House advantage and randomness: how they work together
The idea that most forms of gambling are random, but still have a house advantage resulting in predictable player losses over time, may seem confusing. You may ask: "Doesn't the fact that there is a house advantage prove that gambling games (especially machine based games) are rigged and not random?" This is a valid question for which we'll try to provide an answer.
Here are two examples that show how these concepts can exist together in a game.
Example 1 - Randomness / No House Advantage
John and Julie each have $100 dollars. They decide to play a simple coin flipping game. If the coin flips heads, John takes a dollar from Julie; if it flips tails, Julie takes a dollar from John.
It's fairly clear what will happen over time in this game. Each coin flip is totally random - heads and tails both have a 50/50 chance of occurring. No one has an advantage, so the amount of money each player has will probably remain relatively even.
Example 2 - Randomness / With a House Advantage
Each player still starts with $100 dollars, but now the payoffs will be slightly different. If the coin flips heads, John still takes a dollar from Julie; but if it flips tails, Julie takes only 90 cents from John.
We've now introduced a house advantage. John and Julie will still win about equally as often, but due to the new payoff structure, Julie's money will slowly drain to zero because her payoff odds are now lower than the true odds.
Notice that the coin flip is still completely random (and fair), but the payoff structure now gives John a house advantage.
All casino games and VLTs work in this same this way, although the complexity of the games can make it harder to see. Randomness and house advantage can exist quite easily together. The effect in casino games is that the results are unpredictable (random), but the games are still profitable for the operator (house advantage).
The result of randomness and house advantage on a player's money is similar to the effect of a funnel. The gambler starts out with a lot of money, but slowly and surely it dwindles down through the funnel until nothing remains.
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- The appeal of gambling: what gambling means to different people
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