A Crash Course in Gambling

Crash Course in Gambling

We've written a dozen "crash course" pages designed to teach people to play casino games like blackjack and Texas hold'em. But we realized at the end of that project that something was missing. What about people who've never gambled before? Where are they supposed to turn? We realized that our other crash course pages are useless without a guide to gambling in general.

Why would you want to learn how to gamble? We can think of dozens of reasons. Maybe you're planning a romantic Vegas honeymoon and don't want to look like a fool in front of your bride. Maybe your boss has invited you over for a poker night, or your company is being treated to a casino night event. Whatever the reason, we've met thousands of people over the years clamoring for information about gambling. One thing they all have in common - they're looking for a condensed version, a crash course, something they can absorb and apply in thirty minutes or less.

That's what this page is - a crash course in gambling. We start out with an FAQ designed to address some basic misconceptions and definitions. The next section, outlining the various layers of US law related to gambling, is essential for people new to betting. We include a section describing various forms of gambling, followed by advice about game odds and betting strategy. Along the way, we're going to fill you in on the rest of what we consider the bare minimum knowledge a person needs to feel confident at any gaming table in the world.

An FAQ for Gambling Beginners

What is gambling?

Don't snicker at this question - it's a legitimate one. In most American states, gambling is the act of risking something of value against a future event of which you have little or no control in the hope of getting something in return. In some states, illegal betting includes a simple wager between friends on the outcome of a race. Other states take a more relaxed approach, allowing social betting, charity-run gambling games, casinos, and other forms of wagering. But, in general, if you're placing a bet on an outcome that you don't have full control over, you're gambling. The legality of it depends on where in America you live.

Isn't gambling illegal?

Gambling is not illegal across the board in America. In some US states, gambling is pretty much illegal. In other states, just about every form of betting you can think of is legal, regulated, and probably sponsored by the state government or a government agency. Some forms of gambling are illegal no matter what. According to the federal government, it's illegal to place a sports bet or exchange information about a sports bet across state lines using the Internet or a phone. In some states, playing a game of cards for money in the privacy of your home is illegal. What we're trying to show you is that American gaming law is complex. See the section on US gambling law below for more information.

Aren't all casinos rigged?

The short answer is "No." The long answer is that it's complicated. Mathematically, every casino game is rigged, because they're all designed to return a profit to the house. Casinos would go broke offering games that paid out more than they took in. In that sense, all gambling games offered by legitimate operators are "rigged," but because you know going in that these games favor the house, it's an above-board and fully-legal sort of rigging. If the question is: "Don't casinos rig their games to pay more or less depending on their mood?" or whatever, then the answer is no. Casino operators don't have to rig games to makes money - the games are designed to pay out less than they take in. If that's "rigged" to you, so be it.

Why is gambling so popular?

Gambling is a form of entertainment. Gambling games are designed to be fun, many of them even addictive. Gambling offers a potential reward for what seems like a small investment. Gambling caters to every bankroll, every budget size, and every entertainment style. The variety of games makes it akin to an adult carnival. You can try your luck on some games, or sharpen your skills at others. The casino is a jovial place, with bright lights, free drinks, and lots of friends gathered around hoping for a common result. We imagine gambling is popular for the same reason religion is popular - it brings us together, entertains us, and offers us hope for the future. That may sound silly, but it has a certain truth to it. In short, gambling is popular because human beings enjoy gambling, and we always have. There's no reason for it - we enjoy risk, we enjoy reward, and we enjoy socialization.

A Crash Course in US Gambling Laws

When discussing American gaming law, you should think of it as a cake. This particular cake has three layers: federal law, state law, and municipal law. Obviously, federal law is the most discussed aspect of US gambling regulations. Some features of American gaming law are so well-known as to be household names, things like UIGEA and the wire act. But state and municipal (meaning local) laws are just as important. In many cases, the federal government defers to state and local law when it comes to gaming regulations and enforcement.

This section will bring you up to speed on all three layers of our allegorical cake.

1. Federal Gaming Laws

Two federal laws are immediately applicable to any discussing of gaming - the Wire Act and the UIGEA.

