If you are gambling with friends there is no 'house' or third party, so the money would simply move around the group. When a third party is introduced they take a cut of every bet you make.
The cut is usually around 10 per cent, so if your bet was a dollar this would mean it would cost you 10 cents for every bet you place.
Sometimes you will win some money, but when you keep playing, the house will continue to take its cut, so the longer you gamble the more the house will take until you have nothing left.
It all adds up
Don't underestimate the financial implications of the house edge. Casinos are run in a certain way so that they make regular profits, this means that regular gamblers must lose in the long run.
Or put simply: the house edge makes it impossible for regular gamblers to win more than they lose. Luck has nothing to do with it!
A former Tabcorp spokesman Michael Piggott made the following point:
"We understand that our product can be abused. It's important that people don't think that they can win, because you can't win in gambling.
You can win for a little while but you can't win in the long run. People that think they can win - we've got to stop that culture."