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Monte Carlo Methods or Why It's a Bad Idea to Go to the Casino

• intrasight 5y ago
  Go to a "Monte Carlo Night" fundraising event. You get all the fun of a casino and do good at the same time.
• krisrm 5y ago
  The related article on blackjack (linked at the bottom) was also a great read. I've never felt like I really understood card counting but it makes a lot more sense now. Also explains why I don't go to the casino :)
  • teej 5y ago
    Just beware - the expected value of the authors simulated blackjack counting is quite good. This is due in part to the crazy “spread” (the ratio of max bet to min bet) of 100-to-1. This illustrates the profitability of the model well, but it’s unrealistic. A more typical spread of 10-to-1 ekes out an expected value of ~0.5% (see https://wizardofodds.com/games/blackjack/card-counting/high-low/ https://wizardofodds.com/games/blackjack/card-counting/high-...). When I was counting, I could barely hit $15/hr expected value. Hardly worth the effort, I found it very demanding to keep track of the count at Vegas dealer speeds and play perfect blackjack for hours on end.
    • ReaLNero 5y ago
      How did you manage to card count without attracting attention, even after playing for hours?
      • listenallyall 5y ago
        Because he wasn't winning. Even if they noticed, he wasn't a threat.
      • kqr 5y ago
        At $15/hour, I'm sure the casino will let them sit for days if they want. It's peanuts and shows other non-counters a player winning, meaning good publicity for the casino that's surely worth more than $15/hour.
  • listenallyall 5y ago
    Card counting 101: unlike dice or roulette where every outcome is entirely independent, blackjack has "memory"... all the cards that have previously been discarded are unavailable in future hands. Blackjack starts out with a casino advantage of only about 0.3 to 0.7%. When a lot of 5s (and to a lesser extent, 6s and 4s) have been used already, that can move the advantage up to about 2 percentage points into the players favor, therefore, going from -0.5% to as high as +1.5%. The idea is to bet as little as possible under normal circumstances, and then for the hands where the advantage has shifted to the player, increase the bet as much as the casino will allow. So for example in theory, 40 hands x $10 x -0.5% + 3 hands x $500 x +1.0% is net positive. But not a lot, and good luck getting a 50x bet spread past a halfway decent pit boss.
    • kqr 5y ago
      > for the hands where the advantage has shifted to the player, increase the bet as much as the casino ...and your bankroll... > will allow. ---- You can still go bust on a 1.5 % edge, after all, if you overbet.
      • listenallyall 5y ago
        If your bankroll isn't sufficient to withstand significant volatility, yes, you shouldn't start counting cards in the first place.
• reidjs 5y ago
  I understand gambling at Casinos as a fun novelty with your friends. But as a legitimate way of making money? Seems so risky. Especially when gambling online seems pretty straightforward. Or even better, gambling a percentage of your income on stocks or cryptocurrencies seems like it should fulfill the same addiction with less potential for completely destroying yourself financially.
  • chrsig 5y ago
    >seems like it should fulfill the same addiction with less potential for completely destroying yourself financially I don't think this is accounting for the role that risk plays into the addiction.
    • reidjs 5y ago
      That’s a good point. The potential for destroying yourself financially may be a meaningful part of the addiction. At least at a casino you may be more restricted, you can’t use credit cards for example, while margin trading on Robinhood lets you gamble using credit.
      • sokoloff 5y ago
        I’ve definitely seen people take credit card cash advances from ATMs in casinos.
  • halikular 5y ago
    The only casino game worth playing is poker. Everything else is a scam.
    • rileymat2 5y ago
      Given the rake, it is also a loser unless you have a big advantage from skill.
