Smart Gambling

Frugal gamblers prefer games with the highest expected value, i.e., the lowest house edge. However, it's important to remember that the house edge applies to every bet you make, not to your bankroll. Say you're playing a game with a 1% house edge. If you start with $100 and make 50 bets of $10, you should expect to loose 0.01 * 50 * $10, not 0.01 * $100. Thus the frugal gambler might also control the number of bets made. One way of doing this is to put your bankroll on the left side, and move winnings to the right side. As you repeat this, you can easily track the total number of bets and thus your expected cost of playing. Of course your actual performance can deviate well from the expected value!

More generally, you need to be aware of the hourly cost of playing. This is the house edge times the average bet size times the number of bets per hour. For example, you might not want to bet the maximum coins playing video poker. Although this increases the house edge, it decreases the cost to play per hour. The intelligent gambler will only play games were the entertainment value outweighs the hourly cost to play. Brisman's Mensa Guide to Casino Gambling has a good discussion of this.

A somewhat neglected concept is risk (variance). In investing you want to minimize risk for a given level of return. This doesn't appear to be the case for gamblers. Take roulette. Most bets have the same expected value, so the choice of bet is purely psychological. Do you prefer the occasional big payoff or the frequent small payoff? Are there strategies, for example, in Video Poker that decrease (or increase!) risk with only a small increase in the house edge?

Of course the truly frugal gambler will leave the casino.