Question about moneypot

[lclclc223]

On the investment page there are a few stats:

Site Bankroll: 389,800,231.98 bits
Wagered against bankroll: 14,589,464,076.97 bits
Investor Profit: 87,654,258.75 bits
Your stake: < 0.01 %
Your amount: 100.86 bits

I am confused on what the formulas are for the first three? Sometimes I see the "site bankroll" fluctuate. Is that just a result of other investors investing or divesting and a combination of gamblers winning and losing? Also, how much of that belongs to moneypot and how much belongs to investors? Secondly, I assume "wagered against bankroll" is the total amount of money gambled, so it will always increase? Finally, and this is where I am the most confused, what is the formula for "investor profit"? Also, is it proportional to "your amount", and does it change when invesstors invest or divest?

Thanks in advance to all of you taking the time to respond.

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[RHavar]

Sometimes I see the "site bankroll" fluctuate. Is that just a result of other investors investing or divesting and a combination of gamblers winning and losing?

When a gambler loses, your stake stays the same but the bankroll goes up (aka you make money). When a gambler wins, your stake stays the same but the bankroll goes down (aka you lose money). When someone invests,  the bankroll goes up but your stake decreases (aka you don't win or lose). When someone divest, the bankroll goes down, but your stake increases (aka you don't win or lose).

Also, how much of that belongs to moneypot and how much belongs to investors?

Good question, something for them to disclose

Secondly, I assume "wagered against bankroll" is the total amount of money gambled, so it will always increase?

yup

Finally, and this is where I am the most confused, what is the formula for "investor profit"? Also, is it proportional to "your amount", and does it change when invesstors invest or divest?

Investor profit is just how much gamblers have lost in total.

[lclclc223]

Finally, and this is where I am the most confused, what is the formula for "investor profit"? Also, is it proportional to "your amount", and does it change when invesstors invest or divest?

Investor profit is just how much gamblers have lost in total.

I'm guessing that's minus what the gamblers have won? Also by investors is it moneypot and investors or just investors?

So I guess my question is which one is the best indicator of how much I would make if I hypothetically were to invest more money withough actually investing

[lclclc223]

Something doesn't quote add up:

Site Bankroll: 389,800,231.98 bits
Wagered against bankroll: 14,589,464,076.97 bits
Investor Profit: 87,654,258.75 bits
Your stake: < 0.01 %
Your amount: 100.86 bits

Today:
Site Bankroll: 389,934,103.16 bits
Wagered against bankroll: 14,772,889,421.86 bits
Investor Profit: 99,064,021.05 bits
Your stake: < 0.01 %
Your amount: 103.90 bits

So collectively the gamblers lost 99,064,021.05-87,654,258.75=11,409,762.30 bits, which is a 13.0% increase. The site bankroll barely budged, making only a 0.03% increase, meaning the investors collectively divested 11,275,891.12 bits. Ergo, gamblers lost a ton of money, the other investors divested a lot of money, and I only get a 3% increase? Note: I did not divest any of the 100.86 bits that were already in there. So either moneypot is faulty or the formulas are more complicated than that (unless I'm wrong)...

[RHavar]

Something doesn't quote add up:

Site Bankroll: 389,800,231.98 bits
Wagered against bankroll: 14,589,464,076.97 bits
Investor Profit: 87,654,258.75 bits
Your stake: < 0.01 %
Your amount: 100.86 bits

Today:
Site Bankroll: 389,934,103.16 bits
Wagered against bankroll: 14,772,889,421.86 bits
Investor Profit: 99,064,021.05 bits
Your stake: < 0.01 %
Your amount: 103.90 bits

So collectively the gamblers lost 99,064,021.05-87,654,258.75=11,409,762.30 bits, which is a 13.0% increase. The site bankroll barely budged, making only a 0.03% increase, meaning the investors collectively divested 11,275,891.12 bits. Ergo, gamblers lost a ton of money, the other investors divested a lot of money, and I only get a 3% increase? Note: I did not divest any of the 100.86 bits that were already in there. So either moneypot is faulty or the formulas are more complicated than that (unless I'm wrong)...

