Proposition: Higher house edge reduces overall gambling losses

[actmyname]

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It seems paradoxical to anyone who knows basic probability. If E(X) < E(Y) then X is clearly worse than Y. In a mathematical sense, this is absolutely correct. However, allow me to add a claim:

An individual is more likely to be a problem gambler if they have won a large amount during their first session as opposed to one that does not.

From what I know, research has shown that gamblers chase the jackpot feeling. This makes sense from a biological perspective: when one wins a large amount, there will be a rush of dopamine to incentivize the wager. This will result in a habitual urge to gamble since it felt so euphoric to the gambler. Even if the individual knows that the odds are not in their favor, they will still receive this natural response. In fact, it may be stronger due to their "beating the odds".Analysis

Let us rephrase the claim:

if winnings(A) > winnings(B) then A is more likely to develop problem-gambling habits.

I would further change this to:

if winnings(A) > 0 then A is more likely to develop problem-gambling habits than if winnings(A) < 0.

Certainly, if an individual were to lose most of their bets, or in an extreme scenario, if an individual were to lose all of their bets, they would not be likely to return. There is the lack of the sensation of winning. This seems to be more effective when the gamblers are unaware of the increased edge.

"when participants had a lower expectation that they would win, their response to winning equal rewards was elevated."

Source: http://www.bbc.com/future/story/20160721-the-buzz-that-keeps-people-gambling

All of this is assuming, however, that the individual has not gambled in their life.Addendum

Assuming an increase in house edge doesn't affect non-problem gamblers' behaviors (lots of people typically set a lower bound on their bankroll), we should expect to have less problem gamblers in general due to the claim.
Problem gamblers will still contribute to the total losses, however, the % increase in house edge and % increase in losses will not be 1:1.
With house edge, 0 < E(X) < 1 and each additional wager has the gambler approaching 0. Most problem gamblers don't stop until they lose it all. Much of the time, it is merely a game to see how long they can last before busting.

Thus, we can assume that the % increase in losses is significantly less than the % increase in house edge.

Since problem gambling is less likely to develop in new gamblers, this results in a long-term decline in gambling losses.Feel free to discuss. More will be added to this post as time goes on.

[SyGambler]

well this is somehow true , personally I have lost way less money with slots and roulette for example than what I lost playing dice
this was because I already know that these games HEs are way to higher than dice so I end up playing dice more

but also the money I used for fun , so if dice wasn't available I would had gambled the same amount of money on higher HE games so I would had ended up with way more loss

I'm sure pokerstars may like such topic since they keep raising their rake , they would love to hear that more rake is better 

[actmyname]

Up.

[Wendigo]

And this proposition pertains to the lifelong lottery players who haven't won anything how? It's a matter of personal choice. Recreational gamblers do exist.

[kryptqnick]

It's weird people are not discussing this topic and not trying to offer some other agruments to refute or support the op. House edge makes cases a bit more in favour of the casino. If there could be such thing as a negative percent house edge (well, not exactly, but say when the written probability is lower than the actual one, gamblers would win, get more into the game and might develop addiction and eventually lose everything. But they might also not develop it in the first place, I believe the vast majority doesn't.
If one loses at first, one is surely not likely to keep trying to play, but if a person is already a gambler, s/he will lose everything anyway (like you said), so it wouldn't matter how things turned out with the house edge for them (everything is everything regardless to first wins or losses).

An individual is more likely to be a problem gambler if they have won a large amount during their first session as opposed to one that does not.

Since problem gambling is less likely to develop in new gamblers, this results in a long-term decline in gambling losses.

I am having troubles with these two sentences, because IMO the first one contradicts the second one. At first you say that winning the first session makes one a gambler, but then you conclude that gambling doesn't have high probability to develop in new gamblers...

[eternalgloom]

It's weird people are not discussing this topic and not trying to offer some other agruments to refute or support the op.

