[discussion] on the commercial viability of dice style gambling sites

[monsterer]

Hi guys,

I was just running a few simulations on the commercial viability of running a satoshi's dice style bitcoin gambling site. I wanted to share my results about the viability of the various different betting odds.

Assuming:

* 2% house edge
* initial bankroll of 1000 BTC
* between a random bet size between 0.01% and X% of house bankroll for each bet

Here are the results of amount of bets taken in order to reach 100% return on investment (for the developer/investor, not the player). In each case the maximum bet amount was adjusted to keep the volatility of results similar.

240/256 odds, 93.75% chance of winning, payout 1.046x, 0.01% -> 1% house bankroll bet size: 7000 bets



200/256 odds, 78.13% chance of winning, payout 1.255x, 0.01% -> 0.5% house bankroll bet size 15,000 bets



128/256 odds, 50% chance of winning, payout 1.961x, 0.01% -> 0.1% house bankroll bet size 125,000 bets



64/256 odds, 25% chance of winning, payout 3.92x, 0.01% -> 0.075% house bankroll bet size 275,000 bets



As you can see, the maximum allowed bet size has to reduce fairly drastically to keep volatility in check, which sends the required number of bets sky-rocketing as odds of winning decrease. Strangely counter-intuitive results.

The question is, how can sites like justdice.com, satoshiroulette.com and satoshidice.com offer odds even less than 25% and stand any chance of making their money back (considing the number of required bets) with edges less than 2%?

Cheers, Paul.

[icedicedavid]

Over longer period of time it's all the same. We don't start a betting site to run it for 150,000 bets then call it a day. it's a long term project.

[monsterer]

Over longer period of time it's all the same. We don't start a betting site to run it for 150,000 bets then call it a day. it's a long term project.

It seems like sites could stand to make a lot more money in the early stages of existence by only offering the first few levels of bet (the higher winning percentages), since they are much more stable volatility wise and therefore can have higher max bet sizes leading to greater profitability.

The question is, do customers demand the riskier betting levels?

[icedicedavid]

Over longer period of time it's all the same. We don't start a betting site to run it for 150,000 bets then call it a day. it's a long term project.

It seems like sites could stand to make a lot more money in the early stages of existence by only offering the first few levels of bet (the higher winning percentages), since they are much more stable volatility wise and therefore can have higher max bet sizes leading to greater profitability.

The question is, do customers demand the riskier betting levels?

it's not about the site making money. It's about providing good entertainment and user experience. If the players are happy, the money will come.