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I believe there are two factors we should consider when discussing this matter:
MATHS:
Kelly Criterion works just fine, but the fact is that Nakowa's bankroll is many orders of magnitude bigger than the average player's, and so is his average bet. He is virtually the only one going nowhere near the "max bet". This just means that himself alone can provoke huge variance - but if he plays long enough, it will even out.
PSYCHOLOGY:
From one side, its definitely the casino's ally. If you understand this business, you simply know that Nakowa is either a) a cheater or b) the absolute best customer you can probably EVER have. Let's remember that there's absolute no evidence for a), and that:
Nakowa is the kind of guy willing to gamble $40k every 5 seconds during 3/4 hours
From the other side, you have a mob of whiners or angry "investors" who treat JD as a bank, and these guys are obviously ready to spread FUD about JD and Dooglus if they see their investment shrink by %25 in a few days due to variance. Some of this "investors" are ready to crap their pants by disinvesting probably because they do not understand in what they were investing in the first place, and this could create a "bank run" effect if the whale has another lucky strike.
The latter is something difficult to factor when calculating the probability of "bankruptcy of the house", but anyhow I'm sure Doog took his decision considering also this difficult to weight but very real "bank run" scenario.
IMO, a "market for risk" is a brilliant concept. I also hope more investors understand now what does it means to invest in a gambling site: who is your average customer, who is your STAR customer, and how your expected result can fluctuate wildly.
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If you want less risk simply invest less money. Simple as that. Think about it....
There is no good reason to change the max bet.
Investing less money doesn't change the risk of ruin (ie. of the site going bust). Whatever you invested, you were risking 1% of it per roll. I have temporarily set the max profit to 0.25% because with it at 1% nakowa was able to take huge chunks of the bankroll over and over, as he has demonstrated time and time again. To make matters worse, each time he takes a chunk of the bankroll, more investors lose faith and divest, resulting in the bankroll shrinking even faster. Risking 1% of the bankroll per bet turned out to incur a much greater risk of ruin than I had anticipated, and so I made the change to 0.25% in an attempt to prevent ongoing huge losses. At no point was it intended to be "the solution"; it's a stopgap fix until I can put something better in place. I need to seriously reconsider allowing investors to somehow set their own risk level. If some want to risk 0.25% per bet and others want to risk 1% then I don't see why I shouldn't let them. If nakowa continues to win, the 1% people risk going bust, while the 0.25% people gain an ever increasing share of the remaining bankroll. Eventually all remaining investors (the cautious ones) will be risking 0.25% and we'll be back where we are now, and the 1% investors will have had the chance they're asking for - risk big to win big. If nakowa does blow up one day, the 1% people get the lion's share of his losses, which they will deserve for 'keeping the faith'. Of course, maybe he'll never return whatever happens; who can say? I know he has said many times before that he has quit. In my book Nakowa just demonstrated he is up 13k, which is unlikely but very possible. And today he lost aprox. 3k. Then, I'm assuming you calculated the "ruin risk" before taking such a decision: could you share with us what is the precise probability of Nakowa ruining the Casino, considering 1% max profit and a 23k roll for the Whale? My "guesstimate" is that it's totally negligible. Secondly, you speak about 1% max profit investors are "keeping the faith". In what? In the site NOT being rigged, or in math and probability? I've absolute faith in you, and therefore on the site. And you simply do not "have faith" in math and probability. |
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mechs, do you even realize why most people here are disagreeing with you?
Because they understand math. They know that 1% is the most profitable bet size.
For someone who claims to think 'long-term' you would know that mathematically nakowa would lose all his bankroll if we allowed him to keep playing.
So, you obviously don't think 'long-term'. You think short term because you are a greedy investor who wants the bet size dropped at the expense of other investors who are down and will never be able to recover their losses.
You're basically just greedy and selfish. You want all the reward without the risk at the expense of other investors who now will never recoup their losses.
