Nowadays, the gambling industry is one of the biggest entertainment industries – and it is growing rapidly. The thrill of competition and actually winning attracts many people. However, it is impossible to beat the online casino in the long run.
In this article, we will explain why casinos are profitable in the long run and why it is difficult for punters to make a profit at online casinos. We will also explain why Transparent Bets is able to be profitable in the long term with online sports betting.
Let’s start with a definition: ‘’Gambling is the wagering of money on an event with an uncertain outcome with the primary intent of winning money’’. This is exactly casino’s want gambling to look like: it should give gamblers the feeling that there is something in it for them. Psychological factors play a major role here: the excitement of gambling, the thrill of the competition and the thought of winning money quickly and easily… all very difficult to resist!
The house edge: a fixed, built-in profit margin
It is impossible to be profitable in the long term by playing online casino games like roulette and blackjack. This is because of the casinos’ built-in profit margin, on which their entire business model is based. All games offered by a casino have a statistical edge in favour of the house, while offering the player the possibility of a (possibly large) short-term pay-out.
This so-called house edge is the expected profit for the casino from a player’s gamble. Some games have a house edge as low as 0.5%, while others have an edge of up to 25%! The house edge can also be applied to sports betting and explains how bookmakers make profit.
We will explain the house edge with a simple example. Imagine a coin flip where you can bet on heads or tails. The odds should be 2 on each side, which means 50% probability of hitting one of the sides. The odds at the casino do not represent the probabilities of a specific outcome correctly. In the case of heads or tails, a casino would set their odds for each outcome to 1.9, resulting in a long term profit for the casino. All of this is based on the law of large numbers.
Large numbers and variance
In probability theory, the law of large numbers describes the result of performing the same experiment a large number of times. According to this law, the average of the results obtained from a large number of trials should be close to the expected value and will tend to become closer to the expected value as more trials are performed
In other words, over a large volume of experiments, the variance will even out. Variance measures how far a set of random numbers are spread out as compared to their average value.
Let’s clarify this using the heads or tails example. If we flip a coin 100 times it may land on heads 62 times and tails 38 times, or heads 45 times and tails 55 times. The chance of hitting just as many heads as tails with such a small sample of coin flips is small. But, as the number of tosses increases, the distribution of heads or tails evens out to about 50%. The same principle can be applied to variance in sports betting.
Roulette is one of the oldest and most popular casino games. Players may choose to place bets on either a single number, various groupings of numbers, the colors red or black, whether the number is odd or even and some other selections. All the bets have one thing in common: over any volume of spins, they are not profitable because of the house edge.
Let’s make this clear with an example. When you put your money on red or black, you will double your money if you win (just like an odd of 2.00 in sports betting would do). So a fair chance would be 50/50. However, the chance of winning is smaller than 50% because of the number zero (European wheels) or double zero (American wheels), resulting in an edge of about 2.7% and 5.4% respectively. And the roulette house edges are fixed; players’ skills do not influence the outcomes of the game.
Blackjack, also known as twenty-one, is in short a comparing card game between several players and a dealer. It is played with one or more decks of 52 cards and the objective of the game is to beat the dealer. Blackjack is a very popular online casino game worldwide.
The house edge is not fixed because blackjack is a game where skilled players can use a strategy to lower the house edge, resulting in a bigger chance of winning. The house edge in blackjack is around 0.5% if you use basic strategy. It can go up or down depending on skill level. Most players are bad enough at blackjack basic strategy to give up another 1.5% or so to the house, making the edge for the online casino around 2%. Although this is not very high compared with other (online) games, it is still profitable for the online casino.
With Transparent Bets, you have an edge over the bookmakers
Although the same theories about house edge can be applied to bookmakers (who also aim to have an edge over the punter), we at Transparent Bets are able to outsmart them. We can do so because bookmakers, in comparison to the online casino’s, can’t predict the probabilities of a particular outcome correctly. Inevitably, they will make mistakes.
In other words, the edge in sports betting isn’t fixed and predefined; it rather differs from time to time and game to game. The mistakes made by bookies will result in wrong odds in favour of the bettors.
Finding these odds can be explained by the concept of ‘value betting’. Finding value in sports betting is about creating an edge over the bookmakers. The idea of value betting is to find exactly those odds where the implied probability of the odd is actually incorrect – and subsequently exploit these mistakes.
If you know how to find them, you can expect a positive value of every single bet you place. In other words, you will have an edge over the bookmaker. As a result, you will make a profit in the long run, because the odds are in your favour. And it is exactly this edge that Transparent Bets is able to offer you.
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