We're in Gambling Discussion, just look at the majority of replies on the other threads and you'll see why no-one replies to a serious thread that actually requires some thinking.
I know I sound negative and don't want to turn this into another discussion of the quality of the forum, just answering your question...

Now on topic:

The article you've shared mentions that people generally have "loss thresholds", meaning that they will only gamble till they've made X amount of loss.
You could indeed argue that in casino's with a lower house edge, they will spend more time reaching that "loss threshold".

Would it be right to conclude that there's an increased chance of developing addiction, if more time is spent on gambling?
I have looked into a few studies through Google Scholar, but couldn't immediately find a study that verifies those claims.

What I would also like to mention though, is that in some cryptocurrency-based casino's with low house edges, the time between placing a bet and seeing the result is very small.
I think traditional casino's usually have laws they must follow, which include a minimum amount of time between placing the bet and seeing the result.

Reports indicate that a significant risk factor may be a fast speed of play. Types of games where there is a short time between placing a bet and seeing the results present a higher risk for players. This happens with slot machines, for instance.

Sources: https://www.medicalnewstoday.com/articles/15929.php & https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3361844/

That's an additional risk factor that's usually present in these casinos with lower house edges. Sorry for going a bit off-topic here, just thought it was something interesting to mention.

 

[SyGambler]

What I would also like to mention though, is that in some cryptocurrency-based casino's with low house edges, the time between placing a bet and seeing the result is very small.
I think traditional casino's usually have laws they must follow, which include a minimum amount of time between placing the bet and seeing the result.

this has a role for sure , but I don't think it has anything to do with addiction
also not sure if there is such rule for real casinos , never heard of it and I guess all slots have instant results or am I wrong ?

in general my thoughts is that the gambler is the one who is responsible for addiction , if all gamblers started to know how odds work and that there is no way to beat the normal casino games then they will start limiting their spending on gambling and probably it will be way harder to get addicted

as I stated before , personally when I want to gamble on -EV games I just set a budget to play with and keep playing till I bust it or reach a goal of profit and I believe all the gamblers should do that since there is no way in making money long term with these games

having higher house edge for me won't change a thing , I will still gamble occasionally on dice or roulette and I will still lose the same amount of money but this way the process will be faster 

in general I'm totally against that , like imagine in the future poker sites raise their rake to 20% or bookies raise their margin for over 15% claiming that they want to protect people from getting addicted

gamblers will still gamble anyways , actually I guess only people with gambling problem will continue gambling if the house edge is higher   

[Don Pedro Dinero]

From what I know, research has shown that gamblers chase the jackpot feeling. This makes sense from a biological perspective: when one wins a large amount, there will be a rush of dopamine to incentivize the wager. This will result in a habitual urge to gamble since it felt so euphoric to the gambler. Even if the individual knows that the odds are not in their favor, they will still receive this natural response. In fact, it may be stronger due to their "beating the odds".

Yes, that’s true and I’ve said it many times when discussing on this board.

Your post shows a very interesting perspective although casinos care about making money, not about problem gamblers. They have taken measures to help problem gamblers due to regulations, not because they have empathy.

Certainly, if an individual were to lose most of their bets, or in an extreme scenario, if an individual were to lose all of their bets, they would not be likely to return. There is the lack of the sensation of winning. This seems to be more effective when the gamblers are unaware of the increased edge.

This seems to be very effective to make casinos go out of business. After all, most casinos’ users are non-problem ones. If they have the feeling the casino is stealing their money, they won’t play at all.

That reminds me of the laffer's curve: if casinos raise the HE, they may lower their problem gamblers but they will probably lower their overall gamblers, thus making less money, and the more they raise the HE, the more likely they will go bankrupt.

So, I think it is quite an interesting idea but I think it is unlikely to get implemented. Problem gamblers have nowadays some tools that didn’t exist 100 years ago, like self-exclusion or allowing themselves a maximum weekly or monthly deposit. I think more steps will be taken in this direction in the future, rather than raising HE. If they raise it, it will be for other reasons, not to prevent problem gamblers lose their money.