Once again, I have an opinion but I am not a deicison make. And yes, I want to make profit just as the players do. Well, you actually destroyed any short-term profit expectation for those of us who actually understand a bit of math and gambler's psychology, and also understood what kind of investment JD was, and therefore DID NOT DIVEST during the huge negative variance caused by Nakowa. You scared our best customer away by lowering the max bet he loves while he was playing, now we are roughly 30% down, and it will probably take many months to just reach b/e. Man, do you realize that guy loves to make 300BTC bets? And he thinks he actually has a system that beats the house edge? And he says he is not a gambler and he just kept coming back? What would you think that guy would have done when he started to lose big? I'll tell you: he would have lost more, faster (just look how fast he lost the last 1,000BTC he sent to the site today, compared to the first 1,820BTC). That's basic human psychology at work. Nakowa is the prototypical gambler, he has EXTREMELY DEEP POCKETS, and you scared him away just because there was a minuscule chance that he could have won the whole roll? Anyhow, anyone better than me at math could calculate what was the exact probability of him winning the whole bankroll, considering that: - he has aprox 23K BTC
- house bankroll was aprox. 30k BTC at that moment
- house edge is 1%
- max profit is 1% of house bankroll
Mechs, I saw you in the chat: while we were all commenting how "percentage/nakowa" was gambling, you were whining. "I don't want to see this", "i feel bad", "i know how this story ends, he always starts losing big and then he goes up +6k btc", blah blah blah (I quoted you very loosely but you know that's the spirit of what you were saying). Shortly after Doog lowered the max profit. You know what? You were just crapping your pants, you were overemotional and you didn't act rationally, triggering a -EV decision (lowering max profit, pissing off the whale). "i know how this story ends"? YES, YOU SHOULD HAVE KNOWN. MATHS HAVE NO FEELINGS. THE STORY ENDS NAKOWA ENDS UP LOSING EVERYTHING IF YOU LET HIM PLAY LONG ENOUGH. Unless you crap your pants and scare him... |
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No gamblers fallacy here. Nakowa was lucky, very lucky, unlikely lucky - if he had played long enough, he would have ended up losing. That's no fallacy, that's math, because you do realize that the house has an edge - right?
The point is that he doesn't have to play long enough to lose. He's demonstrated over and over again that his bankroll is big enough that he can let variance take him into positive territory, and walk away. The Kelly Criterion applies to situations where the player with the edge can keep betting as long as he likes. With JD, the house has the edge, but can't initiate bets. You are implying that each time he "walks away" the "luck clock" resets? That's the fallacy. He might stop to eat/sleep/whatever, but from a mathematical point of view he is not stopping. It doesn't matter the house cannot "initiate bets", Nakowa is initiating bets non-stop. In mathematical terms, he never "walks away", he never "stops" until he quits playing for good and never plays again. Do you understand that? As the very same dooglus wrote: Nakowa doesn't stop playing. He pauses to sleep when he's ahead, but then he plays again. As far as the numbers are concerned his bets are a single continuous stream. He's playing right now. He didn't "quit when he was ahead", he just paused for some hours. TL;DR: he just needs to keep playing as he is playing right now, and he will end up losing it all. End-of-the-story. There's no way of "beating the edge" with large enough numbers. You want him in your casino, you NEED him on your casino.... |
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Also Mechs in chat said to Nakowa , he personally does not want him betting there anymore win or lose because hes an asshole. Is this the type of investors other investors want?
Well, the was preceeded by him insulting me. I do not care about Nakowa. The site needs to be fair, trusted and the best odds out their for players, while a +EV with managable variance for investors. I am thinking long-term, while many of those against change only thinking short-term. Insults best customer - claims to think long term   lol, you've nailed it. Sorry mechs, I don't want to be harsh on you, but scaring away the best possible customer for "your" casino doesn't sounds like long-term planning  You think me not liking nakowa and expressing that since he is a known thief and liar effects his behavior. How many times has he said he will never come back? If he will only play at the site under conditions which put the site's bankroll in extreme jeopardy, then so be it. Let's remember who we are dealing with: http://www.coindesk.com/bitcoin-gambler-cheats-satoshidice-competitor-just-dice-out-of-1300-btc/Guy is a POS, it the truth. Well, the 1300BTC issue was ludicrous at best, good it was solved well by Dooglus. But the fact he is a liar and that he keeps saying he will never come back, while he keeps coming back, is in fact GOOD for you - don't you see?. Do not you realize that he has all the traits of a degenerate gambler that will end up losing EVERYTHING? TL;DR: Unless he is cheating (and there's no evidence whatsoever on that), you want him in your casino. Precisely because of how he plays, precisely because of how he is. |
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Also Mechs in chat said to Nakowa , he personally does not want him betting there anymore win or lose because hes an asshole. Is this the type of investors other investors want?