It's probably the last one 


Let's illustrative purposes lets the bankroll was 100 BTC, and you own 1% of it (1 BTC), and the investor profit has been 0.1 BTC. Now let's say a gambler comes, and loses 1 BTC.

That means the investor profit has gone up from 0.1 BTC -> 1 BTC  (1000%)!  How much would you expect to make?

Well you don't make 1000% of your money, that's for sure, because if so you would've made 10 BTC (that's more than the gambler lost!). But rather, your profit would be { your stake} * { increase in bankroll }  or 0.01 BTC  (You own 1% of the bankroll, so take 1% of the loses and gains).



So back to the moneypot example, the change in investor profit is actually meaningless. What you care about is a gambler lost ~11.4 BTC on a ~390 BTC bankroll  which means the bankroll should have increased by ~2.92%, and thus your stake should be worth the same amount more. Which matches your observation.


BTW a very probable reason the amount divested almost exactly matches the amount lost, is because the person who divested the money is the same person who lost it

(Disclaimer: I'm not an investor and haven't been following MP, I'm just going purely based on the info in your post)

[lclclc223]

So in other words, the poor guy took the money out of the bankroll just to put it right back in.

[lclclc223]

Sorry I'm sounding like such a newb, but what is commission?

What commissions do you charge?
MoneyPot charges 0.2% commission on all wagered bets. Furthermore to this, all apps are paid a commission of up to 50% of the house edge. So this means if someone bets 1 BTC with a house edge of 1%, from the investors perspective it is much more similiar to a 0.5% house edge bet, as the investors give the app half the house edge (in this case 0.005 BTC) in comission.

However, we do respect the kelly and will never put investors at more risk than that.

[lclclc223]

Sorry I'm sounding like such a newb, but what is commission?

What commissions do you charge?
MoneyPot charges 0.2% commission on all wagered bets. Furthermore to this, all apps are paid a commission of up to 50% of the house edge. So this means if someone bets 1 BTC with a house edge of 1%, from the investors perspective it is much more similiar to a 0.5% house edge bet, as the investors give the app half the house edge (in this case 0.005 BTC) in commission.

However, we do respect the kelly and will never put investors at more risk than that.

Commission is the house fee taken to pay for servers, hosting, work and services to maintain the website.

It is 0.2% of the house edge.

For example, if you're playing at BetterBets at a 1% House Edge and bet 1 Bitcoin: 1 Bitcoin (bet) * .01 (house edge) * 0.2 (commission) = 0.002 Bitcoin (Total Comission taken).

But didn't it say they do 50%? Also, so the higher the commission the less the investors get?

[lclclc223]

Wait, so let's say that the site bankroll is 1000, and I own 10%. Then when someone loses 100, how much do I get? And what if they win 100?

[RHavar]

Commission is the house fee taken to pay for servers, hosting, work and services to maintain the website.

It is 0.2% of the house edge.

For example, if you're playing at BetterBets at a 1% House Edge and bet 1 Bitcoin: 1 Bitcoin (bet) * .01 (house edge) * 0.2 (commission) = 0.002 Bitcoin (Total Comission taken).

Ugh, is it 0.2% (what the FAQ and your post says) or 20%?

--

I'm going to assume it's 20%, because 0.2% is negligible and doesn't make much sense.  Also the total amount of commissions should include what is paid to apps, no?

So someone bets 1 BTC @ 1 house edge. The apps get 0.005 BTC, MP gets 0.002 .. and investors have all the risk?

Also just to make sure it's clear for investors, let's assume the the bankroll is 100 BTC and someone wants to bet on a binary 1% house edge bet. What exactly is the max profit of that bet going to be? Because if investors are going to take 100% of the risk for 30% of the EV, it's pretty damn important they are risking under a kelly.

[unholycactus]

Wait, so let's say that the site bankroll is 1000, and I own 10%. Then when someone loses 100, how much do I get? And what if they win 100?

People never win in the long run, unless the site is bad.
If the share is fair, you should get 10% of whatever people lose in total.

[RHavar]

If the share is fair, you should get 10% of whatever people lose in total.