[ralle14]

I can relate to this, long time ago I regularly play casino games with high house edge like slots I tend to stop right away after a small win or break even because I know i'm about to lose on my the next bet once I continue. And then I saw someone announcing a contest with huge rewards so I deposit my balance to that casino I had a great start then eventually lost it all . With or without the contest I would still end up playing there at some point because of the low edge that they offer.

[eternalgloom]

What I would also like to mention though, is that in some cryptocurrency-based casino's with low house edges, the time between placing a bet and seeing the result is very small.
I think traditional casino's usually have laws they must follow, which include a minimum amount of time between placing the bet and seeing the result.

this has a role for sure , but I don't think it has anything to do with addiction
also not sure if there is such rule for real casinos , never heard of it and I guess all slots have instant results or am I wrong ?

in general my thoughts is that the gambler is the one who is responsible for addiction , if all gamblers started to know how odds work and that there is no way to beat the normal casino games then they will start limiting their spending on gambling and probably it will be way harder to get addicted

as I stated before , personally when I want to gamble on -EV games I just set a budget to play with and keep playing till I bust it or reach a goal of profit and I believe all the gamblers should do that since there is no way in making money long term with these games

having higher house edge for me won't change a thing , I will still gamble occasionally on dice or roulette and I will still lose the same amount of money but this way the process will be faster  

in general I'm totally against that , like imagine in the future poker sites raise their rake to 20% or bookies raise their margin for over 15% claiming that they want to protect people from getting addicted

gamblers will still gamble anyways , actually I guess only people with gambling problem will continue gambling if the house edge is higher  

It has everything to do with addiction. The less time there is between the bet and seeing the result of your bet, the higher the chance that you get addicted.

I wouldn't be so fast to say that addiction is 100% the fault of the gambler, this is a very simplified view in my opinion.
Casinos use every trick in the book to get people addicted, even going as far as using psychological research for reaching those goals.

You can be almost certain that some casino's even work very closely with corporate psychologists, literally to make everything as addictive as possible, while still following the law.

Saying that a higher house edge doesn't affect you is just a bit weird. These things are not supposed to be noticeable. They are effective among a large group of people, affecting only a certain percentage of those people.

I certainly do not think that actmyname is suggesting to only play games with a higher house edge. He's merely discussing how a higher house edge might cause people to lose less.

also not sure if there is such rule for real casinos , never heard of it and I guess all slots have instant results or am I wrong ?

In The Netherlands for example, it's required by law that slot games for example are not shorter than 4 seconds. For the reasons that I've described above.

Source in Dutch: https://www.jellinek.nl/informatie-over-alcohol-drugs/gokken/basisinfo-over-gokken/gokken-en-de-wet/

Een spelletje mag gemiddeld niet korter duren dan 4 seconden.

[Don Pedro Dinero]

Casinos use every trick in the book to get people addicted, even going as far as using psychological research for reaching those goals.

You can be almost certain that some casino's even work very closely with corporate psychologists, literally to make everything as addictive as possible, while still following the law.
...
In The Netherlands for example, it's required by law that slot games for example are not shorter than 4 seconds. For the reasons that I've described above.
 

Yes, that’s true. Actually, the sounds of the slots pay an important role in the addiction process as well. Everything in a casino is designed to make people bet more, but that’s not only in casinos, that happens in businesses in general. When you go to a supermarket everything is set up so that you spend more.

[Ewinsane]

There is no need to make it all complex.
Simply I understand that if you lose money right away when you first start, you won't comeback.

However, if you have low house edge the gambler may have a chance of winning on the first days which than he will lose but always comeback because he initially won and thinks he can won again. With bigger house edge the chance of losing is bigger and lower the house edge the chance of losing is lower. Hence, if you make the house edge bigger then the people who gamble will not come this frequently.