Well, the was preceeded by him insulting me. I do not care about Nakowa. The site needs to be fair, trusted and the best odds out their for players, while a +EV with managable variance for investors. I am thinking long-term, while many of those against change only thinking short-term. Insults best customer - claims to think long term lol, you've nailed it. Sorry mechs, I don't want to be harsh on you, but scaring away the best possible customer for "your" casino doesn't sounds like long-term planning |
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With lower max bet you're effectively having a higher house edge for larger wagered amounts.
Please elaborate since a lower maximum bet would only lower variance. How would it affect the house edge? It doesn't effect the house edge. It reduces the risk of ruin. But mathematically, 1% max bet at 1% edge is the optimal kelly criterion. Yes, with large numbers enough. With smaller numbers, you get variance. I guess some investors were scared by variance, which I find ridiculous because you are investing in a casino which has 1% max profit and 1% edge, and thus variance is expected when you confront a single whale with such a big roll. |
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Also Mechs in chat said to Nakowa , he personally does not want him betting there anymore win or lose because hes an asshole. Is this the type of investors other investors want?
Wow, amazing. From one side, if your only chance to quickly recoup those HUGE losses is variance, you don't want to screw up variance. Math and Nakowa's delusional attitude was on our side. From the other side, you just do not scare away the best customer you have (and that probably you will EVER have). Nakowa has incredibly deep pockets, he is completely delusional and probably sick ("i'm not a gambler", "i found a system", "i spot patterns", "i cannot quit because i always win"), and we scare it away from "our" casino? Are we crazy? That said, I understand Dooglus, even if I don't approve what he did. I have this attitude towards Nakowa because I am 100% ready to lose all my investment in JD, and that makes me calm and confident. On the other side, Doog has invested a HUGE amount of work on this project. Even if the chance of Nakowa winning the whole bankroll is extremely low, I guess for Dooglus that extremely low probability is high enough to make him VERY nervous. My guess is that he couldn't even stand the thought of seeing another big chunk of the roll go to Nakowa's pockets, so he took a rushed and IMO unfortunate decision. This is a matter of math and logic. Some people argued that the max bet was too high and the variance allowed a whale with a large enough bankroll to win despite the house edge. There is plenty of evidence lately that this is the case. Nakowa himself agrees with this and has said so. Others argued that the max bet had to kept at 1% to give them a chance to recoup their losses. But this sounds like gambler's fallacy... what's lost is lost, and there is no reversion to the mean to make things right again.
My point is that math is not a democracy. Voting to set pi equal to 3 does not make it so.
JD is an experiment. Let's see what happens, analyze some more data and reconsider the max bet.
No gamblers fallacy here. Nakowa was lucky, very lucky, unlikely lucky - if he had played long enough, he would have ended up losing. That's no fallacy, that's math, because you do realize that the house has an edge - right? |
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When I discovered the max bet today:  I was watching Nakowa playing, losing big time. It was just a matter of minutes for him to go berserk and push max bet to recover his losses. When I saw the max bet going to 0.25%, I thought "OH NO!!!" IMO Dooglus got overemotional, he was scared by the thought Nakowa could have won another big % of the bankroll. But that was unlikely. Plus, I don't understand all this talk about "making Nakowa stop playing". Nakowa was OUR BEST CUSTOMER. Every casino in the world wants the biggest whales to keep playing. If you need to change things, you do it right, you just do not take a rushed decision to STOP your best customer from playing. That's unfair and totally counter-productive. Plus, the only chance to recoup the 25% losses we had in a few days was precisely to let Nakowa do his things. Math was on our side. Now, we will probably do not reach break even for months. Anyhow, respect to dooglus - and full support. It might be a mistake, but he is honest, trustworthy, and very capable. I'm glad I'm invested in his product. |
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I think the problem is in understanding English. ROI is not return "OF" your investment, it is return "ON" your investment! Huge difference.
