Choosing to Gamble – The Uncertainty Element of Gambling
Gamblers make wagers on a variety of events for both fun and profit. The basics of gambling are simple: win, bet, and bet some more. It all gets complicated when you add a third element, which is the element of uncertainty. This can be tricky territory.
In most cases, gambling is simply the wagering on something with an uncertain result with the primary purpose of winning something in return. For example, a gambler may wager his or her luck on a horse race. The uncertainty of whether the horse will finish first or last, or if it will even be able to win at all, is what concerns the gambler. However, without the element of uncertainty, there would not be any reason for the gambler to engage in the venture in the first place. Gamblers thus needs three elements for any activity: risk, consideration, and a prize.
Risk refers to the unknown. Some activities involve great risks such as playing a hand of cards at the casino, while others involve relatively minor risks such as riding in a hot air balloon. The gambler considers these risks when deciding how he will spend his leisure time. He does not want to take chances on winning too much, but at the same time does not want to take risks that he might be unable to handle.
Consider the risk/reward relationship. In gambling, the gambler considers how likely he is to win as well as the potential costs to him of not winning. The more uncertainty the gambler perceives in a situation, the more he tends to gamble. A major proportion of one’s income (in today’s dollars) is made up of gambling income. Thus, the uncertainty element of gambling is huge.
A second factor is the consideration aspect. The gambler considers the possible time cost and end result of each action. For example, if the player prefers to bet small amounts often, then he may gamble more frequently, hence generating larger profits from smaller bets. Similarly, if one likes to bet long enough to cover more than one outcome, then he may “over-bet” which can lead to financial problems for the gambler.
Lastly, there is the prize itself. If the player wins, then he faces the problem of managing his resources effectively. Gambling cash flow is crucial, since one needs to pay out regularly in order to stay in the game. At the same time, winning too often can lead to financial losses and having a high debt to credit ratio. Gamblers thus need to evaluate their risk-return relationship and manage their winnings and losses carefully.