If you multiply the gambling reward with the probability of winning, it will be less than the cost to play. This is the house edge. It's how the casino makes mo

If you multiply the gambling reward with the probability of winning, it will be less than the cost to play. This is the house edge. It's how the casino makes money. It's the same thing with insurance. If you multiply the size of the payout with the probability of getting a payout, it will be less that your insurance premiums. It's how the insurance company makes money. https://en.wikipedia.org/wiki/Expected_value https://en.wikipedia.org/wiki/Expected_value E[x] = prize*winning_probability - cost < 0