4 ms·

This 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

This 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 ago
  Actually 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 ago
    That's a good job for making the casino look more active. Just letting someone win $8/hour
virgilp 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! 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 ago
  The 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 ago
  Yeah, 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

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 ago
Actually 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 ago
  That's a good job for making the casino look more active. Just letting someone win $8/hour

virgilp 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! 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 ago
The 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 ago
Yeah, 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