Just-Dice.com : Invest in 1% House Edge Dice Game

[Jls.]

FWIW I'm with dooglus and mechs on this.  As regards disclosure, I in the top ten investors at the moment.

I invested in just-dice for a long term stable investment - based on e.g. 5000 BTC wagered a day, 50 profit a day.  For me, I would rather have a load of smaller bets slowly meeting the 1% expected profit rather than a load of variance.  In my ideal investor world, the max bet would be tiny and thus the variance would be tiny and we would rely on bet volume, however the max bet is certainly a huge attraction to some gamblers, so we want it high enough to attract people to the site, but low enough to still maintain a constant stable profit over time.

High max bet means that investing is more like gambling - if I wanted to be watching nakowa bet 300 or 400 a pop, I would just be betting 10 BTC on 50/50 myself, but I don't want to do that - I recommend that those people that do prefer that 'investment strategy' go ahead and play instead of invest.

For those saying to simply 'reduce your investment if you don't like the risk' - that isn't the answer either - if I've invested a certain amount of BTC on just-dice then I am expecting to make a certain amount per day on average and that amount is directly proportional to the amount I've invested - reducing my investment reduces my profit but keeps my risk exactly the same.

So for me the question is, how many of the bets are actually > 80BTC - I would guess that the percentage is pretty small, it's probably a very small number of gamblers who exceed this limit, and without those people (pick a set of days over the past month or so when nakowa wasn't online), we're looking at maybe around 5000 BTC a day average bet - this still gives around a 35% annual return.  I'm personally very happy with this.  If I wanted to go high variance I would gamble!

So, the balance has to be struck here in making the max bet small enough that we don't scare gamblers away.  For me, 0.25% is pretty good given the amount of investment, so I back mechs and dooglus in the recent change.

According to you casino == long term, stable investment ?
Long term and secure yes, but stable ?

Variance may be annoying as an investor, but everyone must realise that those btc you loose go into the gambler pocket, they don't vanish in the air.
Gamblers wouldn't gamble without variance, and no casino would work without gamblers.

What is bugging me with your position will is that while it makes much sense given your position as a top investor, it doesn't make sense from a Casino Business model pov.

From JD perspective, the ultimate goal is to gain wagered volume, whatever it comes from small or big bets.
You're right when you assume the # of bets > 80 btc is very low, but guess what : a big chunk of wagered come from them.

Sadly whales usually know that splitting bets to circumvent a low max is dumb because the house edge stack.

On the other hand, your other option (wagered base) is interesting.

[Deprived]

Another Option

On another option that hasn't been explored much, perhaps we should have an option where investors can choose to be based on amount wagered instead of amount won - at say a substantial reduced amount - example would be at 40% house 'risk cut'.

This is best explained with an example e.g. for an investor owning 1% of the house invested with current house edge of 1% - 5000 BTC gambled a day that's 50 profit or 0.5 BTC a day with pure winnings (as JD is now).  With pure-wagered the penalty would be, say, 40% cut so it would be 5000 BTC a day, 50 expected profit, 1% own of the house but 40% cut so 0.6 / 100 * 50 = only  0.3 but that value is guaranteed.

To make it more elaborate, make it so there is a sliding scale of 0 to 100 on how much risk you want to take.  If you chose to go 'winnings based' (this is how JD is now) then you take the risk of win and loss as people win and lose.  If you choose to go 'wagered based' then you take the risk of not profiting as much when people win, but a lower but more stable income.  To make the math work, the excess profit from those people who are on 'wagered based' when the house is up goes into a pot, and that pot is used to pay these people out when the house loses.  I will have to think about the math a bit more to make certain it all adds up.

Keen observers will notice that 'wagered based' is very much like the model for letsdice.com - but with a lower (1%) house edge.

Will

So if everyone chooses 0% risk and the house loses who covers the losses?  For such a system to work requires that for anyone taking under 100% risk there is someone taking over 100% risk - that can't be achieved by allowing people to move their own risk around as they see fit : it needs someone committed to covering all losses.  And if someone's doing that then they don't need investors at all.

The letsdice model is "grab as much cash as we can, make some promises and hope we can then deliver on them - whilst not actually having any customer base to warrant the investment and with zero liquidity so investors can back out once they realise that".

[jgarzik]

I invested in just-dice for a long term stable investment - based on e.g. 5000 BTC wagered a day, 50 profit a day.  For me, I would rather have a load of smaller bets slowly meeting the 1% expected profit rather than a load of variance.

