House edges compound - Why people always seem to lose at dice

[jambola2]

House edges have a much greater impact than you can imagine.

Assume you start with 1 BTC, with the final aim of 1024 BTC.

With a house edge of 1%, you have a 0.0966% chance if you try to do a direct 1024x bet.
On the other hand, if you try doubling your money 10 times to reach there, you get a (0.495)^10 = 0.0883% chance of reaching 1024 BTC.

While in the first case, the expected value is 0.99 BTC, in the second case though, it is around 0.9 BTC. Effectively, in the second case, the house edge is actually 10%, even though your start amount and target amount are the same.

In general, the average amount you expect to win (expected value) after a number of bets will be original amount * (1 - house edge)^number of bets

What am I getting at with this?

If you're gambling with the aim of earning money, set a fixed threshold and aim to get there in a single bet of all your funds.

You always lose 1% or whatever house edge of all the money in total that you bet. Try to minimise the total amount of money gambled.
If you have no strategy, putting it all on a low chance roll may be better than a lot of other poorly conceived strategies

Admittedly betting it all on one go, with a low chance to win is not fun...

[vennali]

Sounds like a nice calculation , in simpler terms I used to think of it as "Since I am wagering more by betting smaller amounts to get to that profit , I would be losing more to the house edge." . I guess most of the gamblers don't think much of the maths behind it and only think of strats which can work against the house , and most of these strats start with smaller base bets so its very rare to see people betting their entire bankroll on a single bet.

[joksim299]

There was a challenge what is best way to win 1btc with 1btc https://bitcointalk.org/index.php?topic=939776.0

[fox19891989]

House edges have a much greater impact than you can imagine.

Assume you start with 1 BTC, with the final aim of 1024 BTC.

With a house edge of 1%, you have a 0.0966% chance if you try to do a direct 1024x bet.
On the other hand, if you try doubling your money 10 times to reach there, you get a (0.495)^10 = 0.0883% chance of reaching 1024 BTC.

While in the first case, the expected value is 0.99 BTC, in the second case though, it is around 0.9 BTC. Effectively, in the second case, the house edge is actually 10%, even though your start amount and target amount are the same.

In general, the average amount you expect to win (expected value) after a number of bets will be original amount * (1 - house edge)^number of bets

What am I getting at with this?

If you're gambling with the aim of earning money, set a fixed threshold and aim to get there in a single bet of all your funds.

Admittedly betting it all on one go, with a low chance to win is not fun...

sounds reasonable, you did a good calculation actually, IMO you are right, what's why people lost more, cos it is compound, like 1.01 bet with allin funds, the profits after compound bet is huge.

[vennali]

There was a challenge what is best way to win 1btc with 1btc https://bitcointalk.org/index.php?topic=939776.0

Doesn't look like it was decided which was the best way. Did Rhavar decide what he thought to be the best method and pay out to the best method on the thread ?

[98problems]

i must say that the title of this thread is incorrect people not always loose money when gambling, sometimes they can win and win huge amounts

[DiscoverCebu]

House edges have a much greater impact than you can imagine.

Assume you start with 1 BTC, with the final aim of 1024 BTC.

With a house edge of 1%, you have a 0.0966% chance if you try to do a direct 1024x bet.
On the other hand, if you try doubling your money 10 times to reach there, you get a (0.495)^10 = 0.0883% chance of reaching 1024 BTC.

While in the first case, the expected value is 0.99 BTC, in the second case though, it is around 0.9 BTC. Effectively, in the second case, the house edge is actually 10%, even though your start amount and target amount are the same.

In general, the average amount you expect to win (expected value) after a number of bets will be original amount * (1 - house edge)^number of bets

What am I getting at with this?

If you're gambling with the aim of earning money, set a fixed threshold and aim to get there in a single bet of all your funds.

Admittedly betting it all on one go, with a low chance to win is not fun...

You know I hadn't thought of this but I feel like I get lucky if I go 2.5x and increase 150% on each win, this gives me better chance of winning, IMO.

[RHavar]

If you're gambling with the aim of earning money, set a fixed threshold and aim to get there in a single bet of all your funds.

That's not really the case. The real advice should be to minimize the amount you wager when playing a game with a fixed house edge.

There was a challenge what is best way to win 1btc with 1btc https://bitcointalk.org/index.php?topic=939776.0

Doesn't look like it was decided which was the best way. Did Rhavar decide what he thought to be the best method and pay out to the best method on the thread ?

Both 'blockage' and 'dooglus' gave fantastic solutions (just skip past the rest, really). As I recall, I checked blockage's and awarded him the prize, and then Dooglus came in later and posted an even better strategy.

[vennali]

Both 'blockage' and 'dooglus' gave fantastic solutions (just skip past the rest, really). As I recall, I checked blockage's and awarded him the prize, and then Dooglus came in later and posted an even better strategy.