The Interstate Wire Act outlaws the practice of placing bets "using a wire communication facility." That may not sound like a big deal, but until very recently, the US Department of Justice translated that into a law against all wagers made by phone or even over the Internet. Passed in 1961, the Interstate Wire Act is still a headache for gamblers five decades after becoming law. The act's only purpose was to amend existing gaming law "with respect to the transmission of bets, wagers, and all related information." In layman's terms, the act's only goal was to create a new crime related to betting and/or the transmission of bets.

Does the Wire Act make gambling in America illegal? No. In fact, the Department of Justice has recently clarified the law, saying that they now interpret it as a ban on phone and Web-based sports betting, and not to other forms of gambling. In short, based on a strict interpretation of the Wire Act, it is illegal to place a bet on sports across state lines using your phone or Internet connection.

Why did the Interstate Wire Act ever become law? It was the pet project of then-US Attorney General Robert Kennedy, who'd built his political career campaigning against the mob and other forms of organized crime. Following a swell of anti-organized crime sentiment, the Interstate Wire Act of 1961 was meant to attack one of the mob's biggest sources of income. At that time, sports betting across state lines by phone was the mob's biggest moneymaker.

The Wire Act's only real result was the creation of a new crime that Kennedy and his Justice Department could use to crack down on mob bosses. Unfortunately, the Wire Act's outdated language means that this crackdown has extended well into the modern era, blocking access to bets by regular old Americans who are no more a member of organized crime than they are time travelers. The use of the Internet as a major platform for betting complicates things even further. How could lawmakers in 1961 have predicted the spread of Internet betting? The trouble with the Wire Act in the Internet age is that no one knows for sure whether or not the act applies to online betting.

In 2011, the US Department of Justice released a statement, reading in part: ". . . the interstate transmissions of wire communications that do not relate to a 'sporting event or contest' fall outside the reach of the Wire Act." Know also that the Wire Act has never been used to prosecute an individual gambler. The government's focus is on targeting large-scale illegal operations profiting without paying taxes. The government isn't interested in busting you for betting a couple hundred bucks on football - they're more interested in illegal operators making millions of dollars without paying their fair share to Uncle Sam.

The UIGEA bill is a more recent addition to the federal gambling landscape. UIGEA stands for Unlawful Internet Gambling Enforcement Act, which pretty plainly spells out the intent of the bill. The UIGEA bill was passed in 2006, but only because it was added as a minor attachment to a much-larger (and can't-miss) national defense bill. The SAFE Ports Act was intended to tighten security at seaports, airports, and train stations - the UIGEA bill was added as a rider. The UIGEA is a scant four pages of legislation tacked onto the end of a bill that constitutes several thousand pages. Interviews with lawmakers at the time revealed that most of them didn't read UIGEA and had no idea they voted for it.

The goal of UIGEA was to crack down on (and eventually shut down) American online gambling in all forms. Thankfully, UIGEA was watered-down, and really only attacked the processors of online gambling account payments. UIGEA made it illegal, for the first time, for banks and other financial institutions to process payments to and from known gambling websites. The creators of UIGEA believed that doing so would dry up the money, and people would abandon gaming online altogether.

Does UIGEA make it illegal to gamble online in America? No. All it does it make it a bit harder for gamblers to send and receive money in dealing with a gambling website. The UIGEA failed because of flaws inherent in the bill. The truth is, plenty of Americans are still processing payments and placing online bets. UIGEA contains a number of loopholes which clever gamblers and business owners have taken advantage of. This is an example of what happens when you build a better mousetrap.

Even though UIGEA failed its main mission, it has had a big impact on American gambling. Plenty of operators pulled out of the US market entirely. Most of them have failed to find a legitimate way to return. But it's still true that the UIGEA does NOT make it illegal to place online bets. No individual will ever be arrested, prosecuted, or charged with any crime for placing online bets based on the UIGEA bill. The bill just isn't designed to do that.

2. State Gaming Laws

State law is the most complicated layer of our metaphorical cake. Understand that the laws of our fifty states and three territories are patchwork quilt of outdated and modern laws. Many states defer most of their gaming law to local governments. Others have ancient language in their penal code that makes it basically inapplicable to any modern form of gambling.

State gaming laws popped up after World War II. America was beginning to trend conservative. Right-wing politics dominated. Is it any surprise that state governments began to turn a bit Puritan? Outside of the state of Nevada, you could only participate in any legitimate form of gambling in America in one state - Maryland. For a few years, Maryland residents could play slot machines, until even that once-progressive government tightened up its morality and banned those slots in the 50s.

