Quote:
Originally Posted by blackthroatedwind
Except doesn't the churn on slot machines negate the lower takeout aspect, in that you will go broke faster?
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BTWind, I'm not sure what you're comparing when you write "you will go broke faster". If you're comparing two slot machines with similar games but different takeout, then the churn rate is equal and you'll of course last longer on the game with lower takeout.
If you're comparing slot play to horseracing, it's hard to decide what "units" of bet would make the comparison useful.
An important factor for casinos is to create the "if I'd only quit when I was ahead" kind of thinking. When you have lower vig in a casino game, it usually means you will have a higher chance of having been ahead at some point during your play.
Compare two nearly identical "Jacks or Better" video poker slot machine games, one with a 98.4% return and the other with a 95% return.
If you play the 98.4% game at the $1 level betting $5/hand for about 2-3 hours (1000 hands), you have just a 29% winning. But you will have been $100 ahead 53% of the time. So in addition to having a solid chance to win, you also have a strong illusion that you could have won.
If you instead played the 95% game, your chance of winning drops to 12%. And you'll have had just a 38% chance of having been $100 ahead during your play.
The casino's minimum* expected win in the 98.4% game is 1.6% x $5 x 1000 = $80.
The casino's minimum* expected win in the 95% game is 5% x $5 x 1000 = $250.
(* it's "minimum" because these games involve decisions, and most players will make errors that create a larger expected win for the casino.)
Despite the much higher expected win for the casino, you rarely see the 95% game offered. There are plenty of oblivious slot players, yet even the oblivious ones realize when they are hardly ever winning. Even in the absence of nearby competition, casinos will usually offer a better version of Jacks or Better than the 95% game.
I think the same might ultimately hold true for horseracing if tracks would lower takeouts, creating a better chance to have the "I was ahead for awhile" mentality. But with the smaller number of bets (compared to casino games), it's not 100% clear to me that a small reduction in takeout would have a noticeable effect on either end result or the chance-of-being-ahead-at-some-point factor.
I may have totally missed the point of your comment, and if so, please clarify and let me have another shot at it!
--Dunbar