In a down economy, it's normal to start thinking of alternative ways to generate some extra money, but if you're tempted into thinking gambling is one of those good alternatives, you need to keep reading. Once you step foot into a casino and exchange your money for chips, you've sold away your only advantage, which is staying out of the casino to begin with. Casinos can bring great shows, food and entertainment, but statistically they won't bring you much more than that. (For more, see Going All-In: Comparing Investing And Gambling.)
IN PICTURES: 7 Forehead-Slapping Stock Blunders

Big Business and Big Profits
To say casino gambling is a lucrative business would be an understatement. Last year, commercial casinos brought in a gross revenue of about $31 billion and Indian casinos cashed in for about $26 billion. Although revenue from private casinos was down last year, it was still three-times higher than Hollywood's 2009 ticket sales revenue of $10.6 billion, a banner year for the silver screen. It's no surprise where those profits are coming from, but that didn't stop over 36 million visitors from showing up in Las Vegas last year alone, with some hoping to win more money than they came in with.

Games of No Chance
Math is the universal language, and it rarely ever lies. Each game you play at a casino has a statistical probability against you winning. Every single time. This house advantage varies for each game, and helps ensure that over time the casino won't lose money against gamblers. For people who are really good at Blackjack, the advantage for the casino might only be 0.5%, but certain types of slot machines might have a 35% edge over a player, and other games fall somewhere in between. The slot machine odds are some of the worst, ranging from a one in 5,000 to a one in about 34 million chance of winning the top prize when using the maximum coin play. (Read more, in Are You Investing Or Gambling?)

The house advantage obviously doesn't mean that you can't win, because people do and sometimes they win substantial amounts, but it does mean that the more you play, the more the math works against you and the better the chances are of you walking out of the casino with less money in your wallet than when you came in.

IN PICTURES: 6 Biggest Millionaire Flops

Everyone's (Not) a Winner
Think of all those profits we mentioned earlier as all of the losses from casino patrons each year. Of course, some of the money may come from other venues within the casino, but the breadwinner for this industry is the games. Now, think of yourself walking into a casino with the feeling that you're going to beat those odds (or profits) because luck, whatever that is, is on your side. Not likely. You can't even bet on winning or losing streaks either. If you'd had a slew of bad hands, the likelihood of that turning into a winning streak simply doesn't exist, it's not in the cards, or math for that matter.

The Betting Rip Current
Aside from the entertainment of casinos, some people do get swept into an addiction that far surpasses the entertainment value of the games. Only a small percentage of gamblers, about 5%, reach that point, but unfortunately it's estimated that their losses make up a quarter of the profits for the casinos. This is all the more reason to understand the house advantage and how it works against a player who has lost a significant sum and is spending lots of time in the casino trying to win it back. The more a player struggles to get ahead, the more he gets pulled into additional losses. (Read more background info, in Sinful Investing: Is It For You?)

Quit While You're Ahead
Almost every time, it's in your best financial interest not to walk into that casino and place the bet - the math simply isn't your friend. For those who want to press their luck anyway, make sure to quit while you're ahead, because that winning streak you're on is definitely all in your head. (Looking for more action? Check out A Quick And Dirty Look At Sports Gambling.)

Find out what happened in financial news this week with Water Cooler Finance: The New iPod And The Roller Coaster Market.

Related Articles
  1. Investing

    4 Gambling Stocks that Outperformed Since 2010

    A look at four stocks in the casino and gambling industry that outperformed the market for the last five years.
  2. Investing News

    Defensive Investing: Learn from a Hedge Fund Pro

    Looking for ideas on companies, sectors or investments to short? Consider the opinion of this hedge fund luminary.
  3. Investing

    How to Play the Gaming and Gambling Sectors

    An upturn in macro revenue numbers should signal a significant trading and investment opportunity in the gaming and gambling sectors.
  4. Stock Analysis

    5 Risky Stocks to Own Right Now

    These five well-known stocks are risky propositions. Here's why.
  5. Entrepreneurship

    Behind the Hair: How To Build an Empire, Trump-Style

    Who is the man behind the hair? The crucial steps that Donald J. Trump took to build his real estate and celebrity empire.
  6. Personal Finance

    Why Does the House Always Win? A Look at Casino Profitability

    Understand how a casino has a number of built-in advantages that insure it, and not the casino players overall, will always come out a winner in the end.
  7. Stock Analysis

    Will WYNN Continue to Rally?

    Wynn Resorts has experienced a rally recently. Will it remain a good bet?
  8. Investing News

    6 Signs You Are Addicted To Investing

    An addiction to trading can ruin your life and relationships. Not to mention the monetary costs. There are telltale signs that you've gone too far.
  9. Fundamental Analysis

    Macau: Not Your Father's Gambling Destination

    Macau has given Las Vegas casinos a run for their money, but what's behind the scenes? Here's an overview of Macau's gambling industry.
  10. Chart Advisor

    Traders Are Looking To Bet On Casinos

    A breakout on the chart of BJK suggests now is the time to invest in the gaming industry. We'll take a look at several stocks that could be worth a closer look.
  1. What taxes will I pay if I win a lot of money while gambling in Las Vegas?

    Every year, thousands of people travel to gambling hot spots, such as the Nevada cities of Las Vegas and Reno, with the hope ... Read Full Answer >>
  2. What is the difference between a banker's acceptance and a post-dated check?

    Some common financial instruments that speculators use are stocks and financial derivatives. Speculation involves trading ... Read Full Answer >>
  3. What is the difference between speculation and gambling?

    Speculation and gambling are two different actions used to increase wealth. However, the two are very different in the world ... Read Full Answer >>
  4. Is there a difference between the special administrative regions of Hong Kong and ...

    Hong Kong and Macau are the two areas of China formally designated as Special Administrative Regions (SARs) of the People's ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Take A Flier

    The slang term for a decision to invest in highly speculative investments.
  2. Bar Chart

    A style of chart used by some technical analysts, on which, as illustrated below, the top of the vertical line indicates ...
  3. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
  4. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  5. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  6. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
Trading Center