SumGames - Vigorish (How the House Advantage and Investment Costs Impact Results)
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     Vigorish (also known as the vig, juice, or the take) is the amount charged by a bookmaker, or bookie, for his services. In the United States it also means the interest on a shark's loan. The term is Yiddish slang originating from the Russian word for winnings (Source: Vigorish at Wikipedia).

     The Vigorish in gambling is analogous to investment costs in investing. In fact, John Bogle often uses the term croupier (meaning casino dealer) for the investment industries "take". The table below summarizes various negative sum games ranked by the vigorish. For casino games, the vigorish is pretty straight forward. For investing in asset classes, the costs incurred are the vigorish. The critical distinction is that in investing, there are two steps. First is choosing an asset class. Then comes the decision of investing passively in a broad index in that asset class or investing actively in an attempt to outperform that index. That attempt is called active management and by definition is a zero-sum game before costs. The costs of playing the active management game are the Vigorish.

     Keep in mind the numbers below make certain assumptions. I've seen estimates of the average blackjack player giving the house a -2% advantage (the average player does not play "basic" strategy). The active management figure below is an average per year.

The SumGames Vigorish Table (using typical rules - there are many variations)
Sum Game Skill? Vigorish Notes
Craps Pass + 100XOdds No -0.021% 100 X Pass line odds
Blackjack Single Deck No -0.20% Using "Basic" strategy (no card counting)
Blackjack Six Decks No -0.60% Using "Basic" strategy (no card counting)
Craps Pass + 2XOdds No -0.61% 2 X Pass line odds
Active Stocks (US) Yes -0.67% Annual Active Investment Costs estimate per Ken French
Roulette 0 No -2.70% Single Zero
Poker Yes Rake None if playing with friends. Online Rake Charts
Sports Betting Yes -4.55% Bet $11 to Win $10
Roulette 0+00 No -5.26% Double Zero
Keno No -27.0% Typical (common range from 25-29%).
Lottery No -50.0% Vigorish varies by sponsor (typically half goes to the prize pool).

 

 

 

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