Just-Dice.com : now with added CLAMs : Play or Invest

[FiatKiller]

This site sucks for the investors. I lost 35%. I'm out.
 
For the users it is awesome. I made 30% on what I had left in like 10 mins.

[Professor James Moriarty]

 Yeah you can make %30 , I remember when I made like %400 in seconds.

 If you quit now , great , if you keep going eventually you lose it all , I once did

[FreeMoney]

Paradoxically I don't like the max bet reduction and now I'm sending dooglus more money (but not 4x more).

People are never going to agree on what the fraction should be, but if it is higher then anyone can reduce their exposure, but increasing it is harder and requires more trust.

I think a good solution would be to have three places for money, balance, 'ready to invest' and 'invested'. Then let users select a fraction of 'ready to invest' + 'invested' which should always be in 'invested'. It needs to be more intuitive than that I think, essentially it boils down to letting investors manage their own max bet by automatically shuffling money in and out.

With a system like this a 10% max bet (of 'invested' of course) would be reasonable. To get the old way players would just chose 10% of their 'ready to invest' money to be invested, to get the current, 2.5%.

[oda.krell]

There is the house edge providing positive expected value to investors, just like dividends for stocks. Investors however are less concerned of dividend risk, but on total return of capital after the investment is sold.

The line between an investor and gambler is blurred, but there are some levels of risk appetite typical for them. Investments have annualized return volatilities of roughly 1-10% for bonds 10-40% for blue chips, a return volatility above 100% is rather gambling.

Assuming gambler on JD play >50.5%, then the volatility is proportional to Sqrt[n*0.505*0.495] for n rolls.
An investor into the site has an annualized volatility of return of about betsize/bank*Sqrt[betsperyear*0.505*0.495].
Note that with varying bet size or bets other than >50.5% the volatility increases, therefore next calculations are lower limits of the actual volatility.

The expected number of bets per year extrapolated form today's stat is: 521890, the average bet size before Nakowa were: 8.1 BTC, bankroll was around 50,000.

An investor faced annualized return volatility of at least 5.8%.

After Nakowa the average bet size is: 90.1 and bankroll is 30,000 that leads to at least 108% return volatility.

Investors are gamblers now, therefore I disinvested until doog reduces the max bet size with a magnitude.

Interesting. Thanks for posting this.

But I wonder, isn't reducing max betsize only a moderately effective solution? Say *max bet size* is reduced to a tenth of its previous value, but as a result *number of bets increases tenfold* (not completely unlikely). Then, according to your formula, return volatility is reduced only by a factor of about 3 (/10, *sqrt(10)).

[4mherewego]

Max profit was just lowered to 0.25%

Meh this is terrible. I as an investor am very dissapointed. Kelly's criterion says that we should allow up to ~25% of invested be risked so 1% was already very conservative. The wales wont like it and us investors will get a lower ROI.

Too bad so few people understand game theory and risk. The site was doing fine without the lowering the amount, cmon it was just getting started and even though profits went down, 30k BTC was invested while the site was just getting started.

Hope the site owners comes back to their senses after having read this:
http://en.wikipedia.org/wiki/Kelly_criterion

[01BTC10]

Max profit was just lowered to 0.25%

Meh this is terrible. I as an investor am very dissapointed. Kelly's criterion says that we should allow up to ~25% of invested be risked so 1% was already very conservative. The wales wont like it and us investors will get a lower ROI.

Too bad so few people understand game theory and risk. The site was doing fine without the lowering the amount, cmon it was just getting started and even though profits went down, 30k BTC was invested while the site was just getting started.

Hope the site owners comes back to their senses after having read this:
http://en.wikipedia.org/wiki/Kelly_criterion

+1 most investors are falling for the same fallacy that gamblers do.

[cbhelp]

Freezing new investments is dumb.  Just because the current investors lost money, there is NO REASON you should stop new investors.  An investment is just that, an INVESTMENT.  It can RISE OR FALL.  If you invest any lose, you dont get to bitch and say that no one else gets to invest until you win it back.

[iANDROID]

There is an article in a swiss newspaper:

http://www.20min.ch/ro/multimedia/stories/story/Un-joueur-decroche-le-jackpot-en-Bitcoin-22694555

[DumbFruit]

Hope the site owners comes back to their senses after having read this:
http://en.wikipedia.org/wiki/Kelly_criterion

I assume you stopped reading at the heading, "Reasons to bet less than Kelly".

[geofflosophy]

Max profit was just lowered to 0.25%

Meh this is terrible. I as an investor am very dissapointed. Kelly's criterion says that we should allow up to ~25% of invested be risked so 1% was already very conservative. The wales wont like it and us investors will get a lower ROI.