A startup casino running on a startup currency does not match with realistic expectations of a long term stable investment.

[geofflosophy]

This was said before, but it'd actually be easy to build this max bet system mathematically, and only a little more difficult UI-wise, but not significantly more difficult than the current UI. The biggest UI challenge would be the expression of the size of the house bankroll, as it would have to be tiered, which would be ugly.

If we move to this model, I would eventually like to see a two basket approach like Betterment, where you can invest a proportion of your investment at a lower level and a smaller proportion of your investment at a (much) higher level. More coding, but still not much more work. The site already has two "baskets;" a gambling wallet and an investment. This would be just breaking the investment number up one more time.

[RationalSpeculator]

For those saying to simply 'reduce your investment if you don't like the risk' - that isn't the answer either - if I've invested a certain amount of BTC on just-dice then I am expecting to make a certain amount per day on average and that amount is directly proportional to the amount I've invested -  reducing my investment reduces my profit but keeps my risk exactly the same.

Does not compute. Please explain why your risk stays the same when reducing your investment.

Risk of loss of a certain percentage of my investment in JD.  Not risk of loss of my total amount of bitcoin asset including that not invested.  I suppose it's dependent on your definition of risk.

Will

Sure, you invest a lot of coins, or few coins, you always risked losing -80% of your investment with 1% max bet.

But equally, you invest a lot of coins, or few coins, you always had an expected return of 200% per year with 1% max bet.

So, saying that reducing your investment reduces your profit but does not reduce your risk is illogical. Can you see that?


And inversely, lowering the risk, like just happened by lowering max bet, also lowers the returns on your capital. Do you agree and accept this?

Will you stay invested in JD if a competitor does offer 1% max bet again, attracts the whales and offers much higher potential profit than JD, but with higher variance?

[maqifrnswa]

This was said before, but it'd actually be easy to build this max bet system mathematically, and only a little more difficult UI-wise, but not significantly more difficult than the current UI. The biggest UI challenge would be the expression of the size of the house bankroll, as it would have to be tiered, which would be ugly.

If we move to this model, I would eventually like to see a two basket approach like Betterment, where you can invest a proportion of your investment at a lower level and a smaller proportion of your investment at a (much) higher level. More coding, but still not much more work. The site already has two "baskets;" a gambling wallet and an investment. This would be just breaking the investment number up one more time.

why does it have to be tiered? the proposal I laid out (and the one I thought we were discussing) works exactly the way the current site works with no change to UI (except a field for investors to input their maximum risk per bet) and is not tiered - you can choose whatever risk level you want and it just works.

[w33mhz]

I think that if there was a dynamic delay should be put in place after winning bets.  The delay would be increased as it approaches the max profit, but have the standard delay after a losing bet.  This would keep the site from going into a negative state in a short amount of time like what happens.  The sites growth is designed to increase at a rather low rate so when a whale comes in and makes a large number of large bets in a short amount of time and then pulls out when they are ahead it takes the site a very long time to recoup from that.  If there was a delay put in place after large winning bets it would decrease the amount of those bets that would be placed.  

I still think this is a good idea.....

[willphase]

And inversely, lowering the risk, like just happened by lowering max bet, also lowers the returns on your capital. Can you see that?

yes I see this.  I stand corrected on my previous statement.

According to you casino == long term, stable investment ?
Long term and secure yes, but stable ?

Variance may be annoying as an investor, but everyone must realise that those btc you loose go into the gambler pocket, they don't vanish in the air.
Gamblers wouldn't gamble without variance, and no casino would work without gamblers.

What is bugging me with your position will is that while it makes much sense given your position as a top investor, it doesn't make sense from a Casino Business model pov.

From JD perspective, the ultimate goal is to gain wagered volume, whatever it comes from small or big bets.
You're right when you assume the # of bets > 80 btc is very low, but guess what : a big chunk of wagered come from them.

I don't have the data, dooglus has, but I would be very interested in the daily wagered amount if we took out all bets over 80BTC.  I would guess it would match those days that nakowa or some of the other high rollers aren't betting - so that's maybe around 5k a day?

To me - 5k a day which works out as around 35% annual return is fine for me.  I don't want more than that and a corresponding higher variance.

So if everyone chooses 0% risk and the house loses who covers the losses?

Yes, but statistically over time the house profit should tend towards the house edge i.e. 1% - so the house covers this - it pushes more risk to the house and less to those investors who choose the 'amount wagered' payouts, and to compensate the house takes a higher cut.  Those who chose to do the 'amount wagered' investment are effectively just operating on a lower house edge (less profit) as a penalty for lower risk.

