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Stake Numerator Denominator Stake $ 1 $ 8

Betting and gambling are popular forms of entertainment, but they often involve unfair odds that ensure the house always wins. There are three main types of odds used in gambling - fractional, decimal, and American - which can be converted between each other using simple math. However, the odds presented do not always reflect the true probabilities and instead include a margin for the house's profit. For example, implied probabilities for candidates in an election calculated from the odds totaled over 100%, revealing the game is unfairly skewed towards the bookmaker. Therefore, gambling should be avoided as it is not a rational way to earn money due to the built-in advantage for the house.

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104 views2 pages

Stake Numerator Denominator Stake $ 1 $ 8

Betting and gambling are popular forms of entertainment, but they often involve unfair odds that ensure the house always wins. There are three main types of odds used in gambling - fractional, decimal, and American - which can be converted between each other using simple math. However, the odds presented do not always reflect the true probabilities and instead include a margin for the house's profit. For example, implied probabilities for candidates in an election calculated from the odds totaled over 100%, revealing the game is unfairly skewed towards the bookmaker. Therefore, gambling should be avoided as it is not a rational way to earn money due to the built-in advantage for the house.

Uploaded by

anon_355962815
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Betting or gambling is very popular for everyone in the daily life even they don’t realize that

they are betting, for example 2 students bet on their final QM grade for a lunch or buying
lottery ticket. The final goal of gambling is to get profit quickly. But is it a rational way to earn
money? Let get the answer through my example of an odds payment. I would like to introduce
you about “odds payout” which is applied in every casino. There are 3 types of odds: fractional,
decimal, and American (moneyline). Generally, it is easy to convert one to another type of odds
between these 3 types, it is just a matter of addition and multiplication. Some technical words
in gambling:

 House/bookmaker: the organizer/facilitator of the gambling. Ex: casino owner


 Stake: amount of money needed to spend to bet
 Total payout= stake + profit
The most important thing is the house always win because of their margin profit collection. This
fact is revealed in the implied probability of betting ratio (odds), and will be explained clearly
after the introduction about fractional odds.
Fractional odds (aka British odds/traditional odds)- popular in British and Irish bookmakers- are
typically written in slash(/) or hyphen(-). E.g: a fractional listing of 7/1 means you bet $1 and
could win $7 as profit. Total (potential) return can be stated as:
Stake∗Numerator
Total payout = + Stake
Denominator
1∗7
E.g: Total payout=$ + $ 1=$ 8
1
From the odds ratio could we figure out the probability of winning/loosing, actually we
can but it is not “true”. The true probability of an outcome will never be reflected in the odds
because there is always margin profit for the house, which means the payout to the successful
gamblers is always less they what they should receive if the odds reflect the true probability.
E.g: the odds on betting for winner of America President Election 2020 are:
Trump: 1/ 4
Biden: 11/2
Stake
The rule for implied probabilities is: Implied probability of an Outcome=
Total payout
Implied probabilities for Trump or Biden to win are:
1 %∧11
=20 =84.62% , respectively .
1+ 4 11+2
If you notice, the total of these 2 probabilities is 104.62%, doesn’t that conflict with the fact
that it must be equal 100%. This is because that the odds on display are not fair. The amount
excess 100%, which is 4.62% is the bookmaker ‘s profit if the gambler accepts the odds rate. If
you bet on both Trump and Biden, you are actually risk $104.62 to get $100 back (including the
stake). This is an unfair game for the gambler. Therefore, as you have known about odds
payout, you should rationally ignore the gambling games because of its unfair nature.

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