The first-person narrative is told from the point of view of Alexei Ivanovich, a tutor working for a Russian family living in a suite at a German hotel. The patriarch of the family, The General, is indebted to the Frenchman de Grieux and has mortgaged his property in Russia to pay only a small amount of his debt. Upon learning of the illness of his wealthy aunt, "Grandmother", he sends streams of telegrams to Moscow and awaits the news of her demise. His expected inheritance will pay his debts and gain Mademoiselle Blanche de Cominges's hand in marriage.
Alexei is hopelessly in love with Polina, the General's stepdaughter. She asks him to go to the town's casino and place a bet for her. After hesitations, he succumbs and ends up winning at the roulette table. He returns to her with the winnings, but she will not tell him why she is in such need of money. She laughs at him (as she does when he professes his love) and treats him with apparent indifference. Alexei only learns the details of the General's and Polina's financial state later in the story through his long-time acquaintance, Mr. Astley. Astley is a shy Englishman who seems to share Alexei's fondness for Polina. He comes from English nobility and is very wealthy.
One day, while Polina and Alexei are on a walk on the Schlangenberg (a mountain in the German town), he swears an oath of servitude to her. He tells her that all she has to do is give the word and he will gladly walk off the edge and plummet to his death. Polina dares him to insult the aristocratic couple Baron and Baroness Wurmerhelm, whom they have just seen, and he does so. This sets off a chain of events that explains Mademoiselle Blanche's interest in the General and gets Alexei fired as tutor of the General's children. Shortly after this, Grandmother shows up and surprises the whole party of debtors and indebted. She tells them all that she knows all about the General's debt and why the Frenchman and woman are waiting around the suite day after day. She leaves the party of death-profiteers, telling them that none of them are getting any of her money. She asks Alexei to be her guide around the town, famous for its healing waters and infamous for its casino; she wants to gamble.
Grandmother plays at the roulette table and wins a large amount of money. She briefly returns to the hotel, but she has caught the gambling bug and soon returns to the casino. After three days, she has lost over a hundred thousand roubles.
After sending Grandmother off at the railway station, Alexei returns to his room where he is greeted by Polina. She shows him a letter where des Grieux says he has started legal proceedings to sell the General's properties mortgaged to him, but he is returning properties worth fifty thousand roubles to the General for Polina's benefit. Des Grieux says he feels he has fulfilled all his obligations. Polina tells Alexei that she is des Grieux's mistress and she wishes she had fifty thousand roubles to fling in des Grieux's face. Upon hearing this, Alexei runs out of the room and to the casino where, over a few hours, he wins two hundred thousand florins (100,000 francs) and becomes a rich man. When he gets back to his room and the waiting Polina, he empties the gold and bank notes from his pockets onto the bed. At first Polina accuses him of trying to buy her like des Grieux, but then she embraces him. They fall asleep on the couch. Next day, she asks for fifty thousand roubles (25,000 francs) and when he gives it to her, she flings the money in his face and runs off to Mr. Astley (Polina and Mr. Astley had been secretly meeting; she was supposed to meet Astley the night before, but had come by mistake to Alexei's room). Alexei doesn't see her again.
After learning that the General won't be getting his inheritance, Mademoiselle Blanche leaves for Paris with her mother and seduces Alexei to follow her. They stay together for almost a month; he allows Mlle Blanche to spend his entire fortune on her own personal expenses, carriages and horses, dinner dances, and a wedding-party. After getting herself financially secured, Mlle Blanche, desiring an established social status, unexpectedly marries the General, who has followed her to Paris.
Alexei starts to gamble to survive. One day he passes Mr. Astley on a park bench in Bad Homburg and has a talk with him. He finds out from Astley that Polina is in Switzerland and actually does love Alexei. Astley tells him that Grandmother has died and left Polina and the children financially secured. The General has died in Paris. Astley gives him some money but shows little hope that he will not use it for gambling. Alexei goes home dreaming of going to Switzerland the next day and recollects what made him win at the roulette tables in the past.
