What is probability?
Probability is the likelihood of a specific outcome or event taking place. To work this out, you divide the number of specific outcomes with the number of possible outcomes.
For example, if you were rolling a dice and wanted the number three to come up, there is only one specific outcome; at the same time, there are six possible outcomes because the dice could land on one, two, three, four, five or six. So the probability of you rolling a three is 1 in 6. When you flip a coin, the probability of it landing on heads is the same as the probability of it landing on tails, so you could say that it has a 50% chance or it’s 50/50.
Randomness means that each possible outcome has the same chance, or probability, of occurring.
The reason each outcome is as likely as all of the others is that it all depends on chance. If a flipped coin landed on heads several times in a row, it’s easy to think that it has to come up tails on the next flip. However, the coin doesn’t “remember” what it has landed on before in the same way that it doesn’t “decide” what to land on next. No matter what has happened already, the probability of it landing on heads or tails is always 50/50. Unless you can see the future, the result of a rolled dice or flipped coin is unknown and unpredictable, so we can say that the outcome is random.
Remember: despite what you might think, you can’t work out or control an outcome that’s based on chance and randomness – people who try to do this often lose a lot of money. They might win now and then, but this is also down to chance. Thinking that you can beat the system can cause big problems.
The Law
As a general rule, the minimum legal age for gambling in the UK is 18 years old. This applies to adult gaming centres, betting shops, bingo halls, casinos, racetracks and online gambling. There is an ongoing debate in the UK as to whether social gaming (gambling-style games available through social network platforms and gaming websites) should be subject to legal regulation in the same way as gambling.
Gambling in the United Kingdom is regulated by the Gambling Commission on behalf of the government’s Department for Culture, Media and Sport (DCMS) under the Gambling Act 2005. This Act of Parliament significantly updated the UK’sgambling laws, including the introduction of a new structure of protections for children and vulnerable adults, as well as bringing the burgeoning Internet gaming sector within British regulation for the first time.
Myths
The more you gamble, the more likely it is that you’ll have a big win.
The outcome of each gambling event is down to chance. Spending longer gambling doesn’t have any impact on the outcome of the next gamble. This is known as the ‘independence of events’ – each event outcome (e.g. lottery draw or reel spin) is independent from those before or after. Given the house edge and return to player mechanisms described above, a longer amount of time spent gambling will usually mean paying more for that leisure time.
If you keep playing for long enough, you’ll eventually win all your money back.
Actually, the more you gamble, the more likely it is you’ll lose more money. The odds are always stacked in the favour of those offering the bet – the bookies, casinos and lottery companies know that some people will win, but more people have to lose so that the companies can stay in business.
Knowing a game well increases your chances of winning.
Again, it’s all down to chance. Games such as poker and sports betting can benefit from extra knowledge, but you still can’t guess the outcome. You might think you’re the best poker player around, but someone else may be better or have stronger cards. Your football team might have won the last two matches, but that doesn’t mean they’ll win a third. Remember to always play it safe.
When gambling, keeping track of previous results can help you figure out the coming results.
There is no pattern when it comes to gambling. If there were a pattern, everyone would learn it and no one would ever lose. If no one lost there’d be no money left in the slot machines, and the bookies and casinos would become bankrupt and wouldn’t be able to pay the winners. Believing this will only cause you to lose lots of cash and stop gambling from being fun.
Relevant examples
How a gambling addict lost £2.1m
A man is suing William Hill for more than £2m, money he lost gambling after asking the bookmaker not to let him bet again.
Man blew £250,000 on slot machines branded the “crack cocaine of gambling”
James Petherick was driven to the brink of suicide by the devastating impact of betting terminals on which you can gamble up to £100 in 20 seconds
Bookmakers – The BBC has a interesting documentary on bookies
What are odds?The most basic level, betting provides you with the ability to predict the outcome of a certain event, and if your prediction is correct, you will win money. For any given event, there are a certain number of outcomes. Take rolling a dice for instance. If someone roles a dice, there are six possible outcomes. Therefore, if you bet that the person rolls a ‘one’, there is a 16.67% chance that will happen. What betting odds merely do is present how likely the event is to happen. Bookies most frequently in the UK do this as a fraction, i.e. 4/7, whilst the vast majority also offer the ability to view them as decimals.