Why did gambling come back? State budget crises of the 1970s, a time when every US state was strapped for cash. Immediately, state lotteries, legal horse and dog race betting, and even new casino gambling laws were to be found from coast to coast. Atlantic City emerged from the ashes to become the new hot gambling mecca of the East Coast. Tribal gaming expanded to a point where most US states have some form of legal tribal gaming.

Having said that, some US states have outlawed gaming outright. Others have created regulated online betting systems, making all other forms of online gambling illegal. Here's a list of the twelve US states that have harsh restrictions on gambling in one form of another:

  • Indiana
  • Illinois
  • Louisiana
  • Maryland
  • Montana
  • Nevada
  • New Jersey
  • Oregon
  • South Dakota
  • Utah
  • Washington
  • Wisconsin

You should look up state gambling law for the state where you live or are planning to visit before you gamble. If you have genuine concerns about a state's gaming laws, you might need to consult a lawyer familiar with gaming law in your area.

A Crash Course in Gambling Games

This section is a guide to the various forms of gambling available in America. We give brief descriptions, not in order to bring you totally up to speed on these games, but to describe the texture of the modern gambling business.

Casino Gambling

The phrase casino gambling refers to a wide range of games. Here's a list of the casino-style games you're likely to find in an American casino:

Poker / Card Rooms

Some US states allow for the operation of poker rooms or card rooms, businesses that are allowed to host games like poker and (in some cases) blackjack. California is the traditional home of the card room, with several hundred venues legally hosting games like Texas hold'em, Omaha, and California blackjack. Generally-speaking, these rooms are allowed to rake games (meaning to charge a percentage commission) but not to participate or charge entry. The existence of card rooms is almost always predicated by a failed fight to expand legal casino gambling.

Lottery

46 US states and territories participate in some form of lottery. In America, the most popular way to play the lottery is to buy scratch cards. These are instant-win games that reveal your prize as soon as you scratch their surface away. But Americans don't spend billions just on scratch cards - traditional raffle-style lottery draws are still very much big business, having swept the country in the 80s and 90s and now settled in for the long haul. Some states, like Delaware and Nevada, use a lottery-style system for selling parlay tickets, a type of sports betting we cover briefly in the section below. In short, the lottery is a legal form of gambling that just happens to be the most popular in the United States. Some people don't think of playing the lottery as gambling, but it's pretty clearly a form of legal wagering by the common definition at the beginning of this page.

Sports Betting

Four US states (Nevada, Oregon, Delaware, and Montana) are allowed to host some form of sports betting. Most American sports betting action takes place in Las Vegas, though Delaware, Oregon, and Montana allow the sales of parlay cards through their lotto systems. A parlay card is an extended wager on the outcome of two or more sports contests in a single day. The action available in Las Vegas is much more expansive, with traditional wagers on things like the point spread and over/under's. If all this sounds like a foreign language to you, check out our Crash Course on Sports Betting,

Race Betting

In America, race betting was one the toast of the gaming industry. These days, it's tough to find an active track in many parts of the country. Take greyhound race betting - as of the time of publication, just five US states host greyhound racing events and allow the public to wager on the outcome. Thoroughbred racing has done a bit better, but only a bit. Twenty-nine states host horse racing events and allow betting, a far cry from the heyday of horse racing, when legal tracks existed in nearly every state. Simulcast betting, allowing gamblers to wager on races taking place in other states or countries, has been the industry's answer to dwindling numbers, and most US states that allow dog or horse race betting allow simulcast betting.

Daily Fantasy Sports Betting

DFS, as it is known, is a relatively new phenomenon in America. DFS allows people to turn their fantasy sports passion into a gambling event. DFS asks bettors to form fantasy rosters that compete head-to-head. This form of betting is distinct from sports gambling and unique enough from traditional fantasy sports to require some new definitions and regulations. As we put this crash course on gambling together, the legality of daily fantasy sports is changing, the legal landscape shifting with each new state's reaction to DFS. Some states are regulating the activity, others are outlawing it.

Charitable Gaming

Most US states allow charitable groups (recognized non-profits) to sell things like raffle tickets and bingo cards in order to raise money. Some states even allow these groups to operate casino-style games. In every state where charitable gambling is allowed, it is heavily-regulated, to the point where recognized charities are usually only able to host one or two of these events per year.

