The Magic Economics of Gambling

  • Published: 30 October 2018
  • Build your website for 10% off at

    Subscribe to Half as Interesting (The other channel from Wendover Productions):

    Get the Wendover Productions t-shirt:

    Check out my personal channel:

    Support Wendover Productions on Patreon:

    Email: [email protected]


    Animation by Josh Sherrington
    Sound by Graham Haerther (
    Thumbnail by Simon Buckmaster

    Special thanks to Patreon supporters
    Alec Watson, Andrew J Thom, Braam Snyman, Bryan Yip, Chris Allen, Chris Barker, Connor J Smith, Daddy Donald, Etienne Dechamps, Eyal Matsliah, Hank Green, Harry Hendel, James Hughes, James McIntosh, John & Becki, Johnston, Keith Bopp, Kelly J Knight, Ken Lee, KyQuan, Phong, manoj kasyap govindaraju, Plinio Correa, Qui Le, Robin Pulkkinen, Sheldon Zhao, Simen Nerleir, Tim Robinson

    Music by

    Select footage courtesy the AP Archive

Comments • 2 438

  • Lewis Gray
    Lewis Gray  4 days back

    200/1 odds returns 201 for each dollar not 300. 6:43

    • Saadman Yasar
      Saadman Yasar  6 days back

      The House Always Wins

      • ХОРОШО
        ХОРОШО  7 days back

        Casinos not just sell loses, it sells entertainment.

        • J L
          J L  1 weeks back

          I didn't hear mention of entertainment being a motivation for patrons. I know I will lose money gambling but the thrill of winning has a value to consumers.

          • cormac23432342
            cormac23432342  3 weeks back

            1$ at 200/1 does not return 300$. It returns 201$

            • Paul Page
              Paul Page  3 weeks back

              Casino gambling and lotto are rigged games that always favors the house.

              • Tradin War Stories
                Tradin War Stories  4 weeks back

                This is a stupid explanation of gambling hes leaving out so many factors juat by saying essentially you lose 94 cents for every dollar you play. Btw playing black or red is a suckers play on roulette. You play 3 numbers every spin they pay out like 38x

                • Pat
                  Pat  4 weeks back

                  if you go see a movie you will loose the 10$ but get 2 hrs of entertainment. if you gamble 10$ you could win more, break even or loose all the 10$ all the while you are entertained and prob get a free drink.

                  • Pat
                    Pat  4 weeks back

                    just go and look at the quarterly Nevada gaming commission revenue per casino and games.

                    • Cody'sLab
                      Cody'sLab  4 weeks back

                      The only reason I have car insurance is I am legally required to have it for liability.

                      • kevin wilson
                        kevin wilson  4 weeks back

                        Sports betting no different

                        • Milquetoast Eugenicist
                          Milquetoast Eugenicist  4 weeks back

                          Double Zero American Roulette is for Mushes.

                          Now let me go put a c-note on 11.

                          • Magnusmaster
                            Magnusmaster  4 weeks back

                            Now explain how people buy loot boxes in videogames when it's cheaper to buy a game without loot boxes and it's way more fun.

                            • Mitchell Lerich
                              Mitchell Lerich  4 weeks back

                              The reason people buy into low probability big wins is because most people that gamble can't afford too. Gambling feeds off the poor.

                              • Keanu-sama
                                Keanu-sama  1 months back

                                Except intrest is basically nothing

                                • Aston Dence
                                  Aston Dence  1 months back

                                  Wendover? more like Bendover

                                  • Shivansh Shukla
                                    Shivansh Shukla  1 months back

                                    Doesn't the background music around 11:00 sounds like Arriving Somewhere But Not Here - Steven Wilson?

                                    • s.f.w.l
                                      s.f.w.l  1 months back

                                      You want a big gamble with low risk? Buy bitcoin and don't touch them for 5 years, than sell them for a big profit!

                                      • JoeAceJR
                                        JoeAceJR  1 months back

                                        Insurance should be optional.

                                        • Jon C
                                          Jon C  1 months back

                                          The guaranteed $ can keep playing and winning infinite money, the non-guaranteed win, can lose and it's game over...

                                          • David Lloyd-Jones
                                            David Lloyd-Jones  1 months back

                                            A 1:15 the video claims a fair 50-50 would let you leave with the money you came in with after infinite time.
                                            With a finite stake playing on a fiar 50-50 proposition you will with certainty go broke. In finite time. You may be rich from time to time, but you will at some point hit zero -- at which point you're out of the game. The end.
                                            So much for Wendover's knowledge of "magic economics."

                                            • Alexandre Zajic
                                              Alexandre Zajic  2 months back

                                              Insurance doesn't exist only because people have loss aversion. It's actually logical, if you grant that there's decreasing marginal utility of money. Spending that extra 3 cents on the dollar to make sure that an accident doesn't leave you in abject poverty is a huge win, because the marginal utility of the universe where your $100,000 accident coverage pays out and you avoid abject poverty is worth a lot more than the universe where you risked abject poverty for the long-run benefit of +$3,000. In other words, though it's negative EV in terms of money, it's positive EV in terms of utility.

                                              It's important that loss aversion and the decreasing marginal utility of money are kept as separate ideas. If people had a ton of money like banks themselves, then insurance would be illogical, as you say, and would only exist because of loss aversion. But it exists for a very logical reason, not just couched in human psychological biases.

