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It's more complicated (worse) than this. That the house has a small edge only tells a small part of the story. When people go to vegas for a weekend, they migh
by 55555 7y ago
It's more complicated (worse) than this. That the house has a small edge only tells a small part of the story.
When people go to vegas for a weekend, they might have a number in their head they are willing to gamble. If they dont, then that number is their bank account balance. Then they start flipping coins, and often they keep doing this until they go bust. They rarely cash out when up but they always lose when they go bust. They scale the bets as their bankroll grows. Essentially they are flipping coins for infinite time and just waiting to get a bunch of tails in a row, which is inevitable. The behavioral factors are bigger than the house edge.
The idea that people are rational is also absurd. Some people are driving to the slots _because_ they are depressed. Or they are there for fun but they lose a bunch of hands in a row and tilt and now they're betting everything on a longshot to win it all back and win some because they dont want to self-identify as a 'loser'.
You can only spend so much money on drugs and sex. Gambling is the only vice where you can lose billions. And these days, all you have to do is pull out your phone to place a trade or a bet.
- RomanBob 7y agoThis is a common misconception about why casinos win. That 'casinos have infinite bankroll so they cannot lose' isn't actually an argument because casinos have limited bankroll. If they would allow me to play a +EV game I can crush them even if they had infinite bankroll by varying my betsize. The 'random walk' argument only works for fixed bet size.
- eric_h 7y ago> If they would allow me to play a +EV game If a business offered a positive EV gambling game, it wouldn't be called a casino and would only last as long as the venture capital lasted.
- ojbyrne 7y agoActually there are still +EV video poker games in Vegas. http://www.slotsmamma.com/blog/how-do-you-find-full-pay-deuces-wild/ http://www.slotsmamma.com/blog/how-do-you-find-full-pay-deuc... There are a few catches though. Mostly if you play perfectly (which is not simple) the most you can expect to make is less than eight dollars an hour.
- homero 7y agoThat's a good job for making the casino look more active. Just letting someone win $8/hour
- virgilp 7y agoI actually made a simulation of this because it seems obvious - you can actually double your bet each time you lose, and this basically guarantees that you eventually win each time! Turns out, you have to go surprisingly high for this to be true/effective on the long run. And the casino will cut you off way below the limit (i.e. there's of course a maximum bet). Plus, with this strategy, each win is a small one... but when you lose (hitting the max bet), the loses are significant.
- rocqua 7y agoThe expected value of that strategy is still negative. You get a high chance of winning 1 dollar, with a low chance of losing everything. Only the chance of losing everything isn't low enough.
- animal531 7y agoYeah, the doubling of your bet tactic when you lose is an old Blackjack strategy. But with the introduction of a max bet you have to look at the scale difference between the min/max bets, usually it means for example that you only need to lose 5-7 times in a row to lose everything.
- rlpb 7y ago> I actually made a simulation of this because it seems obvious - you can actually double your bet each time you lose, and this basically guarantees that you eventually win each time! This is the St. Petersburg paradox: https://en.wikipedia.org/wiki/St._Petersburg_paradox https://en.wikipedia.org/wiki/St._Petersburg_paradox
- cortesoft 7y agoSure, but lots of people can also gamble a little bit and then quit.
- taneq 7y agoAll true, but also this article is about Monte Carlo numerical methods rather than actual casinos. "Flipping a coin until you get enough tails in a row" is a really good way to describe long term gambling, though. I'm gonna borrow that.
- ImaCake 7y agoThe history of probability theory and risk management is filled with mathematicians who were gamblers or had patrons that were. Introducing monte carlo methods with gambling seems very appropiate considering the history of the topic!
- emarsden 7y agoIndeed! Here's a Python notebook illustrating both Monte Carlo and symbolic analysis of historical gambling problems (the Chevalier de Méré corresponding with Pascal, Pepys corresponding with Newton) https://risk-engineering.org/notebook/coins-dice.html https://risk-engineering.org/notebook/coins-dice.html
- Yajirobe 7y ago> "Flipping a coin until you get enough tails in a row" is a really good way to describe long term gambling It's not. The correct way is saying 'flipping a weighed coin'. It can be weighed in or against your favor. If it is weighed in your favor, then you will never really have the 'until' part (i.e. get bust), if you also manage your bankroll wisely.
- daveFNbuck 7y agoPeople playing until they go bust doesn't actually affect the casino's take, except insofar as it means more people are gambling. If someone leaves when they're up and someone else takes their place at the table, the casino makes exactly as much money as if the first person hadn't left.
