settings are resultss of mismanagement. I was running out of ideas, but thankfully, Gemini AI, with its combination of right and wrong answers (that's why double-checking is important), has helped me out of writer's block. I would like to state that because October means Halloween for some, I decided to write this post where I address the scary truth about gambling. This reminds me of the irony of turning down investing in favor of gambling, such as the irony of "investing" in Axie Infinity after pulling out of AXA, or the stupidity of buying lottery tickets in hopes of getting rich.
Back in 2012, I remember losing a huge sum of money to a family friend, who was a habitual gamber. Some people even play mahjong until the crack of dawn, hoping to get rich fast. In another situation, I remember hearing of people who keep playing the lottery, hoping to get rich. This reminds me of the sob story of some crazy female working student, who mentioned how her family keeps buying lottery tickets after work, and she contributes via her silly song and dance. I got mad at her sob story back then. However, after realizing that trying to discipline every single Filipino isn't a sound economic plan, I realized that the crazy girl and her family were but symptoms of a much higher problem. They were the effect and not the cause of bad economic policies, such as the Filipino First Policy. But let's not dwell on that. Instead, I would like to focus on gambling for now.
The mathematics of probability shows the scary truth about gambling
Math is the universal language, and it rarely ever lies. Each game you play at a casino has a statistical probability against you winning—every single time. While this house advantage varies for each game, it ultimately helps to ensure that over time, the casino won’t lose money to gamblers.For people who are really good at blackjack, the advantage for the casino might be only 0.5%, but certain types of slot machines might have a 35% edge over a player—and other games fall somewhere in between. The slot machine odds are often some of the worst, ranging from a one-in-5,000 to one-in-about-34-million chance of winning the top prize when using the maximum coin play.
The house advantage obviously isn’t insurmountable—people do win, sometimes substantially. However, it does mean that the more you play, the more the math works against you, and the better the chances are of you walking out of the casino with less money in your wallet than when you came in.
In fact, playing the lottery is gambling. I tend to laugh (and cringe) whenever that incorrigible female working student, who kept talking about her family woes, and how they've been buying some lottery tickets, hoping to get rich. In fact, Investopedia reveals this sad data about lottery tickets:
Independent Probability
Of course, someone has to win the jackpot. But don't let that certainty cloud your judgment. The rules of probability dictate you do not increase your lottery odds by playing more frequently, nor by betting larger amounts on each drawing. Each lottery ticket has the same odds of winning no matter how many you buy. Each one has independent probability not altered by the frequency of play or how many other tickets you bought for the same drawing.
Buying more tickets certainly increases the overall likelihood of claiming a prize of some sort, even if it's extremely likely to end up below what you spent on the tickets. Spending $1,000 on Mega Millions tickets carries a nearly 50% probability of getting back $64 or less, a nearly 90% chance the prizes won won't total more than $92, and a 99% likelihood they won't top $554.
When the jackpots carry over and grow in size, those who buy tickets to the latest drawing can hope to claim some of the money spent by the luckless players on the prior ones. That may initially improve the expected return on a ticket, but as the higher jackpots and attendant publicity draw other players, the increased likelihood of having to share a jackpot, if you win, can lower expected returns below those on much lower jackpots.
Keep in mind that lottery game prizes account for only 50% of ticket receipts, like the Powerball.
This is scary information, mind you. Investopedia's blunt approach to addressing financial illiteracy, such as people who think supply and demand is just capitalist propaganda, aligns with my style of rhetoric. If we must look into the scary truth that you can never laugh away basic economic laws. Just think of the fact that a good example of a country that tried to ignore the laws of economics is Venezuela.
There's a statement, "Nobody gets rich from gambling but the casino!" Back to Investopedia, this is also one dangerous fact that we need to consider:
How Do Casinos Make Their Money?
Although casinos may earn some money from food, entertainment, and other venues, the breadwinner for the industry is the games. A significant portion of casino profits are the result of the accrual of all of the losses from casino patrons each year.
Does Playing More Increase the Odds of Winning?
The odds for each game are stacked in favor of the casino. This means that, the more you play, the more the math works against you, and the better the chances are of you walking out of the casino with less money in your wallet than when you came in.
Why doesn't the jackpot guarantee that you'll become rich?
Compulsive gambling shows signs of measurable changes in your brain chemistry. As a behavioral addiction, gambling addiction is closely connected with how the brain’s reward system functions. Specifically, the effect that gambling has on your brain’s levels of dopamine — a chemical messenger that causes feelings of pleasure — is what makes gambling so addicting.Hitting the jackpot releases dopamine, generating exceptionally good feelings each time a gambler wins. Once you’ve experienced the rush of dopamine brought on by a gambling win, you’ll do almost anything to experience that same amount of pleasure again.The dopamine release from gambling makes it easy to gamble repetitively without a second thought. Before you know it, gambling can become a habit and an addiction. Those with a severe gambling addiction can even get caught up in the “dark flow” — a trance-like state in which players get absorbed into a gambling game for hours.However, as someone gambles more and more, their brain begins to build up a tolerance for the dopamine released by gambling. Over time, the brain’s reward system gets overused, and betting the exact amounts does not produce the rush of good feelings that it once did. When the brain’s reward system is blunted, those craving more dopamine must take bigger and bigger risks to achieve the same high.Once a gambling addiction reaches this point, people will struggle to stop placing bets. Since gambling triggers the same dopamine release as using a drug, compulsive gamblers can also experience withdrawal symptoms when they stop. In these cases, people need professional help and support to recover from their addiction.
Let's just say I hit the jackpot. What happens next is that because of a gambling win, the dopamine surge may be a lot higher than when somebody had stock market gains from 5-10 years of boring investment. The same could be true for the day trader who might get a 20% increase of the money within the day. However, that's all by chance, not financial discipline. In short, a day trader who gets a 20% increase would now hope to get more than 20% increase also within the day. If I invest my coupons from a bond to GInvest is reinvesting, the jackpot money is regambled all over again.
Given the chances of losing vs. winning, hitting the jackpot means, "Okay, I got the jackpot but it's not enough." It might result in more than just overspending the jackpot money. The dopamine surge would mean that instead of stopping after winning the jackpot, the dopamine surge from winning the jacpot, will encourage the gambler, to well, regamble the money.