Betting strategy question

[hopenotlate]

Hypothetical scenario:

You can bet on a single dye roll (choosing a number between 1-6), but if you win you get paid x12 of your stake (instead of x6).
So the Expected Value is positive (see example below), but you'd still have 83% chance of losing.

1 - will you take that bet?
2 - if so, what % of your available funds would you put at stake (i.e. funds you're willing to gamble and afford to lose)?

Again, this is a single, non-repetitive bet.

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Simulation for BTC1 bet:

EV = (83% x -BTC1) + (17% x BTC12) = +BTC1.21

I would definitely take that bet, and I doubt anyone with a bare minimum gambling knowledge wouldn't.
Regardiing the best size I would keep it the same size disregarding how much more I will be paid out, because It Is a single bet event.

[Viscore]

The computation is very attractive having a 17% chance to win 1200% is huge enough considering most dice offer 580% return for 17% chance.  Definitely I will take the bet.  I would allocate 10% or 1/10 of my bankroll to stake for every roll, this way I will have 10 tries to get a win and hope for that 10 tries can hit 1 for a profit.  

No one would really say no to this kind of bet. As long as the casino has provided positive feedbacks from previous players playing this kind of game, then I would also do the same and take the risk in betting. And the more bets I have to make, the more chances of winning. But no matter how it’s very tempting, I will also make sure that I will only bet the amount which I can afford to lose.

[pawel7777]

It’s definitely going to be a good decision to go with the bet since the results that you could get is better than the risk you are going to take so I think it boils down into the risk management on how much you are going to bet, but as long as you are ready to lose that kind of money, then it’s best to take it.

Agree, not taking advantage of positive EV is irrational. So it boils down to how to determine a reasonable stake for such bet.
Probably a good rule of thumb would be, for a bet with 17% chance of winning, to not risk more than 17% of available funds. But that's an oversimplified approach.

...
For me your calculations are wrong, because it's not the EV of a x12 payout, but the EV of a x13 one. When you play at a normal dice, hi-lo or coin toss game you say you're paid out x2 if you win, you don't say you are paid "x1", and EV is the sum of your excepted winnings minus the sum of your expected losses, then for me the EV of a x12 payout game is :

EV = (83% x -BTC1) + (17% x +BTC11) = +BTC1.04 because if you win you get +11BTC not +12.

...

Good spot. I've corrected the calculation in the OP. Thanks for pointing this out.

[pawel7777]

...
 No one would really say no to this kind of bet. As long as the casino has provided positive feedbacks from previous players playing this kind of game, then I would also do the same and take the risk in betting. And the more bets I have to make, the more chances of winning. But no matter how it’s very tempting, I will also make sure that I will only bet the amount which I can afford to lose.

Obviously don't expect to see any such offer in any casino, but real-life examples close to that scenario would be i.e. incorrectly determined odds in sports betting. I think we can find it most often in MMA betting when some underdogs are given way too little chance of winning (therefore better payout rates). So the question is, what's the best method to determine the stake if you spot such opportunity.

[uneng]

Why wouldn't anyone say no to this bet? It's still 83% chance of losing the money wagered and you can't bet more than once, as stated by OP.

I would say yes only in case I could bet multiple times with the same terms (x12 profit) mentioned on this thread, applying bankroll management strategy and martingale.

[BitcoinPanther]

I would allocate 10% or 1/10 of my bankroll to stake for every roll, this way I will have 10 tries to get a win and hope for that 10 tries can hit 1 for a profit.  

As in OP, you can only roll once. Still taking it?

Yeah sure anytime, we have been betting on a game that has far more risk  than the given one by the OP.  So I believe it won't hurt if we a bet on a higher probability to win the given reward(others got chance/2).  I know it is not a sure win but at least at the same risk as others that gives smaller reward, this one give x2 of the reward with the same level of risk.

Why wouldn't anyone say no to this bet? It's still 83% chance of losing the money wagered and you can't bet more than once, as stated by OP.

I would say yes only in case I could bet multiple times with the same terms (x12 profit) mentioned on this thread, applying bankroll management strategy and martingale.

It wouldn't matter to me whether it is repetitive or not as long as there is a chance of doubling the reward with the same risk, this one is worth a go.

[pawel7777]

Why wouldn't anyone say no to this bet? It's still 83% chance of losing the money wagered and you can't bet more than once, as stated by OP.

I would say yes only in case I could bet multiple times with the same terms (x12 profit) mentioned on this thread, applying bankroll management strategy and martingale.

If the payout was x1 million then I'm sure you'd bet at least $1 despite 83% chance of losing, right?
I'd say it would be a shame not to take advantage of the positive EV opportunity, it's just a matter of choosing the appropriate stake.

And even though, in this scenario, you can only roll once - making decisions based on cold, mathematical analysis rather than giving in to unreasonable risk aversion should make a positive impact on your wealth long-term (be it gambling or other aspects of life).