Too bad so few people understand game theory and risk. The site was doing fine without the lowering the amount, cmon it was just getting started and even though profits went down, 30k BTC was invested while the site was just getting started.

Hope the site owners comes back to their senses after having read this:
http://en.wikipedia.org/wiki/Kelly_criterion

How does (1*0.505-0.495)/1 = 0.25? I get 0.01, which is where it was before.

[Bitsinmyhead]

In a totally perfect world I agree that the Kelly criterion should be followed. However, there are two things that need to be taken into consideration in this situation.

-The possibility of some flaw in the RNG.
-The possibility of Nakowa cheating.

If there was a way for us to 100% know neither of those were happening, the Kelly criterion should obviously be followed. FreeMoney explains this very well in his last post.

Unfortunately there is no way for us to be sure that there is no flaw or no cheating going on. Having a max bet lower than the Kelly criterion gains the investors equity because nakowa will not be able to win as much by cheating before it statistically becomes obvious that he is doing it.

If you think the chance of cheating/flaw are >0% the optimal max bet will be somewhat lower than what the Kelly criterion dictates. The chance of something bad going on would need to be pretty high for the max bet to be adjusted as low as 0.25%, but I think a good case could be made for it to be somewhere around 0.6-0.7%.  

[oda.krell]

In a totally perfect world I agree that the Kelly criterion should be followed. However, there are two things that need to be taken into consideration in this situation.

-The possibility of some flaw in the RNG.
-The possibility of Nakowa cheating.
[snip]

Those are not the only reasons. Kelly criterion is about maximizing growth. Individuals (investors) however might also have a (differing) view on risk management, i.e. they are willing to accept less-than-optimal growth in trade for a lower chance to lose everything/a lot.

And another point: simply calculating the optimal value according to Kelly assumes a static system which j-d is certainly not: assume bankroll size of a whale stays the same, but as a result of normal variance, the bank is down substantially and investors get scared and start divesting. While the whale wouldn't have been able to break the bank before, he might be able to do so now.

Both are valid reasons to stay below the Kelly value.

[4mherewego]

Max profit was just lowered to 0.25%

Meh this is terrible. I as an investor am very dissapointed. Kelly's criterion says that we should allow up to ~25% of invested be risked so 1% was already very conservative. The wales wont like it and us investors will get a lower ROI.

Too bad so few people understand game theory and risk. The site was doing fine without the lowering the amount, cmon it was just getting started and even though profits went down, 30k BTC was invested while the site was just getting started.

Hope the site owners comes back to their senses after having read this:
http://en.wikipedia.org/wiki/Kelly_criterion

How does (1*0.505-0.495)/1 = 0.25? I get 0.01, which is where it was before.

You're right, I was wrong. 

[geofflosophy]

In a totally perfect world I agree that the Kelly criterion should be followed. However, there are two things that need to be taken into consideration in this situation.

-The possibility of some flaw in the RNG.
-The possibility of Nakowa cheating.
[snip]

Those are not the only reasons. Kelly criterion is about maximizing growth. Individuals (investors) however might also have a (differing) view on risk management, i.e. they are willing to accept less-than-optimal growth in trade for a lower chance to lose everything/a lot.

And another point: simply calculating the optimal value according to Kelly assumes a static system which j-d is certainly not: assume bankroll size of a whale stays the same, but as a result of normal variance, the bank is down substantially and investors get scared and start divesting. While the whale wouldn't have been able to break the bank before, he might be able to do so now.

Both are valid reasons to stay below the Kelly value.

The max profit is a rolling calculation against the size of the bankroll. People divesting means lower limit.

[oda.krell]

In a totally perfect world I agree that the Kelly criterion should be followed. However, there are two things that need to be taken into consideration in this situation.

-The possibility of some flaw in the RNG.
-The possibility of Nakowa cheating.
[snip]

Those are not the only reasons. Kelly criterion is about maximizing growth. Individuals (investors) however might also have a (differing) view on risk management, i.e. they are willing to accept less-than-optimal growth in trade for a lower chance to lose everything/a lot.

And another point: simply calculating the optimal value according to Kelly assumes a static system which j-d is certainly not: assume bankroll size of a whale stays the same, but as a result of normal variance, the bank is down substantially and investors get scared and start divesting. While the whale wouldn't have been able to break the bank before, he might be able to do so now.

Both are valid reasons to stay below the Kelly value.

The max profit is a rolling calculation against the size of the bankroll. People divesting means lower limit.