- chongli 7y agoYeah. I think casinos would prefer not to inflict financial ruin on their patrons. Apart from the bad PR (and potential for political interference), a bankrupt patron seems less likely to come back to the casino with more money.
- lelima 7y agoThat's true, We used to give free credits/ chips if they lose too much too quick. Casino's want long term relationships.
- justinchan 7y agoThis would only be true if all the seats in a casino are at or close to fully capacity, which in my experience isn’t true. Also only true for games with a fixed amount to bet
- noego 7y agoYou hit the nail on the head. If you simply play the pass-line and free-odds on craps, the house edge is extremely small. And yet, most people lose far more than predicted by the odds. The problem is exactly as you stated - people don't have a defined exit-strategy, and their implicit exit-strategy is to keep playing till they lose everything. Which is guaranteed to happen 100% of the time even if the house-edge was 0. An approach that I've found to be useful, and have personally used in Vegas: - Always start off each session with a fixed $X in chips, even if you're flush from previous winnings - If at any point during the session, you get to $2X or $0 in chips, end the session immediately and cash out everything. Even if you're on a "hot streak" - Bet large enough that you will get to $2X or $0 in a short/moderate period of time. The longer your session drags on, the lower the likelihood of getting to $2X - Once a session has ended, have a cooling off period. Eg, no further gambling until after the next show/meal If done right, gambling can actually be extremely cheap. With a house-edge of 0.5%, you can gamble $10,000 and only lose $50 on average. This makes it far cheaper (and more exciting) than eating out or going to shows. The usual disclaimers still apply: only gamble what you can accept losing, no more
- wincy 7y agoYou can bet Don’t Pass and have everyone glower at you, but have even better odds.
- arbitrage 7y agoPeople also glower and complain when you play perfect strategy at blackjack ... most people are utter shit at odds and statistics in a distracting environment like a casino.
- planteen 7y agoMy strategy used to only play perfect blackjack strategy at the very rare $5 or more typically $10 table. But it's not even fun when people get pissy about when they think you "messed up the cards." I've tried to explain and realized not even worth your breath.
- 7y ago
- assface 7y ago> You can only spend so much money on drugs and sex. Speak for yourself.
- aiisjustanif 7y agoWho even plays slots. Sounds like some people are bad a gambling mate. /s For those that do like to gamble and are not addicted, craps and live 4-8 no-limit hold'em table, 1-2 if you are new. As for pulling out the phone, Liverpool has given me a lovely year.
- AstralStorm 7y agoThe other potential vice is non-control stock market and purely monetary investments, which shares many of the features with gambling. Lack of transparency, design to take your money and not pay dividends, being unable to actually change policy of said organization. Also lies and marketing. This opposed to physical, direct investments which are much easier to control, but more labor intensive. Control stock (as in having a control stake) is in-between, and extremely rich people game.
- lelima 7y ago>>Gambling is the only vice where you can lose billions. That is not far from truth, I use to work for a company that owned several Casinos, we use to have "whales" spending more than 100k each month, sometimes they lost everything so quick that we gave them 50% back or trip to Bahamas / Paris, Anything to keep them happy and coming back.
- matwood 7y ago> If they dont, then that number is their bank account balance. Given that not everyone's account balances are zero, plenty of people gamble for entertainment without going broke. I'm occasionally rational and enjoy playing craps. It is social, rolling dice is fun, and it gives a huge range of betting opportunities. I will also almost always play until I lose. The point is to have fun playing, and not to win money at a game where my EV is negative. If I want to win money, I play poker. The problem with poker is that I'm not good enough to play games where I can win big (10s of thousands) money. The second problem is that playing winning poker is a grind and can be quite boring.
- deleted 7y ago[deleted]
- nabla9 7y agoIt's called martingale strategy. The same strategy is embedded into incentives in the wall street compensations. The real cause of the financial crisis -- An MIT Blackjack Team perspective by Semyon Dukach http://semyondukach.blogspot.com/2009/01/real-cause-of-financial-crisis.html http://semyondukach.blogspot.com/2009/01/real-cause-of-finan...
- burnte 7y ago"You can only spend so much money on drugs and sex." I beg to differ, good sir.
- apta 7y agoIt's mind-boggling how gambling is legal.
- MR4D 7y agoSadly, people do the same in the stock market too. And I’ve seen the same result - lots of tails crushing someone’s financial future. Sad how prevalent this is. At least I have to fly to Vegas - the stock market is on my phone.