Thanks, going through it now

For people wondering, here is the direct link to both the strategies

https://bitcointalk.org/index.php?topic=939776.msg10300895#msg10300895
https://bitcointalk.org/index.php?topic=939776.msg10529739#msg10529739

[jambola2]

If you're gambling with the aim of earning money, set a fixed threshold and aim to get there in a single bet of all your funds.

That's not really the case. The real advice should be to minimize the amount you wager when playing a game with a fixed house edge.

There was a challenge what is best way to win 1btc with 1btc https://bitcointalk.org/index.php?topic=939776.0

Doesn't look like it was decided which was the best way. Did Rhavar decide what he thought to be the best method and pay out to the best method on the thread ?

Both 'blockage' and 'dooglus' gave fantastic solutions (just skip past the rest, really). As I recall, I checked blockage's and awarded him the prize, and then Dooglus came in later and posted an even better strategy.

Heh, I even have a snarky reply to one of the pointless posts on that page.
Sorry, I seem to have made my OP a bit too generalized sounding. I didn't intend it like that, I've struck it out, probably should add some sort of disclaimer.
But it still is more effective than a lot of more instinctive moves, such as doubling continuously, which "feels" good as you see your balance go up for some time.

[WhatTheGox]

House edges have a much greater impact than you can imagine.

Assume you start with 1 BTC, with the final aim of 1024 BTC.

With a house edge of 1%, you have a 0.0966% chance if you try to do a direct 1024x bet.
On the other hand, if you try doubling your money 10 times to reach there, you get a (0.495)^10 = 0.0883% chance of reaching 1024 BTC.

While in the first case, the expected value is 0.99 BTC, in the second case though, it is around 0.9 BTC. Effectively, in the second case, the house edge is actually 10%, even though your start amount and target amount are the same.

In general, the average amount you expect to win (expected value) after a number of bets will be original amount * (1 - house edge)^number of bets

What am I getting at with this?

If you're gambling with the aim of earning money, set a fixed threshold and aim to get there in a single bet of all your funds.

You always lose 1% or whatever house edge of all the money in total that you bet. Try to minimise the total amount of money gambled.
If you have no strategy, putting it all on a low chance roll may be better than a lot of other poorly conceived strategies

Admittedly betting it all on one go, with a low chance to win is not fun...

Yup indeed the best way to approach the gamble from a defending you life savings perspective is to make 1 bet and never bet again.  From an entertainment point of view this is rather boring.   You can see from your example why martingaling performs so badly in the long run since its a high volume betting system style.

[cryptworld]

I have always thought about this but never had tested with number

Now, We just have to know which is the way to get the higher profit with the fewer risk 

[anderson00673]

i must say that the title of this thread is incorrect people not always loose money when gambling, sometimes they can win and win huge amounts

That is true, but math says that in the long run on dice sites you will lose.  Will you personally lose?  Maybe not, but on average most people will lose.  Take it for what it is, to me it means that I should look at gambling as entertainment and not as investment.

[sbankerdemon]

I always thought that 1% house edge means 0.001 btc profit to house on average on 1 btc wager. But do house earn more.

[joksim299]

I always thought that 1% house edge means 0.001 btc profit to house on average on 1 btc wager. But do house earn more.

In theory 1% of every bet

[sbankerdemon]

I always thought that 1% house edge means 0.001 btc profit to house on average on 1 btc wager. But do house earn more.

In theory 1% of every bet

1% of every bet  . And this is for dice websites or any casino games?

[arallmuus]

1% of every bet  . And this is for dice websites or any casino games?

Depends on the house edge of the house, if the house has a house edge of 2 % that will be 2 % of profit for every wagered amount theoretically however this doesnt mean that the house will keep on getting profit as they might some rough day for the house and the house could go into minus instead but on the long run, the house is guaranteed to get a profit on average of their house edge and it could be less or could be more from the house edge

I'll take an example from betterbets with the average house edge of 0.93 % they are actually floating on profit for 1.75 % (status may differ for the other sites )
https://www.moneypot.com/apps/14-betterbets

[boopy265420]

That is appreciable calculation just like most of the people I was not caring of 1% house edge considering it very tiny.Now I read your explanation and I have a totally different approach and thinking about 1% house edge.This is the true cause of loosing at dice as you said I agree with it.

[sbankerdemon]

1% of every bet  . And this is for dice websites or any casino games?

Depends on the house edge of the house, if the house has a house edge of 2 % that will be 2 % of profit for every wagered amount theoretically however this doesnt mean that the house will keep on getting profit as they might some rough day for the house and the house could go into minus instead but on the long run, the house is guaranteed to get a profit on average of their house edge and it could be less or could be more from the house edge

I'll take an example from betterbets with the average house edge of 0.93 % they are actually floating on profit for 1.75 % (status may differ for the other sites )
https://www.moneypot.com/apps/14-betterbets

Thanks for clearing this up for me. That was nice explanation. And nice calculation by jambola2

[SyGambler]

it's really an interesting topic , some people think that 1% house edge is low but maybe they should read this thread
that's why dice in the long run is very -EV , more bets can lead to incredible results
so yes maybe people who like to play dice should set small goals and try to reach them with few bets