Mug's game or money for old rope? rope?Headline to for gambling piece herey

From the National Lottery to buying shares, different forms of gambling play a major part in many people's lives. What are the chances of coming out ahead? By David Porter
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The Independent Online
Everyone likes a flutter. But generally gambling is a mug's game and not for the investor. You pays your money, takes your choice ... and lose more often than you win. Why else would gambling businesses exist unless the odds are loaded against the punter? Take roulette. A standard wheel has 37 numbers, including the zero. But the highest prize possible - by successfully placing your bet on a single number - amounts to only 35 times the amount staked. Of course, it is always possible to win, otherwise punters wouldn't find gambling such a draw. Capital Corporation, owner and operator of Crockfords, a London casino, knows that to its cost. Last Monday it had to hoist a profits warning because high-rollers knocked it for six in December.

In certain circumstances the odds look more attractive, making gambling of interest to the investor. A prime example is the National Lottery. Coming up with the six jackpot numbers is a 14-million-to-one chance (or, to be pedantic, 13,983,816-to-one). Jackpot winnings on a double rollover week are estimated at pounds 40m, so buying 14 million pounds 1 tickets does not look like a bad investment. Obviously there are flaws to this strategy. Filling in 14 million lottery cards is one. That would take more time than standing in the longest lottery queue in history.

Another drawback is that the rules ban commercial syndicates from taking part. The other obvious snag is that the jackpot may be shared. Last weekend's pounds 40.2m double rollover jackpot went to four winners. So shelling out pounds 14m for lottery tickets would have yielded just over pounds 10m as part of the jackpot prize. In addition, there would be the numerous smaller prizes that one giant stake-holder would get. Last weekend 60 winners gained pounds 83,960 apiece for coming up with five of the six main numbers and the bonus number. Of the smaller prizes 1,713 won pounds 1,838 apiece; 79,694 won pounds 86 and 1,628,683 won pounds 10 each. Participants have a one-in-54 chance of winning a prize overall, with half of the Lottery's weekly takings going back in prizes.

Noughts and Crosses, a scratchcard game from Camelot, gives punters a one-in-five chance of winning a prize. The prizes are a lot smaller, however, with the maximum at pounds 50,000.

Premium bonds provide another avenue for the investor who is a gambler at heart. The National Savings Department has just changed its approach. From May there will be more larger winners but fewer prizes overall. The monthly jackpot is pounds 1m but the chances of winning that with a single pounds 1 bond are pretty slim at 1.6 billion to one. Punters do not lose their stakes, however, and so in order to get a fairer idea of a premium bond's worth it must be measured against the interest that would be gained if the money was put elsewhere.

The football pools remain an old favourite too, despite the success of the National Lottery. Jackpot prizes are now around pounds 1.5m, well below the largest payout of pounds 2.8m. Even so, five million coupons are sent in weekly and around 200,000 prizes are paid out every month. Some 27 per cent of the take goes into the prizes.

The aim of the game is to get eight score draws out of 58 football fixtures on the coupon. The chance of selecting the eight score draws is some 191 million to one. But punters increase their chances by choosing 10 or 12 fixture combinations, giving them 165 and 495 more chances respectively. Choosing 12 fixtures costs pounds 6.60, improving a punter's chance of the jackpot to under 400,000 to one.

Straightforward betting on horses and dogs has provided the main outlet for gamblers for decades. Like all forms of gambling the odds are stacked against the punter and are designed so the bookie doesn't lose. Around 80 per cent of the take comes back in winnings.

While some professional gamblers have a happy knack of coming out ahead, the average punter is likely to show losses over a prolonged period of time.

Slot machines can provide amusement, although prizes are too small to make a difference. In public places the jackpot is limited to pounds 4 cash on a maximum 25p stake. Gaming machines in private clubs are allowed to pay out a pounds 250 cash jackpot. Some 80 to 90 per cent of takings are paid back as prizes.

Taking a punt on performance of financial, commodity or currency markets through futures or options, while some see this as nothing short of gambling, can also have a legitimate investment and tax-planning use. Most popular among private investors are share options. These can be arranged through a stockbroker making use of the London International Financial Futures and Options Exchange (Liffe). Options over shares can be bought or sold in more than 70 of Britain's largest companies.

For instance, buying shares in the electronics giant GEC currently costs around 360p a share. Buying a call option (the right to buy GEC shares at 360p on Wednesday 3 May) would cost 22p a share. If GEC's shares rise to, say, 400p then profit per share will amount to 18p - the difference between 400p less 360p less 22p. That amounts to an 81 per cent profit on the original outlay. But if GEC shares take a dive the investor would lose all the 22p per share paid for the option.

The IG Index is distinct from share options because gains are tax-free. IG's most popular service is guessing where the FT-SE 100 index will be in future. A customer may ask for the "price" of the FT-SE 100 in March and be given the range 3,720-3,730. The customer can either "buy" at 3,730 if he thinks the index will soar or "sell" at 3,720 if he thinks it will fall. The punter will decide on the level of risk - anything from pounds 10 per FT-SE point either way. So if on judgement day (Friday 3 March) the FT-SE had soared to 3,740-3,750 then "buyers" would be able to cash in their gain at 3,740, making a tidy pounds 100 profit.

IG Index 0171-896 0022.

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