Can You Gamble Your Way to Retirement?
Only If You Properly Manage Risk
This is a serious question. Many people gamble for fun and entertainment, but some people
gamble because they have a serious interest in making a lot of money and funding a
comfortable retirement. Is this possible?
The answer is more complicated than it seems at first glance. If you think of gambling in
the conventional sense - casinos, horse tracks, and lotteries - then the answer is a very
clear "no." The answer is "no" because the odds are stacked in favor
of the people running the gambling operation (the casino, the bookie, the state lottery
bureaucrats). The mathematics of probability, combined with the cost of the profit margin
that goes to the gambling establishment operators, makes winning consistently through
random betting impossible.
There are only two ways to change the losing outcome of normal betting. The first way,
over which no one has any real control, is to win big quickly and quit. If you happen to
win a state lottery for a few million dollars and stop gambling, then obviously you will
have enough money to retire and you will have obtained it through gambling. But, how
likely is this? Let's take a couple of examples. In California, the odds of winning the
state lotto are over 41 MILLION to one against your winning. If you buy ten tickets at
once, you only improve the odds to 41 MILLION to ten against your winning. What about
something simple like roulette? The odds are much better than a state lottery, but it is
still very difficult to make money through random betting. In most casinos, the house
"edge" is 5.26% (in Atlantic City it is only 2.63%). With a 5.26% edge, this
means that in a one for one bet, where you bet a dollar to make a dollar, you have a 47.37%
chance of winning. Play that game often enough at these odds and you won't be retiring
anytime soon.
So, what is the other way that we can answer "yes" to the question about
gambling to retire? The only other way is to shift the odds. This means work. This
means learning something that most people do not know that changes the "edge"
from the "house" to you, the individual gambler. An example is card counting
where the counter uses the principles of probability along with varying bet sizes to
reduce the size of losses and increase the size of wins. Another example is someone who
becomes an expert at horses, athletics, or maybe commodity futures trading and through
hard work and discipline earns money. But, we were talking about retirement, weren't we.
. .?
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