Nevertheless, you are forgetting that there is a whole tens of billions of dollars worth of industry built around the gambling world in everywhere around the world from Vegas to Macao to Monaco and people that play there know that the house edge is insanely high and still play anyway.

[tokeweed]

I think the gambling site owners already know the rule 'it's better to shear the sheep than to skin them alive'. 

They should know more about the psychology of gambling than we do.

[Betwrong]

Problem gamblers are usually the types who want to profit from gambling. So, seeing the higher house edges they are likely to stop gambling at all, as you rightly suggested. Now I would like to show some stats before I continue.

Here's a quote from Projectknow on Alcoholism Statistics,
Last updated on October 21, 2018:

Unfortunately more than seven percent of the American population aged 18 and up have a drinking problem; this is nearly 13.8 million Americans, and 8.1 million of them are alcoholic.

And here's a quote from the National Council on Problem Gambling (NCPG):

15 percent of Americans gamble at least once per week. Approximately two to three percent of Americans meet the criteria for problem gambling. That's around 6 million adults and about a half million teens.

As you can see, alcoholism is much bigger problem than gambling nowadays, and who knows where those wannabe gamblers would move if there was no gambling for them. I mean they can't be gamblers and alcoholics at the same time, because gambling requires a level of concentration drunk person can't meet. Why do I think potential problem gamblers can become alcoholics? That is because they are emotionally unstable, and such people are usually inclined towards using drugs and alcohol.

What I'm trying to say is that maybe gambling is the lesser evil for such people, and if that is the case, then maybe we should think twice before depriving them of it.

Just my two cents. I'm not sure whether I'm right or not.

[actmyname]

What I'm trying to say is that maybe gambling is the lesser evil for such people, and if that is the case, then maybe we should think twice before depriving them of it.

Having people be addicted to the lesser of two evils is not something that we should be seeking.

Your reply also has some parallels with various industry-funded research that casinos have been spreading. That being, problem gambling is more likely to develop in addictive personalities - that gambling is not inherently addictive but rather it becomes addictive to someone who is susceptible to it.

I simply cannot accept that a lack of gambling would causally imply a direct increase in alcohol abuse. I acquiesce that there may be some increase but I doubt that most problem gamblers will turn to addictive substances.

Moreover, it's really a matter of what someone is giving up: with alcohol, their health; with gambling, their money.

Does one really outlast the other?

[Don Pedro Dinero]

~snip~

~snip~

I don’t agree with him, either:

I mean they can't be gamblers and alcoholics at the same time, because gambling requires a level of concentration drunk person can't meet.

That’s not, at all, the case:

https://www.ncbi.nlm.nih.gov/pubmed/3515989

Being a high-stakes professional poker player is incompatible with gambling but according to that, 20% of alcoholics present problematic gambling behavior and also drug addicts have similar problems.

[shield132]

Can't agree OP because there are so many factors and house edge has almost nothing to do with it.
Well, imagine there is high house edge, for example person Rob started gambling with 1 btc, he lost, tried 1 btc next day, he lost again. Then what happens? More likely he says: I just want to get money back which I lost and then I swear I'll never gamble. He did and lost or win again but didn't get his whole 2 btc, only won 1 btc. But he wants another 1, gambles and loses. Now he gots addict.
I can say also another opposite of what you posted, for example imagine house edge is low and Rob started betting again, wow he won and won much, next day started betting and sees he loses, already lost 40% of profit. Now he realizes that gambling is something he has to left and take a profit, have a fun with friends.

I don't say that you aren't true, yeah you are right also but everything depends on how someone thinks. To be fair I was in sports betting for 2 years, was betting everyday and I am in profit overally but once lose 100$ which was much for me at the moment because I was unemployed, had a lot of free time too. Then soon I left sports betting because don't had enough time to read sport news or watch football (soccer) matches, changed my thoughts and started workout at gym to gain some muscled and it's almost 2-3 year that I haven't made any bet.