Something for Dogedigital to answer, but as I understand it, with 10% of the bankroll you will get 3% (amortized) of what people lose in total (the rest of apps and MP)

[unholycactus]

If the share is fair, you should get 10% of whatever people lose in total.

Something for Dogedigital to answer, but as I understand it, with 10% of the bankroll you will get 3% (amortized) of what people lose in total (the rest of apps and MP)

I doubt someone that has build this kind of service/opportunity would give the full 10%.
No gain for them otherwise.

[lclclc223]

Hopefully somebody from MP can shine some light in this question...

[RHavar]

Yes, it is 20% of the house edge.  Not 0.2%. My mistake. I meant to say to calculate it, you would take House Edge * 0.2% * wager to see the house commission.

The documentation on MP needs to be fixed too then. It's not a particularly small mistake, considering it's the difference between investors paying amortized 50.02% commissions vs 70%. Also, would you be able to answer my earlier question about the max bet, which is probably the most important.

[joksim299]

Yes, it is 20% of the house edge.  Not 0.2%. My mistake. I meant to say to calculate it, you would take House Edge * 0.2% * wager to see the house commission.

The documentation on MP needs to be fixed too then. It's not a particularly small mistake, considering it's the difference between investors paying amortized 50.02% commissions vs 70%. Also, would you be able to answer my earlier question about the max bet, which is probably the most important.

Yes, I'll fix up the FAQ.   Although it doesn't read as 0.2% of the house edge there.  It is referenced as 0.2% of the wagered amount which works out if the house edge is 1% but is slightly off if it isn't.  Nonetheless, I'll go ahead and change that up.  Thank you for pointing that out.

The max bet is still set to the previous settings of the original Moneypot settings, 1x Kelly.  If the house edge is 1%, you can only win a maximum of 1% of the bankroll.  If the house edge is 5%, you can win up to 5% of the house bankroll. 

However, we're currently in the process of re-writing it to have a hard cap max bet in the very near future. 
  

What about Plinko bets? Max win is set to fixed  1% of bankroll?
This can not happen again https://www.moneypot.com/bets/18530298 ?

[RHavar]

I think you may have confused the commission as well.  It's nowhere near 50 or 70%.  If using the above example, the investors would be effectively paying a 7% commission on their profit.

I hate to be blunt, but that's just both disingenuous and dishonest.

Yes, in the absolute most extreme case where someone only does a single giant bet, the commissions might be 7%. In reality, even when people lose money they turn over their money several times.

So what's typical? Well, how about some maths. A gambler who's got 100 BTC to lose, will on average he'd be able to wager 10000 BTC (on the standard 1% house edge site) before running out of money. Which means investors are going to pay: 10000 * (0.5 + 0.2) in commissions, or 70 BTC. The remainder goes into the bankroll (30 BTC).

Which is exactly what I said. Investors are paying an amortized 70% commission.

The max bet is still set to the previous settings of the original Moneypot settings, 1x Kelly.  If the house edge is 1%, you can only win a maximum of 1% of the bankroll.  If the house edge is 5%, you can win up to 5% of the house bankroll.

*sigh*. As I suspected. You're off by over a factor of three, which means you're putting investors into negative expected bankroll growth territory.  I would've thought understanding half a page of basic casino maths would be a prerequisite to running a casino.


Although to be fair, you're not the first investment site owner to struggle with it. It's pretty sad, but I think Dooglus is the only guy running a site that really gets it.

[RHavar]

I'm not at all trying to be dishonest or disingenuous about it.

I stated what is an objective fact, your amortized commissions are 70%. I didn't mean that as an attack, or that it's bad (in itself, it isn't). I meant that as a fact.  Which it is. To which you reply:

I think you may have confused the commission as well.  It's nowhere near 50 or 70%.  If using the above example, the investors would be effectively paying a 7% commission on their profit.

Which is both insulting, and a plain lie.  Even how you derived the 7% commission is using the same definition of commission I am, so you can't even pretend it's a terminology mistake.

It kind of seemed like you're setting these questions up so that you can knock us down when we respond.

That's not my intention, I just wanted straight answers.

   I have no quarrels with you and I don't know why there seems to be tension between us.

