Roulette Is a Gambling Game Where a Wheel with 37

question 239

Multiple Choice

Roulette is a gambling game where a wheel with 37 (Fr.) or 38 (Am.) squares spins around in one direction and a ball runs along its circumference in the opposite direction. Eventually the ball loses momentum and lands in a square. Roulette wheels pay 35-to-1 on a winning square. In other words, a $10 bet on square 20 will pay $350 if the ball lands on square 20. Many people feel this is an excellent payout and thus consider it superior to other games with lower payouts. Why is this payout less of a good deal than some might think?

• A) The risk of losing is greater than 97%.
• B) The opportunity cost of holding your money while the wheel spins is high.
• C) The efficient markets hypothesis suggests it costs upfront money to play this game.
• D) There are fewer than 35 squares on the wheel, thus the expected payoff is low.

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