Using Betting Odds to Calculate Probability
Whenever you see two numbers separated by a trailing slash, i.e. 10/1, this is known as fractional odds. From this, you can calculate how likely a given event is to happen with a calculation. For ease of explanation, let’s replace the numbers with letters i.e. 4/1 becomes A/B. Here is the calculation: Probability (%) = B / (A+B).
· 9/1 can be calculated as 1 / (9 + 1) = 0.10 – There is a 10% chance that the event will happen.
· 4/1 can be calculated as 1 / (4 + 1) = 0.20 – There is a 20% chance that the event will happen.
· 1/1 can be calculated as 1 / (1 + 1) = 0.50 – There is a 50% chance that the event will happen.
· 1/4 can be calculated as 4 / (4 + 1) = 0.80 – There is a 80% chance that the event will happen.
Given a fraction, we can now tell how likely (the probability) what we’re going to bet on will happen. Now let’s figure out how much money can be won using betting odds.
Using Betting Odds to Calculate Winnings
Betting odds allow you to calculate how much money you will win if you make a bet. Let’s use the same examples as before, with the same replacement of numbers for letters, i.e. 4/1 becomes A/B. Quite simply, for every value of B that you bet, you will win A, plus the return of your stake.
· 9/1 for every £1 you bet, you will win £9.
· 4/1 for every £1 you bet, you will win £4.
· 1/1 for every £1 you bet, you will win £1.
· 1/4 for every £4 you bet, you will win £1.
What about decimals?
Decimals are far more common on exchanges, such as Betfair, but all leading betting sites do give you the option to view betting odds in this format. They are an alternative to seeing betting odds in the fraction format. Here is the calculation: winnings = (odds * stake) – stake.
· 9.0 can be calculated as (9.0 * £10 stake) – £10 stake = £80 winnings.
· 4.0 can be calculated as (4.0 * £10 stake) – £10 stake = £30 winnings.
· 2.5 can be calculated as (2.5 * £10 stake) – £10 stake = £15 winnings.
· 1.25 can be calculated as (1.25 * £10 stake) – £10 stake =£2.50 winnings.
Decimal odds versus fractional odds
One isn’t better than the other but there is certainly a trend emerging towards decimal odds. Historically fractional odds were used in the UK, especially on race tracks and on the high street.
There are two key differences. Generally, decimal odds are easier to understand. Based on this, there has a movement to attract more people to horse racing by making it more accessible to the average punter. Ten years ago, if you were going to Cheltenham, all the odds would be displayed as fractional odds. Now, they’re largely all in decimals.
The second difference between the formats are that fractional odds only represent winnings, and do not include the returned stake compared to decimals which do include the stake.
The transition from fractional odds to decimals largely kicked off with the growing popularity of the betting exchanges such as Betfair. For odds to change slightly, it’s really difficult to marginally increase or decrease the probability without creating large fractions which are hard to compute for the punter.
Gambling Vs Investment
In gambling, ‘the house’ or the casino has a mathematical advantage over the gambler. In the long run, odds are that the gambler will lose. For example, even when you’re playing blackjack (a game many people claim to be good at) on average, for every £100 you spend you lose 50p.
Similarly, with sports betting the odds are also stacked against the bettor. For example, in horse racing, the odds are set by other players as they are determined by how much money is bet against each horse. Also, in sports betting, the bettor has to provide a commission for the house in order to place a bet.
Where you are investing, your money is attached to something – be it shares in a company, a house, or a valuable item. Although the stock market fluctuates from time to time, the general trend has been up. In the long run, your money is much safer to be invested rather than gambled. Mathematically, this is the better option.
Watch this short video about the differences between gambling and investing: