One of the business principles that many successful people use is investing in something with low risk and possible high reward. This goes hand and hand with limited downside and unlimited upside.
Gambling is rarely considered a business situation from the gambler’s point of view. But if you look at it from a low-risk, high-reward viewpoint, you can see that there are some similarities. I cover several of these situations below.
The popular lottery games, like the Powerball and Mega Millions, fit the low-risk, high-reward equation perfectly.
This is a big reason the lottery is so popular.
The difference between the lottery and business principles is that most low-risk, high-reward business decisions have a much better chance to succeed. Of course, most business risks cost more than a few dollars, so there’s a difference on both ends.
I buy lottery tickets sometimes. If you can afford to buy them and enjoy dreaming of what you’re going to do if you win, then you should buy them too. But you also need to understand the reality of winning.
Even though $2 or $3 is a low risk, the truth is that the chance for the reward is almost non-existent. The argument could be made that playing the lottery is actually a high-risk, low-reward situation because you’re risking something of value with almost no chance at a reward.
Progressive Slot Machines
Progressive slot machines have a great deal in common with the lottery. You risk a few dollars on a spin in hopes of winning a big progressive jackpot. The problem is much the same as the lottery; you have a minuscule chance of actually hitting the progressive.
Yes, a few lucky players hit big progressive jackpots every year, but most players never hit one in their entire life. The other problem is that most players don’t just take one or two spins. Where you might buy two to four lottery tickets every week, playing for an hour on a slot machine might consist of 400 to 600 spins.
In addition to risking more playing slots in total capital, the top payout for progressive jackpots is usually much lower than the top payouts for the lottery.
If you choose to play slot machines and understand the low chance of winning, it’s ok to keep playing them. But looking at it from strictly a business low-risk, high-reward situation, you’re better off investing $20 a week in the lottery than risking hundreds or thousands play progressive slot machines.
The odds of hitting a progressive jackpot are usually a little better than hitting the top prize in the lottery, but the odds are still so high that a safe bet is that you’re never going to hit one.
I love keno, even though it’s one of the most difficult games to play. The house edge is usually over 25%, which means that for every $100 you risk playing keno, you lose $25. And this isn’t even the worst thing about the game. The top prize is much lower than the lottery and progressive slot machines; often coming in at $10,000.
So, why do I love keno, even though it sounds like the most difficult choice?
The drawings are spaced out, so you can play all day on a low bankroll. And even though the odds are stacked against you, the truth is you still have a chance to win $10,000 or more by risking only $1.
The lottery is a better option because you can win a much higher amount, but if you’re looking for a game offered in the casino you can play with a small bankroll, keno is one of your best choices.
So far, I’ve covered the gambling activities that fit the low-risk, high-reward definition, but they all have a serious flaw. The chances of making money are extremely small. In business, the goal is to create or build something profitable. If you can combine a low element of risk while working toward long-term profits, you have a good chance at success.
While gamblers are rarely thinking about this as a business, the fact is that there are a few gambling areas where you do have a chance at long-term success with relatively low risk. This is where the next three sections come into play.
Blackjack is a popular table game offered in almost every casino. It’s a big moneymaker for the casinos, and almost all blackjack players lose money in the long run. But a small percentage of players have learned how to make a profit while playing.
Get started by learning everything you can about blackjack strategy. The next step is to learn everything you can about blackjack advantage play.
You’re going to need a much larger bankroll than you need for the lottery or keno, but instead of consistently losing money, you can consistently start winning. In the long run, blackjack offers a much better low-risk, high-reward ratio.
While blackjack isn’t traditionally viewed as a low-risk, high-reward game, if you’re smart and work on the right things, it can be one of the best opportunities in the gambling world. It offers a much more realistic upside than the lottery, slot machines, and keno.
The next possibility for long-term rewards in the gambling area is poker. Just like blackjack, you need to learn how to play at a winning level, but some novice players are able to do it. Also, like blackjack, you need a larger bankroll.
This starts with learning everything you can about poker strategy and honing your skills over time. It’s going to cost some money because you’re going to lose while you learn how to win. As long as you focus on learning from every mistake you make, and reducing your mistakes over time, you have a good chance to learn how to win with lower risk and higher rewards.
Gambling on Sports
Gambling on sports can fit in alongside the other types of low-risk, high-reward gambling situations I’ve covered so far. You can make a small bet on a long shot and win a big amount. But you can also learn how to evaluate games and matches and find good lines to turn a long-term profit.
Learning how to win on a consistent basis when gambling on sports requires a great deal of study and time. It also requires a bigger bankroll than blackjack or poker if you want to make good money. You have to put a lot of money in play because even winning sports gamblers work on a small margin, usually only 1 or 2%.
But even with a small margin, if you can hold a winning margin over time with a large bankroll, you can make good money. The key is the same as blackjack and poker; you have to learn how to win consistently to maximize the low-risk, high-reward payout.
The path to winning in blackjack and poker is clearer than in sports gambling. It’s difficult to find good advice, and often the sportsbooks make adjustments when a profitable strategy is discovered. But you can develop your own strategies and models to constantly test and refine them so you can become a winning sports gambler. It just takes work and dedication.
The main thing that winning gamblers at poker, blackjack, and sports betting have done is to solve the ultimate risk versus reward scenario. They enjoy a high chance of success or rewards for a relatively small risk. While there is still some risk involved, this isn’t any different than working in the business world.
Every business, like every gamble, has a risk of losing money and/or closing a deal for profit. But if you follow a proven path, it increases your chances at the rewards.
You can look at the low-risk, high-reward gambling situation in two ways. You can focus on the very low-risk activities that have an extremely low chance of rewards like the lottery and keno, or you can focus on activities like blackjack, poker, and sports betting that have a realistic chance to give you rewards.
Another option is to hedge your bets and do both. Go ahead and buy a lottery ticket while learning how to be a winning blackjack player, poker player, or sports bettor. The risk is still small in comparison to many business activities, so why not consider the possibilities? That way, you can have the best of both worlds.