                                              • Santiago Ruvira
                                                Santiago Ruvira  2 months back

                                                Insurance works because people are risk-averse. To say that they economically shouldn't work is really ignorant

                                                • 本刀にهُنْطُ نِクスノギ کُسُنُگِ

                                                  gambling should be banned 100% and the government should shut down all the casinos


                                                  1. it exploits the poor for money
                                                  2. the profits from casinos do not generate any material wealth

                                                  • xMacieX
                                                    xMacieX  2 months back

                                                    The 80% option doesn't only come with a "chance of loss", depending on the number of tries you are able to take for example 1 try you have 20% to loose everything and end up with 0$ instead. Even if you are unlcuky because of the nature of the probability there is a certain random factor involved and if you are unlucky this certainly happens because you can't ramp up the sample size to infinty when applying this to reality. So optiopns considering probability are not "woth the exact same". Only if you are able to run enough cycles you are able to achieve these results due to the law of large numbers. Since this doesn't usually apply for many ppl it is totally reasonable to pick the 100% chance chance choice over the other.

                                                    • iceshadows911
                                                      iceshadows911  2 months back

                                                      I think your study lead you to make a bad premise where the gambled $6.25 is equal to $5. Winning a prize happens only once, and cannot be averaged out over time and therefore it's obvious these two choices aren't equal. One is either $6.25 or $0 and the other is always $5.

                                                      • Jacob Larsen
                                                        Jacob Larsen  2 months back

                                                        If you can swing the advantage to you favor $100 bet with a 1% edge is worth $1 per bet and the longer you play the more you win it's that easy folks just gain the edge over the house and play a lot to win the same way the casino does

                                                        • marek m
                                                          marek m  2 months back

                                                          The horse racing gamble is wrong i think. With 2:1 odds you win $2 for every $1 you bet. So if you win, you get $2 plus your original $1 $3. If you bet 200:1. If you win you get $200 plus your original $1... so $201, not $300. Come on guys, are you or are you not degenerate gamblers who should know this?

                                                          • 3 Subscribers Without Any Videos!!!!!

                                                            Fml hes right.. the moment i went from euro table to american i lost everything

                                                            • infinitecanadian
                                                              infinitecanadian  2 months back

                                                              Gambling is such a waste of time and money. I don't know why anyone would gamble.

                                                              • Asbjørn Olsen
                                                                Asbjørn Olsen  2 months back

                                                                Well, there is also the entertainment factor - people think gambling is fun, and maybe they're okay with paying for that through gambling.

                                                                • eSwatini
                                                                  eSwatini  2 months back

                                                                  Haven't watched the video but I'm going to assume that he puts planes into this somehow

                                                                  • Brandon Guerrero
                                                                    Brandon Guerrero  2 months back

                                                                    Sometimes gambling is pure magic especially when you win good money.

                                                                    • Redallstar1
                                                                      Redallstar1  2 months back

                                                                      FOMO explained.

                                                                      • Vipul Petkar
                                                                        Vipul Petkar  2 months back


                                                                        • Vipul Petkar
                                                                          Vipul Petkar  2 months back


                                                                          • Jack L
                                                                            Jack L  2 months back

                                                                            Those polls only show that most people don't understand basic statistics

                                                                            • NightCrawller
                                                                              NightCrawller  2 months back

                                                                              Did not understand the tennis example, if anyone can elaborate.

                                                                              • Markus Poremba
                                                                                Markus Poremba  2 months back

                                                                                u miss one important fact: when i have the chance to win 100Dollars with an input of 5 then i hope that i get these 100 dollars faster than spending 100 Dollars

                                                                                • Libertad o muerte
                                                                                  Libertad o muerte  2 months back

                                                                                  I have a gambling problem the sad part about it is that i have 120 iq and I already have watched this video thrice
                                                                                  Is really hard to fight this things

                                                                                  • PseudoTiger
                                                                                    PseudoTiger  2 months back

                                                                                    So if I win the lottery I should be afraid of dying of terrorism?

                                                                                    • imperatoreTomas
                                                                                      imperatoreTomas  2 months back

                                                                                      This totally fails to explain tail risk. Tail risk of death or baskrupcy is “more expensive” to buy because if it happens you’re out of business for good. Don’t believe me? Google why put options are “overpriced” and you will see it’s because this downward tailrisk is actually correctly priced and that there is a value to not dying no matter the “risk”

                                                                                      • Spastik
                                                                                        Spastik  2 months back

                                                                                        I gambled once in my life. My dad gave me $50 to gamble as a "lesson" to show its a waste of money. I was down to $10 and feeling bad about it and then I won $394. Im never gambling again.

                                                                                        • Adrian Rutkiewicz
                                                                                          Adrian Rutkiewicz  2 months back

                                                                                          100% for getting X is not 25% for getting X*4. Maybe it is mathematically, but not practically. The first option is surety, while the other is a chance of getting 4 times more 1/4 of the time, which in practical terms may mean never. Get a 100 sided die, throw it 100 times and look a the distribution. Chances are that there will be results that occur multiple times and such that do not occur at all. So yeah, 100% for getting X is the same as 100% for getting X*4 every fourth time.

                                                                                          • comic215
                                                                                            comic215  2 months back

                                                                                            Insurance works because it’s law

                                                                                            • JayBaddAssCutler
                                                                                              JayBaddAssCutler  2 months back

                                                                                              CHICAGO HEIGHTS?!?!?

                                                                                              I went to school at Marian Catholic in the Heights

                                                                                              • Lord Zizumias
                                                                                                Lord Zizumias  2 months back

                                                                                                I mean I wouldn't have insurance if I wasn't forced to by law.

                                                                                                • JoelJames2
                                                                                                  JoelJames2  2 months back

                                                                                                  10:44 Why does that guy look like he is going to murder them?

                                                                                                  • Mahad Omar
                                                                                                    Mahad Omar  2 months back

                                                                                                    Plot twist he acutally kills them