I.
Its February 8 opening imminent, the Rivers Casino’s public relations operation is flooding the area with advertising and press releases. The photos I’ve seen of the casino portray a modern, tastefully appointed property that reminds me of some of the nicer off-Strip properties in Las Vegas, such as the M Resort and Red Rock Station. The restaurants look inviting. But is it a place where you will want to spend your hard-earned money?
Casinos operate on the principle that they pay out less than the true odds on their games. An illustration will explain this: A fair coin, over a large number of tosses, will result in an equal number of heads and tails. In a game in which you bet on the outcome, the true odds would be even. Thus, if you bet a dollar on each toss, and lose your bet on heads, but win a dollar on tails, you are paid true odds, and the casino (and the player), in the long run, would break even on the game, which is not a sustainable business model. Instead, for your dollar bet you may be paid 85 or 90 cents when you win (the casino keeping your dollar if you lose), the difference between the payoff amount and the dollar that would represent fair odds going to overhead and profit. The difference between true odds and actual payouts can be roughly expressed as the “house edge.”
So, if virtually assured a long term loss, why would anyone gamble? There are many answers to that question. However, for the sake of simplicity, let’s choose the most common one – one gambles because of the possibility of “getting lucky.” While the coin toss will result in equal numbers of heads and tails over a long run, the results are “streaky” — they may come in bunches of heads and bunches of tails, some fairly long. This volatility can make players winners in the short run. A well run casino recognizes the necessity of volatility and the winners it produces, and often advertises those who hit large slot jackpots, hoping to persuade others to try their luck. Because the casino is dealing with a large number of players over a long time, volatility is not nearly as much a factor for it, and it will profit despite the short term winners if its business model is sound.
The more often one gambles, and the more one bets, the more one moves from the short term to the long term. Volatility recedes in influence, and the house edge asserts itself more consistently. This is why the educational materials addressed to problem gamblers and potential problem gamblers emphasize that “chasing losses” by continuing to bet seldom works and most often leads to more losses.
II.
A great truth almost never addressed by casinos, their regulators or the general news media is that not all casinos are alike. In addition to offering different games and amenities, casinos have a wide latitude in adjusting their house edge on many games. On some games, the player can calculate the house edge. As I have written, video poker is one of those games. Similarly, the house edge in blackjack can be computed. Other games, notably slot machines other than video poker, do not readily yield their payoff percentages or volatility. As I previously wrote, the video poker offered by other casinos run by the company that manages the Rivers has relatively high house edges, and I expect the same here, given the high taxes and fees the Rivers must pay the State. A recent check of the Rivers web site reveals that its single and double-deck blackjack games will pay 6:5 on a blackjack, which sends the house edge for those games into the unplayable stratosphere (the casino also will offer “shoe games” using more decks that will pay the traditional 3:2 for blackjacks; depending on the other factors, those games may or may not have a reasonable house edge).
If you have guests arriving for dinner in a few minutes, and suddenly find yourself out of something you need to finish the meal, you will go to the nearest store and pay whatever the cost, so that you can return in time to have the meal ready when your guests arrive. That’s the principle behind convenience stores. However, for your weekly shopping, particularly if you have a large family, you are likely to be more price conscious, even if it means a longer drive to a larger store.
From the presently available evidence, I predict the Rivers will be on the convenience store end of the spectrum. If you are a casual, low stakes gambler, and the location is convenient, the comps and offers generous (which remains to be seen) and the atmosphere enjoyable, you can enjoy a day or night out at a reasonable cost if you limit the amount you bring, prepare to lose it, and leave the ATM card at home. However, if you are a more regular gambler, you may wish to take it easy until you have an idea of how you may be expected to do compared to at the venues you presently frequent.
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