EXACTLY. ROI is return ON your investment, and thus means the gains you get from an investment. If you invest 10BTC on a miner and you get 10BTC back, you got NO ROI, you just reached the break-even point. ROI is everything that comes AFTER that point (or, if you lost money, it's the amount of money you lost in relation to your investment - that's NEGATIVE ROI, which is also possible). That's what ROI means in ALL the word, but in this forum somebody started to use it as a synonym of break-even, and everybody followed... Which is fun and ludicrous at the same time. When you are doing a profit&loss for your company, or for a specific operation, in your excel you will have two very clear and different things: BEP (break even point) and ROI (which is usually expressed as a percentage). So, when people here writes "you won't even reach ROI", in reality they mean "you won't even reach break even". If you got a positive ROI, you got profit. If you got a negative ROI, you lost money. If you didn't get any ROI, you have recouped all your investment and thus reached break-even. EDIT: as Death&Taxes just wrote, this is a very basic financial concept... But I guess 99% of BTC miners don't know sh*t about finances, and that's why they rush to preorder miners from which they will get a negative ROI |
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Nakowa is now playing with two ID (percent + balotelli) to "get around" the max profit restriction.... His literal words:
I wasn't under the impression that Balotelli is the same guy as nakowa. Or did he make an account called balotelli recemtly? The one I'm thinking of is user 13839 and has been running a very successful martingale strategy for weeks if not months now. Very disciplined and quite regular. Not like a nakowa play at all. Cake (which I thought is percent/celeste/nakowa/allover) said in the chat that Balotelli and Nakowa were the same guy, and it was his way to "cheat" the max profit limit (lol at that). As there can be 100 "cake" on the site, it might well have been a joker. |
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some investors will wait ages to recover their losses as everyone will invest back now  Exactly, those who stayed are going to wait ages for recovery, while those who left and go back now are going to benefit from the lower variance! Insane. Yes, that's me. Kinda hurts to know that even dooglus divested, plus he suddenly changed the rules while the only customers that could have made us quickly recoup those losses was playing, pissing him off big time. I was ready to lose 100% of my investment playing against Nakowa because I have faith in both math and the weaknesses of gambler psychology, but realizing that it will now take ages to recoup that investment because of a management decision really sucks. |
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So he lost the whole 2,820BTC he sent to the site, plus some change he already had there.
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<percent> banker: I was beaten already. REMEMBER: the rules changed during the course of my play. I HAVE NO INCENTIVE TO PLAY MORE IN THE FUTURE.
Congratulations. The whale is walking away with investor profits. As far as I know casino's in the real world do everything they can to keep whales playing
Indeed. Changing max profit in the middle of the session of the BEST customer we have (yes: Nakowa is our BEST customer, even if he is way up ATM) was a stupid move indeed. As I wrote a few posts back, its obvious he would have felt cheated, which is not good at all. Again: guys, just let math do its thing... |
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Another fact that IMO proves that he is not cheating and that he just got lucky: he is down at least 1,820BTC today (those are the fresh funds he sent to the site), and he just sent 1,000BTC more. He wrote bitter words on the chat, and his betting pattern changed: in this session he is chickening out, and his smaller bet is just 5BTC, when in previous sessions today it used to be 10BTC. In my book that means that he is kinda scared and took a psychological hit, which ultimately benefits the house, which has a 1% edge and no emotions whatsoever.
EDIT: in the last session his lowest bet is 3BTC... He's hit psychologically... And we screwed over lowering max. profit.
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Considering he lost 3k now, the site would have been up 7k again if max bet wasn't changed (3k*4=12k, so +7k starting from -5k). Bad timing ^^'
Math never lies - on the contrary, decisions based on emotions are -EV. Nakowa is a delusional gambling addict who believes he found a "system" to "spot patterns", therefore I will never understand why we decided to lower the max profit precisely when he was in the middle of a session. That sucks, from one side he might feel cheated and he might stop playing JD because of that, and IMO the rational thing to do would have been to let him keep playing as he used to. And BTW, he is used to win, and I'm quite sure that as soon as he started losing BIG he would have started to take very bad decisions based on emotions. Now we "protected" him by lowering the maximum amount he can lose in a single bet. |
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I think today Nakowa lost 1,820BTC with small bets (max bet 70BTC). I wonder what would have been the result if the max bet was not lowered... EDIT: Nakowa just sent 1,000BTC to an unused address, it might well be J-D... We will know as soon as it hits the first confirmation. As I've said: a degenerate gambler, we just need math do its thing. There's no point in chickening out. Even though I agree on many points you say, I believe Kelly criterion is too much an aggressive way to play against a massive gambler. Have you run some simulations? I did and the plots of the earnings are scary (some of them are nice too). Suppose that we keep playing with this maxbet and the bankroll still shrinks, then a lot of people will be very scared and will quit the website thinking it is scam or else, then what do we do, we play 100B bankroll? Then we really will wait a lot What I really cannot understand is how people invests in a gambling site without realizing what 1% house edge + 1% max profit means. Returns will wildly fluctuate because of variance if whales push the max bet, that was clear from the very first moment - take it or leave it. People should UNDERSTAND in what they invest in, if they do not they are just being retarded. |
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I think today Nakowa lost 1,820BTC with small bets (max bet 70BTC). I wonder what would have been the result if the max bet was not lowered... EDIT: Nakowa just sent 1,000BTC to an unused address, it might well be J-D... We will know as soon as it hits the first confirmation. As I've said: a degenerate gambler, we just need math do its thing. There's no point in chickening out. |
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Agreed. Max bet at 1% was the only real chance of Nakowa going busto when he starts with his 300BTC bets. I'd rather lose my whole investment because of an incredible (and very unlikely) strike of bad luck, than just taking down the max bet which practically means that we won't be recovering our losses for months...