Social Gambling

The ability to place wagers on card games, sporting events, or anything else while in the privacy of your home is referred to as "social gambling." Every American states has a law on the books declaring this activity either legal or illegal. If you live in one of the states on the following list, you aren't allowed to place bets on gambling in the privacy of your own home:

  • Arkansas
  • Georgia
  • Idaho
  • Indiana
  • Illinois
  • Iowa
  • Utah
  • Kansas
  • Maryland
  • Michigan
  • Mississippi
  • Missouri
  • Nebraska
  • New Hampshire
  • North Carolina
  • Oklahoma
  • Rhode Island
  • South Dakota
  • Tennessee

If you don't live in one of those states, you have every right to gamble in privacy, but you might want to check your local and state laws just in case. Some states have goofy social gambling laws that go against the standard in the rest of the country. In Florida, for example, social bets are limited to $10 apiece.

A Crash Course in Gambling Math

We could write 150,000 words on gambling math and we'd barely scratch the surface. To put a finer point on it, we could write that many words about the math behind every gambling game on the planet. Mathematics is such a vital part of the gambling industry. Without it, games of chance and skill would never have been invented. Using mathematics, gamblers can often improve their chances. In short, gambling pretty much IS mathematics, with a pretty cover over the whole thing to make it more entertaining. Here, we've included a few basic notes on gambling math to help bring you up to speed on the practice of gambling in general:

Independent vs. Dependent Events

In statistics, an independent event is any that occurs without any outside influence. Dependent events are, obviously, the opposite of that. An example would be the classic coin flip. The odds of a coin coming up heads once is (1/2), meaning there's a 50% chance of each outcome. When you flip the same coin four times, the odds of getting four heads is equal to the probability of getting one heads result four times in a row.

We can describe it like this: (1/2) x (1/2) x (1/2) x (1/2). Do the math - it adds up to 1/16. That's because it's an example of an independent event with no outside influence. The odds don't change no matter how many times you flip that coin. Also, when the first three heads outcomes have appeared, the odds of heads appearing on the next flip are still one in two.

This is a very common misunderstanding about gambling. People tend to think that numbers have some sort of memory - that, in the lottery for example, the fact that a number has come up recently might mean that it won't come up again. This same thinking exists for roulette - casino operator's play into this tendency by listing the last ten or fifteen results. All of this flawed thinking is based on a fundamental misunderstanding of the nature of dependent and independent events.

House Edge

Each bet in the casino has a specific probability of winning and a specific probability of losing. These numbers are based on long-term (even infinite) plays with an infinite bankroll. Let's use the coin flip as an example, for simplicity's sake. Every coin flips has 50-50 odds for both heads and tails. We call this an "even-money" bet because each outcome has a 50% chance of occurring. Also, if you bet money on the outcome of a coin flip, and you won a dollar for each victory, you're getting what's called true odds. However, in casinos, there's no such thing as true odds. It's more likely that a casino would pay you $0.95 for every loss, taking a full $1 for every loss. The house edge is the difference between what the bet pays out and what the best costs to make. In this example, where a win on a coin flip pays out $0.95 and every loss costs $1, the house edge is 2.5%.

Let's look at another example - roulette. The house edge on the American game is listed as 5.26%. How did we come to that number? The odds of winning on a single-number bet is 1 in 38. Put another way, the odds against you winning on a single-number bet are 37 to 1. When you win on a single-number bet, the house pays you $35 for every $1 you bet. A win actually returns $36, including your $1 initial bet. The difference between the total number of possible winning numbers (38) and your winning payout ($36) is $2. Divide that $2 by 38, the bet's "true odds," and you get a house edge of 5.26%. You can do this for every gamble you come across, if you have enough information and a calculator.

A Crash Course in Gambling Strategy

Our other Crash Course pages contain detailed strategy notes designed for specific games. The advice in this section is generic gambling advice that all bettors can apply. If you follow these five tips, you're doing everything you can to have a great time gambling. That also means you're putting yourself in the best position to win money.