I think when you're holding other peoples money, there's a certain duty of care which you're not showing. At least in my books, when you hold other peoples money, tell them you're risking it according to a certain schedule, and don't -- that's negligent.

I honestly don't even think 90% commissions is unreasonable, and there's many investors that would line up for that if you can give them enough turn-over and risk management.

If bettors were all to hypothetically bet to the point where they reach the long run with their bets and with that much volume, I think any investor would be significantly pleased knowing that the greatly reduced volatility over a much larger sample greatly benefits their return on investment position even after including the app fee and house fee payouts.

Of course, that's why investors invest. The more bets the better.

I'm of the firm belief that our investment is +EV.

Well obviously. That's pretty hard to mess up (although I can name two casino that did).

  You seem to have accused us of otherwise

Huh? I have never said, or implied such a thing. If anyone told you I said that, they are lying. And if your investments were -EV, it's probably more likely that I'd start gambling on your site than saying anything.

(for reasons I do not know, especially since you're the one that set it up this way)... Can you please explain why you feel this way and why you feel this way so strongly that you're saying it disqualifies us from being able to run a casino?

I'm saying that if your previous answer to me is correct, you're risking >3x as much for investors as you should. When I originally wrote MP, if the bankroll was 100 BTC the max-profit on a 1% game would've been 0.5 BTC. Which is the fully kelly. You added an extra 20% commission, and are saying that max-profit is 1 BTC. When in actuality you should've decreased the max-profit to keep the bets kelly-compliant. See my earlier point about negligence.

[RHavar]

Moneypot takes 20% of the house edge, App owners take 50% of the house edge, 30% of the house edge is the advantage that investors hold over the players.

This is a very reasonable business model, and I don't think there's anything wrong with it. The important part is just being honest and clear about it, so everyone knows what they're getting into. Earlier in the thread you wrote the MP commission was 0.2%, which fine, was a mistake. Then you literally said the commissions are "no where near 70%" using a contrived example of how it's 7%. Now you're being clear, and that's great.

Anyway, I'm glad we're in agreeance upon this.

This will amount to 70% of the HOUSE EDGE of wagered volume as commission.  It is not 70% commission directly taken from your profits which some may have been led to believe from the traditional use of the word commission.

70% commission of profits is better for investors than 70% of the house edge    (But worse for MP or Apps, who don't want to eat that variance)

To onlooking investors, please take the time to understand and realize what is written.  We encourage all investors to do their due diligence and are always standing by to answer any questions or concerns you may have.

You have still side-stepped the most relevant question for investors, what risk level is investors money being risked at? From my reading of response implies a ~3.33x (?) kelly, but I suspect that is a mistake. Could you confirm what that is really the case? I'll ask the earlier question again for clarity: if the bankroll was 100 BTC, and someone was betting on 1%-house-edge binary bet ... what would the max-profit be?

[RHavar]

We apologize if we misunderstood that you were accusing us of being -EV from the statement of putting "investors into negative expected growth territory".  From your admitted statement of our investment propositions being +EV, in its very nature, would mean that the expected value would continue to be positive going forward in the long run, so we're a bit unclear by what you really mean.  Perhaps this was just an honest mistake.

Please read the kelly, and learn the difference between expected growth and expected value.  You can (and probably are) +EV but -bankroll growth. This should be stuff you did 5 months ago.

This is the second time you've called me out on my "mistakes" which were correct. I don't mean to be so hostile, but seriously..

To be completely fair, it is hard to call us negligent when the code remains the same as you have written it.  We made one change which was to the commission structure to 20% of the house edge being wagered.

lol, the "one change" can break everything if done incorrectly. You can't throw in a random constant in on one line, and expect the previous safe-guards to not break very badly.

We understand your concern about user fund security and thus hold no hard feelings over what we believe to be a misunderstanding.  We take user fund security very seriously as well.  

No hard feelings either. Just to be clear, I think the extra commission is entirely reasonable and important for everyone (apps, gamblers, investors) that there's a sustainable business model in place (which you seem to have). It's better for investors to have 30% of a large-number, than 10% of a small number. I get it.

You just need to communicate it clearly and make sure you're not over-exposing investors  (or at least, tell them they're no longer at a 1x kelly and at a Y).