[actmyname]

Can't agree OP because there are so many factors and house edge has almost nothing to do with it.
Well, imagine there is high house edge, for example -snip-

Here's the problem. You're creating and assuming individual cases. I am not.

I realize there are a number of factors associated with gambling addiction. However, we are evaluating it from a control group (i.e. irrelevant of outside variables). Suppose our sample size is the entire population of the earth. Then, by analyzing the whole, we absolve any other factors from influencing the results.

It's like stating that all organic experiments are flawed because there are random factors associated with each organism and thus the results are skewed.

Bear in mind, these are also hypothetical ideas based on generalized principles. The average result will reduce overall gambling losses but there will always be variance. This is similar to gambling itselfThe thing is, your first example addresses a problem gambler. The behavior would have most likely happened regardless of the house edge (upon a loss) which means there is no significant change to our calculation of total losses.

[shield132]

Can't agree OP because there are so many factors and house edge has almost nothing to do with it.
Well, imagine there is high house edge, for example -snip-

Here's the problem. You're creating and assuming individual cases. I am not.

I realize there are a number of factors associated with gambling addiction. However, we are evaluating it from a control group (i.e. irrelevant of outside variables). Suppose our sample size is the entire population of the earth. Then, by analyzing the whole, we absolve any other factors from influencing the results.

It's like stating that all organic experiments are flawed because there are random factors associated with each organism and thus the results are skewed.

Bear in mind, these are also hypothetical ideas based on generalized principles. The average result will reduce overall gambling losses but there will always be variance. This is similar to gambling itselfThe thing is, your first example addresses a problem gambler. The behavior would have most likely happened regardless of the house edge (upon a loss) which means there is no significant change to our calculation of total losses.

I interprated individual cases to make my opinion clearer. I talk from the situation which is in country where I have lived for a long time. Young people, yeah teens and imagine, people from 12 years old usually start gambling, it's so easy to register and withdraw money online on those local casinos without verification. They want to earn easy money, everytime they got some buks, immediately deposit and play poker, sports betting, slots and etc. I know a lot of people who does that and in most cases they try to get back what they lost. Imagine, house edge is 8% on most games but they still gamble, doesn't matters. That's why I talk absolutely different, that doesn't means I don't share what you say, yeah you are right and what you say comes from big countries.

[eternalgloom]

Can't agree OP because there are so many factors and house edge has almost nothing to do with it.
Well, imagine there is high house edge, for example -snip-

Here's the problem. You're creating and assuming individual cases. I am not.

I realize there are a number of factors associated with gambling addiction. However, we are evaluating it from a control group (i.e. irrelevant of outside variables). Suppose our sample size is the entire population of the earth. Then, by analyzing the whole, we absolve any other factors from influencing the results.

It's like stating that all organic experiments are flawed because there are random factors associated with each organism and thus the results are skewed.

Bear in mind, these are also hypothetical ideas based on generalized principles. The average result will reduce overall gambling losses but there will always be variance. This is similar to gambling itselfThe thing is, your first example addresses a problem gambler. The behavior would have most likely happened regardless of the house edge (upon a loss) which means there is no significant change to our calculation of total losses.

I interprated individual cases to make my opinion clearer. I talk from the situation which is in country where I have lived for a long time. Young people, yeah teens and imagine, people from 12 years old usually start gambling, it's so easy to register and withdraw money online on those local casinos without verification. They want to earn easy money, everytime they got some buks, immediately deposit and play poker, sports betting, slots and etc. I know a lot of people who does that and in most cases they try to get back what they lost. Imagine, house edge is 8% on most games but they still gamble, doesn't matters. That's why I talk absolutely different, that doesn't means I don't share what you say, yeah you are right and what you say comes from big countries.

You're basing your entire argument on anecdotal evidence. I.e. you're just making conclusions about your personal experiences with seeing kids in your country gambling.
While that's certainly worth having a discussion about, it has nothing to do with results gained through research on a bigger scale.