Think of it as PPS vs PPLNS - in one the mining pool takes more cut but the variance is lower.

Will

[Jls.]

I think that if there was a dynamic delay should be put in place after winning bets.  The delay would be increased as it approaches the max profit, but have the standard delay after a losing bet.  This would keep the site from going into a negative state in a short amount of time like what happens.  The sites growth is designed to increase at a rather low rate so when a whale comes in and makes a large number of large bets in a short amount of time and then pulls out when they are ahead it takes the site a very long time to recoup from that.  If there was a delay put in place after large winning bets it would decrease the amount of those bets that would be placed.  

I still think this is a good idea.....

JD : a place where you can lose fast, but win slow !!

I'm not so sure about the effect it would have on the fun factor.

I often see people in the chat complaining /stop playing (and leave ?) because of lag or delay for dust bets.
Do we really want high rollers to also complain ?

Gambling is an irrational activity based on emotions & rushs of adrenaline. I believe those instant winning strikes are important for players to stand loosing strikes, and keep hope of recovering.


Edit: typo

[Rampion]

JD : a place where you can loose fast, but win slow !!

We just lost very fast due to variance, and if we do not see again Nakowa's volume it will take a while to cover those losses.

[geofflosophy]

This was said before, but it'd actually be easy to build this max bet system mathematically, and only a little more difficult UI-wise, but not significantly more difficult than the current UI. The biggest UI challenge would be the expression of the size of the house bankroll, as it would have to be tiered, which would be ugly.

If we move to this model, I would eventually like to see a two basket approach like Betterment, where you can invest a proportion of your investment at a lower level and a smaller proportion of your investment at a (much) higher level. More coding, but still not much more work. The site already has two "baskets;" a gambling wallet and an investment. This would be just breaking the investment number up one more time.

why does it have to be tiered? the proposal I laid out (and the one I thought we were discussing) works exactly the way the current site works with no change to UI (except a field for investors to input their maximum risk per bet) and is not tiered - you can choose whatever risk level you want and it just works.

To use a very simple example:
Investor A has 10 BTC, sets risk at 0.25%
Investor B has 10 BTC, sets risk at 1%
Investor C has 10 BTC, sets risk at 2%

House roll:
30 <= 0.25%
20 >0.25% and <= 1%
10 >1% <= 2%

House roll for all bets <0.25% is 30, making the max bet 0.075
For bets between 0.25% and 1%, the house roll is 30 for the first 0.075, and then 20 for the rest: so the max bet is 0.225.
For bets > 1%, the roll is 30 for the first 0.25%, 20 for the next 0.75%, and 10 for the final 1%: total of 0.325

So a better comes in and loses a 0.075 bet:
Investor A gets 0.025
Investor B gets 0.025
Investor C gets 0.025

On the other hand, a better comes in and loses a 0.325 bet:
Investor A gets 0.025
Investor B gets 0.1
Investor C gets 0.2

Edit - added 0.25% bet case.

[RationalSpeculator]

To me - 5k a day which works out as around 35% annual return is fine for me.  I don't want more than that and a corresponding higher variance.

Fair enough. I admire your clarity.  


Personally I think 35% annual return is not worth the risk.

Counterparty risk and legal risks are relatively high when investing in a gambling website.

Owning bitcoins outright seems a much better risk/reward proposition to me.

Unless you can get more than 100% extra return annually.



The same is true for dooglus by the way.

I think the golden eggs are no more. This may lead to him killing the goose considering all the high risks he takes.

The future will tell.

[w33mhz]

I am not saying you win 20 btc and you have to wait 5 mins before you could bet again I am thinking is smaller waits.  I am saying maybe the max would be close to a minute or 2, but I am going with the max bet being a lot higher then the 75-80BTC that we are currently at now.  I am just thinking about giving  people some time to react to a big swing happening.  Its not fair to investors if the big whale is betting quicker than an investor can react to.  The length of time of the risk seems to me a bit longer for the investor than the better.

[MSwiza2]

I am not saying you win 20 btc and you have to wait 5 mins before you could bet again I am thinking is smaller waits.  I am saying maybe the max would be close to a minute or 2, but I am going with the max bet being a lot higher then the 75-80BTC that we are currently at now.  I am just thinking about giving  people some time to react to a big swing happening.  Its not fair to investors if the big whale is betting quicker than an investor can react to.  The length of time of the risk seems to me a bit longer for the investor than the better.