1. Manage Your Money

Money management is as important to a gambling hobby as it is to any other activity that costs money. It's not fun, it's not sexy, but it is necessary. The Internet is full to the brim with free bankroll management advice, but we thought we'd share the single most important aspect of it to our new gambling experts reading this page. Our trick is to set a budget and never deviate from it. Here's how we do it - let's say you have $1,000 you're willing to lose on your next trip to Vegas. You've done the math, and you figure you need to make that money last for no more than ten hours. Obviously, $1,000 divided by ten hours is $100 an hour. That means your hourly loss limit is $100. If you lose $100 and you've got twenty minutes left in that hour? Take a break. See a show. Have a meal. Make a phone call. As soon as the next hour starts, start gambling again. This is an incredibly easy but also effective tool to protect your mortgage payment form the casino's prying fingers.

2. Learn Game Rules and Pay Tables

You can't walk into a casino knowing nothing about the games they offer and expect to walk out with any cash in your pocket. By the way, if you don't know how to play a game, or how it pays out, you won't have as much fun. Learning the ins and outs of the games you want to play before you walk onto the floor saves you hours of frustration, embarrassment, and losses. Here's a secret we tell newcomers to the casino - if you don't understand a game, you can usually ask the dealer for help, especially if the table is slow. Gamblers and casino employees are friendly people, and they want you to have a good time. Don't understand something? Just ask.

3. Practice (for free!) Online

Thank God for the Internet. These days, you can log on to an online casino (even in some cases as a guest, without registering an account) and play any game they offer for play-money. That means you can practice your new craps or blackjack skills in a casino-like setting without risking any of your actual paycheck. Actually, you don't have to log on to an online casino at all - you can find trainers for just about every gambling game, available for free, and designed to teach total amateurs like yourself. If all else fails, you can avoid online training altogether and go for a free class put on by a casino. Casinos host these workshops in order to drum up business, and you can take advantage of them by learning how to play games like roulette and baccarat at no charge. Sometimes they'll even throw in a free meal.

4. Join a Loyalty Program

This rule mostly applies to casino gamblers. All casinos in America offer some form of loyalty program. This exists in the form of a card that you swipe before you start playing any game on the floor. The loyalty program tracks your play and allows the casino to see how much you're betting and how loyal of a customer you are. That's a good thing, because casinos hand out comps and free stuff based on player loyalty. These loyalty programs don't cost a dime to join. What's better, every free item you get from the casino is a tiny percentage of their edge shaved away. One surefire way to beat the house is to convince them to give you a free room or other item of real value.

5. Enjoy Yourself

Never forget that gambling is supposed to be fun. It is a form of entertainment. Gambling should be no more or less stressful than a night at the movies with your friends or your family. We understand the appeal of gambling as a potential payday - we've all been in a tough spot, looking to turn $10 into $1,000. But casinos are entertainment centers. They feed us prime rib and standing roast. They pour liquor and beer down our throats. They populate the floor with scantily-clad women and go out of their way to make us feel important. They do that because we're spending our hard-earned money to be entertained. As soon as you lose sight of the entertainment value of your bets, it's time to pack up and head home. This piece of advice is designed to prevent what gamblers call "tilt," or betting on emotion. Betting on tilt is a great way to go broke.

Conclusion

In some parts of America, gambling gets a bad rap. In states like Utah and Texas, a tradition of conservative religious views severely limits the gambling rights of their citizens. But in other parts of the country, gaming is a legitimate business. Even states with some tradition of conservative politics and religion are gaining ground on traditional gambling powerhouses like Las Vegas - look at the growth of the gaming industries in Oklahoma and Louisiana for an example. When you talk about gambling in America, you're talking about a hot-button issue that's got much of the country deeply-divided.

Then again, gambling isn't always so controversial. What anti-casino activist turns their nose up at a friendly bet on a round of golf? Almost every US state operates a lottery game (or multiple games), and for the most part these games are a success. Charitable gaming (raffles, bingo, casino nights, etc.) is also legal in most American states and very popular in many of those. What we're trying to point out is the variety of gaming experience available in the United States.

Having read a few thousand words on the subject, you're totally prepared to read up on the games you want to play and step up confidently to the table of your choice. We've explained gaming jargon, filled you in on the history of bets, outlined the various legal challenges to betting, and described a ton of different gambling games available in America. Now it's up to you to discover your game and stick to the advice we've provided above. Good luck.