      • halikular 5y ago
• jstx1 5y ago
  The post doesn't really shed much light on it, it feels like a missed opportunity to explain things well. There's two main effects: - Negative expected value (EV)[1]. The games are set up in a way that on average you're likely to lose money. This is true for every game where you play against the house, otherwise the game wouldn't be there. Poker is different because your EV depends on how you play relative to other people. - Bankroll management and risk of ruin[2]. Even in a fair game, if you start with a short bankroll, you're likely to go broke. For example, let's say two of us flip a completely fair coin and bet $1 on each flip. The expected value for both players is $0. Now if one of us starts with $5 and the other $1000 and we play repeatedly, the person with the smaller amount is almost guaranteed to go broke in a long series of flips. This what happens when you play against the house and it's the main reason why people lose money when they gamble in casinos. [1] https://en.wikipedia.org/wiki/Expected_value https://en.wikipedia.org/wiki/Expected_value [2] https://en.wikipedia.org/wiki/Risk_of_ruin https://en.wikipedia.org/wiki/Risk_of_ruin
  • confidantlake 5y ago
    [Edit] As has pointed out I have misread the parent comment and agree with it. Leaving my original response below. For number 2 it depends on strategy. The strategy you outlined has you risk $5 to win $1000. Of course in a fair game you will go broke most of the time. For every time you win you should lose 200 times to come out even. But you can easily take the reverse strategy. Bet $5 if you win, leave. If you lose double your bet, if you go down $1000 dollars leave. In this case you are almost guaranteed to win. But the times you do lose you lose enough to make up for all of your wins. EV is EV, it doesn't change based on who has the larger bankroll. The casino doesn't magically get an edge because they have more money. They get the edge because the game odds are in their favor.
    • deleted 5y ago
      [deleted]
    • kqr 5y ago
      Well... that's bordering on oversimplifying it. The key distinction is whether you count the EV of a single wager, or the expected growth of compound returns. As you say, the single-wager EV is independent of bankroll provided you can afford it in the first place. This is also what most people mean when they say EV, and indeed the common mathematical definition of it. However, skilled risk takers know that the arithmetic EV isn't what matters more generally. What matters in the long run is geometric EV, or expected growth of compound returns. And for geometric EV, bankroll absolutely matters. The larger your bankroll, the better your geometric EV. I suspect this is what the parent comment referred to. (However, when the wager shrinks in comparison to your total wealth, the arithmetic EV approaches the geometric EV by Taylor series approximation. For "everyday affairs" (as I think Bernoulli put it) you can think of them as equal.)
• citizenpaul 5y ago
  A good reason not to go to US casinos in vegas is there are too many stories of casinos blocking payout due to "exploiting" games. If you win you win or you dont. Doesnt matter how its up to the casino to validate that their game works and is exploit free. You already put your money down so they might as well just use a gun to take it at that point.
  • kqr 5y ago
    This holds a life lesson: you haven't actually "won" until you've managed to get the other party to pay you. Goes in casinos as well as finance and business. Corollary: the best way to win is the one where others don't care or don't even realise you have won. Try to find a niche others don't care about and find in it regular, small wins. Don't go into a highly contested arena and try to win big. Even if you think you have won, you'll never get paid that way.
  • jedberg 5y ago
    I've never heard of this, other than someone breaking the slot machines. And they make it very clear that if you don't use the slot machine they way it is intended, you void your play. I've been scammed at foreign casinos before in the Caribbean, but never in the US.
    • citizenpaul 5y ago
      If they can just declare the machine was wrong (error) then they can do it for anytime they don't feel like paying out. If it says you win then you win the payout or they robbed you. Doesn't matter if there was an "error" the burden is on the casino to vet the operation of their machines. There is ZERO way for a customer to challenge ANY loss ever. Once the trust of payout is breached the Casio is now a zero sum game. The fact that the casio would rather lose face not paying out says a lot more about the other things going on that we don't see. Again if the casino can reject your win for any reason after declaring you won then they can take back the money for any reason period. Therefore there is no reason to ever play at such an establishment.
      • 5y ago
• mbil 5y ago
  Neat! I think a martingale strategy would also have been fun.