Why should the investor have an edge over the better? Isn't an investor a better himself?

[Jls.]

I am not saying you win 20 btc and you have to wait 5 mins before you could bet again I am thinking is smaller waits.  I am saying maybe the max would be close to a minute or 2, but I am going with the max bet being a lot higher then the 75-80BTC that we are currently at now.  I am just thinking about giving  people some time to react to a big swing happening.  Its not fair to investors if the big whale is betting quicker than an investor can react to.  The length of time of the risk seems to me a bit longer for the investor than the better.

- Since the maxbet is a % of invested, your loss @ maxbet == +infinity is the same as @ current level.
- 1 or 2 seconds are big enough to bother, trust me.
- Investors are passive, gamblers active, it couldn't be otherwise.
- If you divest when -, then gambling investment is not for you (imo) and / or you invested too much.

[willphase]

To me - 5k a day which works out as around 35% annual return is fine for me.  I don't want more than that and a corresponding higher variance.

Fair enough. I admire your clarity.  


Personally I find 35% annual return not worth the risk.

Counterparty risk and legal risks are relatively high when investing in a gambling website.

Owning bitcoins outright seems a much better risk/reward proposition to me.

the thing about a bitcoin gambling site investment is that you get the best of both, you get to keep your assets in BTC meaning you get any gains in BTC/USD, as well as any BTC gains.  But I see your point about the risks.

Perhaps the best option is the tiered investment proposal, but I worry about the complexity of the code and the corresponding chances for it to go wrong, or end up with very opaque profit calculations (right now, it's easy)

Will

[maqifrnswa]

To use a very simple example:
Investor A has 10 BTC, sets risk at 0.25%
Investor B has 10 BTC, sets risk at 1%
Investor C has 10 BTC, sets risk at 2%

House roll:
30 <= 0.25%
20 >0.25% and <= 1%
10 >1% <= 2%

House roll for all bets <0.25% is 30, making the max bet 0.075
For bets between 0.25% and 1%, the house roll is 30 for the first 0.075, and then 20 for the rest: so the max bet is 0.225.
For bets > 1%, the roll is 30 for the first 0.25%, 20 for the next 0.75%, and 10 for the final 1%: total of 0.325

So a better comes in and loses a 0.075 bet:
Investor A gets 0.025
Investor B gets 0.025
Investor C gets 0.025

On the other hand, a better comes in and loses a 0.325 bet:
Investor A gets 0.025
Investor B gets 0.1
Investor C gets 0.2

Edit - added 0.25% bet case.

this can be done without tiers, the only change to the ui is a "max % loss per single bet" field. the example you presented fits this model:
https://bitcointalk.org/index.php?topic=242962.msg3234742#msg3234742

[Kupsi]

How many decimal places is used in the database for "invested" and "profit" ?

If it's 8 decimal places, is 0.00000021643 in profit on a bet rounded up to 0.00000022 or down to 0.00000021?

[cowbay]

- Investors are passive, gamblers active, it couldn't be otherwise.

Unless if the investor is "daytrading nakowa(tm)", which has proven to be a profitable strategy with his streaky play.

[geofflosophy]

To use a very simple example:
Investor A has 10 BTC, sets risk at 0.25%
Investor B has 10 BTC, sets risk at 1%
Investor C has 10 BTC, sets risk at 2%

House roll:
30 <= 0.25%
20 >0.25% and <= 1%
10 >1% <= 2%

House roll for all bets <0.25% is 30, making the max bet 0.075
For bets between 0.25% and 1%, the house roll is 30 for the first 0.075, and then 20 for the rest: so the max bet is 0.225.
For bets > 1%, the roll is 30 for the first 0.25%, 20 for the next 0.75%, and 10 for the final 1%: total of 0.325

So a better comes in and loses a 0.075 bet:
Investor A gets 0.025
Investor B gets 0.025
Investor C gets 0.025

On the other hand, a better comes in and loses a 0.325 bet:
Investor A gets 0.025
Investor B gets 0.1
Investor C gets 0.2

Edit - added 0.25% bet case.

this can be done without tiers, the only change to the ui is a "max % loss per single bet" field. the example you presented fits this model:
https://bitcointalk.org/index.php?topic=242962.msg3234742#msg3234742

The max profit field already represents that value, it's the "Invested" field that doesn't make sense without showing the different levels of investment.