The same could be said for Casino's, if the visitors looked at it rationally. But humans often don't make decisions rationally. Especially when it comes to entertainment and escape from reality.
However, there are huge limitations to casinos: they are limited by regulation; they are limited to physical infrastructure; they have limited space that the customer has to come to.
Quite obviously, none of this exists for the online world. This is the incredible success story of Zynga. They've managed to build a giant online casino and call it a game, and get the execs of Google and Facebook licking their heels.
This is a market sector that will not simply expand. It will explode.
I agree there will be a correction in mobile gaming. At least I hope to see these vapid "games" get kicked in the nuts a little.
Casinos offer a variety of different games, which have different appeal to different types of their clientele. There are lottery type games, in which there is a faint hope of a extraordinary windfall, which appeal to people who want money without working for it (i.e. people in debt). There are games in which there is a large degree of control and which the winner emerges because of his/her psychological prowess which appeals to the serious gamer (i.e. professional poker players). And then there are the run of the mill ring-ding-ding games, which appeal both to the idea of winning money, the suspense of the spinning wheel, and various other attention keeping mechanisms.
Social games have the ability to emulate virtually all of these. Although ostensibly buy-in is limited to virtual money that can never be removed from the game, there is nothing stopping large markets to grow around virtual items that can be traded (as happened with Ultima, EQ, SL, Eve, etc.).
The clutch here is that the "fun" of the experience in both cases largely revolves around ideas of advancement, social enhancement of the idea of advancement, and (potentially) some real world tie-in.
Actually, in many respects the social game is far more advanced than the casino already, insofar as it offers the idea of advancement which is potentially not tied to money (i.e. leveling up), but which can also be tied to money if people want it to be.
The problem of this right now is the fact that virtual currency cannot be liberated, but as soon as that problem is solved the casino will be an obsolete institution, soon to be extinct.
I agree with the sentiment, which is why I only play in the poker rooms, where the odds are effectively neutralized and you just worry about the rake (which goes away in tournaments, minus 'fees'). But even though I don't like the odds of playing the table games, I will occasionally set aside a small amount to play craps with because it's fun.
As the other commenter pointed out these games aren't making money from the average person. It's making money from the "whales".
A close friend of mine is a compulsive-gambler, trust me they aren't there for the booze or the social experience.
Whales are just the bonus on top and the tables give the sense of glamour/sophistication.