Let's Take A Closer Look

Explaining complicated subject matter simply since 1986

The desperate young husband was at the roulette table gambling what little money he and his wife had left. It was his only chance to earn enough money to get them out of Vichy-controlled Morocco to Lisbon and from there to the United States. But the trip from Nazi-occupied Bulgaria had exhausted all but a few of their dollars and they had no money to buy exit visas, so he risked it all on the roulette wheel.

Rick nodded discreetly to Emil as he told Jan Brandel to put all of his money on number 22. The croupier spun the wheel and the ball raced around the rim before bouncing and clacking into the slot numbered 22. Emil pushed several stacks of chips to the lucky young winner. Rick told Brandel to leave it there and Emil spun the wheel again.

The odds of that number showing up twice in a row are more than a thousand to one, an astounding payoff for anyone. Of course the wheel stops at 22 again, because the wheel was rigged to do so when the croupier pushed a secret button.

As Emil pushes over a table full of chips, Rick tells Brandell “Cash it in and don’t come back.” The young refugee couple had just won against the steepest of odds. It was more than enough money to pay the bribe demanded by the corrupt prefect of police for official exit visas that would allow them to leave Casablanca.

Rick’s manipulating the game so the young couple would win thwarted Captain Renault’s attempt to trade the visas for sexual favors from the beautiful young wife. Renault called Rick a rank sentimentalist. Rick said “Put it down as a gesture to love.”

Roulette is a sucker’s game

It involves only luck and the odds are stacked in the house’s favor. There are 37 possible numbers on a roulette wheel but the winners get only a 35 to 1 payout. This gives the house an edge of five percent. This means for every dollar gambled, the house makes a nickel. Not much, is it? Until you realize that all those nickels add up to more money than you and I can count. 

Most of us know someone who claims to be a big winner at the gambling tables

Most of us also know that gambling games favor the one who is running the game, or as the industry calls it, the house. The rules of the various gambling games are written to guarantee that the house will earn a certain percentage over time. This is the edge, the profit, the take. It is the money that pays for all those glittering palaces and all those freebies and comps that entice ever more gamblers to lose ever more money.

Why are lotteries so happy when people win huge jackpots?

The more money they pay out, the more money they take in. Where casinos pay out 95¢ of every dollar that is wagered, lotteries pay out only 60¢ in winnings for each $1 they take in.

If you see a jackpot winner won $600 million, you know that the lottery took in $1 billion on that game alone. The difference is $400 million, all of which went to the house. What business wouldn’t want to earn a 40% margin –  especially on that kind of volume.

If you know what the next cards are going to be, you have a competitive edge

Card counting is a technique gamblers use to increase their chances of winning at the game of blackjack. If you have the memory for it, you can keep track of all the cards that have already been played. Knowing which cards are gone from the deck means you know which cards are left. And when you know which cards are coming, you are going to do a lot of winning. You can bet more when it is likely you are going to win and bet less when it is likely you are going to lose. By adjusting your bets because you know what’s coming, you will win more often and you will beat the house.

How successful is card counting?

Casinos banned the practice because people who have the minds and memories to count cards are able to beat the system. Well-organized teams of card counters led by a mastermind have been the subject of a dozen movies. Most are based upon the M.I.T. blackjack team that thought up the crazy idea in 1979.

Gambling is described as risking money on the outcome of a game where you may win or lose

The second definition of gambling is risking the loss of something important by acting recklessly. People are surprised when I tell them that when companies spend money on research in attempts to gain a competitive advantage, they are gambling.

Businesses that find real opportunity earn more customers and make more money

The best way to discover real opportunity is by digging it out of the ground very carefully and over long periods of time. Otherwise, you’re just playing roulette with your research budget. Put your money on a game where you can count the cards and you will beat the house. Count cards better than your competition and you will be the big winner.

But don’t forget your competitors are gambling, too

Take a tip from gambling legend Amarillo Slim, who had this to say about sizing up your competition: “Look around the table. If you don’t see a sucker, get up, because it’s you.”

Want to read more articles like this?

Click here for free, no-ad, no-tracking access to the more than 250 articles David has written each week since 2016. He covers lots of topics but all involve the notion there is always more to things than meets the eye.

Enter your email address to subscribe to this blog and receive notifications of new posts by email.