• jedberg 5y ago
  The only way to win at the casino is with a player's card. If you play perfect strategy and have them track all your play, they comps they give you should be close to what you lose. But you have to play for a long time to get the comps and have the odds work out, and most people don't. In other words you have to be pretty rich already and have a deep bankroll to get the breakeven comps. Otherwise, consider your losses the fee for the entertainment. :)
• kqr 5y ago
  One strength of Monte Carlo methods that's often overlooked is their robustness to changing specifications. A coworker told our team about a puzzle relating to sizes of pizzas. Most people came up with clever solutions that all depended on things like uniform density, perfect circularity, etc. Probably good approximations to real world pizzas. But one of us suggested a Monte Carlo based method and the beautiful thing about it was that it would work even without all those assumptions. As long as the pizzas have an area when viewed from above, it works.
• bluecalm 5y ago
  My favorite fact about the law of large numbers is that the more you play the higher expected distance from the expectation is. This sounds counterintuitive to many so it's worth considering for a bit. The law of large numbers says that the number of successes divided by the number of tries converges. It doesn't mean the number of successes converges to expectation - quite the contrary. For example when you flip a coin and go up a unit every time it's heads and down one unit every time it's tails your expected distance to 0 is sqrt(n) where n is the number of flips. Similarly when you play poker your expected distance from real EV to what you actually get is going to increase the more you play. With this mind it's not correct to say the amount is already close to calculated results with more tries as the article says. Try it, you will get numbers farer away from the expectation the more times you play!
  • kqr 5y ago
    That's a nice way to look at it. In an example, for someone who was as confused as I: If you're playing a perfect good blackjack strategy, even without counting cards, you have a small edge over the house (if I remember my Thorpe correctly.) Let's call it 0.5 %. So if you play 100 hands, you can expect to win 51 of them. However, sometimes you might win 59, or 63, sometimes only 45 or 37. But you'll be reasonably close to 51. If you won fewer than 36 hands or more than 66 I'd be surprised. So in the worst case you win 15 hands fewer than your expectation, and in the best case you win 15 hands more. If you instead sat day and night and played 10,000 hands, you'll still be expected to win the same fraction: 5,050. But you might win 5,073, or 5,168. Or win 5,012, or win 4,931. With this large number of hands, you might well win 150 hands fewer than you expected to, or 150 hands more! Relatively speaking, you're closer to the expectation with the additional trials. With 100 hands, you might win anywhere between 36 % and 66 % of them. With 10,000 hands, you'll probably win between 49 % and 52 % of them. But when you're playing 100 hands, the difference between 36 and 51 % is only 20 hands. When you're playing 10,000 hands, the difference between 49 % and 51 % is 200 hands! In terms of actual absolute money won or lost, you're more likely to end up farther away. ---- And the reason, of course, is that while the expectation grows linearly when you increase the number of hands, the variation shrinks with the square root of the number of hands. The reason they converge in the law of large numbers is not that the variation shrinks as you play more hands -- the reason they converge is that the expectation outgrows the variation, which makes the latter seem small relative to the former. This is also why the distance traveled in a random walk is dominated by variation in the short term and bias in the long term. When you have a small enough time step, the square root is greater than the line.
• daneel_w 5y ago
  I'm not sure why people are surprised or educated when this reality is explained to them. Surely there's not a single man alive who really believes that slots etc. offer a 50/50 chance of winning? The house always has an edge of one or several percentiles, which make up their average profit margin of every dollar that passes through the establishment. These days casinos prefer to not call it an edge in their favor, but rather paint it in a prettier and somewhat delusive light by using the term "RTP" - return to player.
• treeman79 5y ago
  Had an in-law that ran a group that made good money off the casinos. Card counting and everything else you can think of. One guy was found with a crowbar in his in his head in front of his house. It didn’t go well for the others. I think they are all died middle age.