You are forgetting a very important benefit of lowering the max bet. With a lower max bet he will not be able to win as much by cheating before it statistically becomes obvious that he is. Depending on how large you currently think the chances of him cheating is, it might actually be +EV to let him continue with a 0.25% max bet... I've watched Nakowa gambling, and I'm obviously not 100% sure that he is not cheating, but I'm willing to bet my whole investment (which anyhow I can afford to lose) on the fact the he is NOT cheating, and thus I'd let him play with max profit 1% of the bankroll until he eventually go busto with his 300BTC bets. In fact, today I've watched him for at least 2 hours in a row. He is losing big time at the moment. I have the impression that if the max profit would not have been lowered, today he would be down many thousands and not just a few hundreds. I have the impression he would have started to push the max bet to recover his losses, which he is actually doing with 60BTC and 70BTC bets (the actual max profit), which eventually would have led him to lose a lot more. Of course this is wild speculation and impossible to know, but given the fact that nakowa has already won +15k coins from the site when the max bet was 4 times higher, lowering the max bet in my opinion is something that plays in his favor, because he won't be able to lose everything as easily as he won it - in fact it will be 4 times harder for him to lose everything, than it was to win it in the first place. That's how I see it... He is down 1000 BTC, he would bet that amount in 5 second before. The change has reduced variance. Sure, but our only chance to quickly recoup the 25% losses Nakowa inflicted to us in just a few days was precisely variance, and lowering the max profit to 0.25% just killed that chance. I see this matter very coldly: nakowa is either a) cheating, or b) a degenerate gambler that won't stop until he loses everything. After having analyzed both the character and his "gambling style", I see no evidence whatsoever for a), and anyhow if he is cheating lowering max bet won't help at all. On the contrary, I've seen a LOT of evidence for b), both in what he writes ("I'm not a gambler", "I spot patterns", "it's difficult to quit when you always win", etc.) and in how he plays, and thus I'd coldly and rationally prefer to let math and gambling addiction do their thing until the law of big numbers takes us where we should be. |
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Agreed. Max bet at 1% was the only real chance of Nakowa going busto when he starts with his 300BTC bets. I'd rather lose my whole investment because of an incredible (and very unlikely) strike of bad luck, than just taking down the max bet which practically means that we won't be recovering our losses for months...
You are forgetting a very important benefit of lowering the max bet. With a lower max bet he will not be able to win as much by cheating before it statistically becomes obvious that he is. Depending on how large you currently think the chances of him cheating is, it might actually be +EV to let him continue with a 0.25% max bet... I've watched Nakowa gambling, and I'm obviously not 100% sure that he is not cheating, but I'm willing to bet my whole investment (which anyhow I can afford to lose) on the fact the he is NOT cheating, and thus I'd let him play with max profit 1% of the bankroll until he eventually go busto with his 300BTC bets. In fact, today I've watched him for at least 2 hours in a row. He is losing big time at the moment. I have the impression that if the max profit would not have been lowered, today he would be down many thousands and not just a few hundreds. I have the impression he would have started to push the max bet to recover his losses, which he is actually doing with 60BTC and 70BTC bets (the actual max profit), which eventually would have led him to lose a lot more. Of course this is wild speculation and impossible to know, but given the fact that nakowa has already won +15k coins from the site when the max bet was 4 times higher, lowering the max bet in my opinion is something that plays in his favor, because he won't be able to lose everything as easily as he won it - in fact it will be 4 times harder for him to lose everything, than it was to win it in the first place. That's how I see it... |
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