But that limit only applies to a single bet, not the cumulative earnings of a whale.

EDIT: to clarify, as the whale keeps playing, then bankroll goes down, and so does maxbet. the limit of that sequence is still a broken bank :P

[geofflosophy]

In a totally perfect world I agree that the Kelly criterion should be followed. However, there are two things that need to be taken into consideration in this situation.

-The possibility of some flaw in the RNG.
-The possibility of Nakowa cheating.
[snip]

Those are not the only reasons. Kelly criterion is about maximizing growth. Individuals (investors) however might also have a (differing) view on risk management, i.e. they are willing to accept less-than-optimal growth in trade for a lower chance to lose everything/a lot.

And another point: simply calculating the optimal value according to Kelly assumes a static system which j-d is certainly not: assume bankroll size of a whale stays the same, but as a result of normal variance, the bank is down substantially and investors get scared and start divesting. While the whale wouldn't have been able to break the bank before, he might be able to do so now.

Both are valid reasons to stay below the Kelly value.

The max profit is a rolling calculation against the size of the bankroll. People divesting means lower limit.

But that limit only applies to a single bet, not the cumulative earnings of a whale.

EDIT: to clarify, as the whale keeps playing, then bankroll goes down, and so does maxbet. the limit of that sequence is still a broken bank

The prior earnings of any player occur independent of future earnings. I guess you're saying something like if the whale has a larger roll than the house, he can absorb enough losses to eventually bankrupt the house, but while there is always a non-zero probability of this happening regardless of house or whale roll size, I think that the odds are substantially against it as a result of the house edge. Long run, whale should always bankrupt eventually unless he can quit while he's ahead. With the lower limit today he shipped back BTC3k, there is certainly a risk of this happening. And to think that if we hadn't lowered the limit, he would have shipped back 12k .

[mechs]

In a totally perfect world I agree that the Kelly criterion should be followed. However, there are two things that need to be taken into consideration in this situation.

-The possibility of some flaw in the RNG.
-The possibility of Nakowa cheating.
[snip]

Those are not the only reasons. Kelly criterion is about maximizing growth. Individuals (investors) however might also have a (differing) view on risk management, i.e. they are willing to accept less-than-optimal growth in trade for a lower chance to lose everything/a lot.

And another point: simply calculating the optimal value according to Kelly assumes a static system which j-d is certainly not: assume bankroll size of a whale stays the same, but as a result of normal variance, the bank is down substantially and investors get scared and start divesting. While the whale wouldn't have been able to break the bank before, he might be able to do so now.

Both are valid reasons to stay below the Kelly value.

The max profit is a rolling calculation against the size of the bankroll. People divesting means lower limit.

But that limit only applies to a single bet, not the cumulative earnings of a whale.

EDIT: to clarify, as the whale keeps playing, then bankroll goes down, and so does maxbet. the limit of that sequence is still a broken bank

The prior earnings of any player occur independent of future earnings. I guess you're saying something like if the whale has a larger roll than the house, he can absorb enough losses to eventually bankrupt the house, but while there is always a non-zero probability of this happening regardless of house or whale roll size, I think that the odds are substantially against it as a result of the house edge. Long run, whale should always bankrupt eventually unless he can quit while he's ahead. With the lower limit today he shipped back BTC3k, there is certainly a risk of this happening. And to think that if we hadn't lowered the limit, he would have shipped back 12k .

You assume he would make all the same bets except at 4X the amount.  He would have likely made different bets and would have stopped himself before reaching 12k in a single day.

[geofflosophy]

The prior earnings of any player occur independent of future earnings. I guess you're saying something like if the whale has a larger roll than the house, he can absorb enough losses to eventually bankrupt the house, but while there is always a non-zero probability of this happening regardless of house or whale roll size, I think that the odds are substantially against it as a result of the house edge. Long run, whale should always bankrupt eventually unless he can quit while he's ahead. With the lower limit today he shipped back BTC3k, there is certainly a risk of this happening. And to think that if we hadn't lowered the limit, he would have shipped back 12k .

You assume he would make all the same bets except at 4X the amount.  He would have likely made different bets and would have stopped himself before reaching 12k in a single day.

This was the assumption implicit in this statement; but considering that the max bet was ~75 before he was playing and up to this point he's been betting 50, 100, 200, 300; it's not the craziest assumption in the world. The only thing that might stop him from losing that much in a day is his balance on a particular account going to zero, but I watched him have a BTC6k swing yesterday before leaving up 500 so I'm not sure where the bottom of his roll is.

You're assuming he can stop.

[DumbFruit]

[Nixsy]

Maybe relevant.