[Darker45]

It's funny how 'choosing 1 number out of 6' sounds a lot more tolerable than having '83% chance of losing,' when they're basically saying the same thing.

But I guess I would still take that bet, if only for that x12 payment should I win. I guess it is still worth taking especially considering that it is just a single bet. But I guess I would only risk around 5% of my available funds for this. If this were a repetitive bet, that percentage would even go down if I were to bet more than once.

[Silberman]

Hypothetical scenario:

You can bet on a single dye roll (choosing a number between 1-6), but if you win you get paid x12 of your stake (instead of x6).
So the Expected Value is positive (see example below), but you'd still have 83% chance of losing.

1 - will you take that bet?
2 - if so, what % of your available funds would you put at stake (i.e. funds you're willing to gamble and afford to lose)?

Again, this is a single, non-repetitive bet.

-----------------------

Simulation for BTC1 bet:

EV = (83% x -BTC1) + (17% x BTC11) = +BTC1.04

Edit: calculation corrected, credit to Saint-loup

The correct decision is to always take such bet, now there are many people out there that hate taking any kind of risk, but when you understand the math behind the bets that you are being offered you can tell very quickly which bets make sense and which do not, for example when it comes to investing do you buy bitcoin at 16k or not? And while the probabilities are not know in advance like in gambling games, it should be obvious that doing this is a good move, similar to the example you are putting forward here.

[ethereumhunter]

If the odds were higher to lose, I don't think I would have accepted the bet and decided to call it quits. It would not be good to continue, especially if the chances of losing are getting bigger. And I think we've had enough of previous defeats and it's time to stop gambling before a big loss occurs.

When playing gambling, I always provide funds that are maybe under 5% of all my money and will not exceed that limit. I try not to spend much money in one day but spread it over several days to save money on gambling.

[klidex]

Hypothetical scenario:

You can bet on a single dye roll (choosing a number between 1-6), but if you win you get paid x12 of your stake (instead of x6).
So the Expected Value is positive (see example below), but you'd still have 83% chance of losing.

1 - will you take that bet?
2 - if so, what % of your available funds would you put at stake (i.e. funds you're willing to gamble and afford to lose)?

Again, this is a single, non-repetitive bet.

-----------------------

Simulation for BTC1 bet:

EV = (83% x -BTC1) + (17% x BTC12) = +BTC1.21

I would definitely take that bet, and I doubt anyone with a bare minimum gambling knowledge wouldn't.
Regardiing the best size I would keep it the same size disregarding how much more I will be paid out, because It Is a single bet event.

All gambling fans will definitely accept all forms of betting even though they know that there is an 83% percentage of losing.
However, in fact all gambling bets do have a greater percentage of losing and only a small chance of winning, even if luck is on your side.
Even though a gambler has gambling knowledge, when they are playing or betting they experience a slight defeat, this knowledge is very rarely used. Because yes, there is only high emotion and greed, so it makes them forget and continue playing without thinking about defeat.

[tokeweed]

Hypothetical scenario:

You can bet on a single dye roll (choosing a number between 1-6), but if you win you get paid x12 of your stake (instead of x6).
So the Expected Value is positive (see example below), but you'd still have 83% chance of losing.

1 - will you take that bet?
2 - if so, what % of your available funds would you put at stake (i.e. funds you're willing to gamble and afford to lose)?

Again, this is a single, non-repetitive bet.

-----------------------

Simulation for BTC1 bet:

EV = (83% x -BTC1) + (17% x BTC11) = +BTC1.04

Edit: calculation corrected, credit to Saint-loup

I think by asking if somebody should take the bet in your hypothetical scenario, it misses the point of why we should take spots that are +EV.  It wouldn't really matter if you're just allowed to be in a +EV spot just once then nothing.  It's all about the long run and taking on enough of these spots to make some profit.

But if you're just asking for the sake of asking..?  Sure, why not, it's like a value bet for a mispriced underdog spot in sports betting.

[Yatsan]

Hypothetical scenario:

You can bet on a single dye roll (choosing a number between 1-6), but if you win you get paid x12 of your stake (instead of x6).
So the Expected Value is positive (see example below), but you'd still have 83% chance of losing.

1 - will you take that bet?
2 - if so, what % of your available funds would you put at stake (i.e. funds you're willing to gamble and afford to lose)?

Again, this is a single, non-repetitive bet.

-----------------------

Simulation for BTC1 bet:

EV = (83% x -BTC1) + (17% x BTC12) = +BTC1.21

I would definitely take that bet, and I doubt anyone with a bare minimum gambling knowledge wouldn't.
Regardiing the best size I would keep it the same size disregarding how much more I will be paid out, because It Is a single bet event.

All gambling fans will definitely accept all forms of betting even though they know that there is an 83% percentage of losing.
However, in fact all gambling bets do have a greater percentage of losing and only a small chance of winning, even if luck is on your side.
Even though a gambler has gambling knowledge, when they are playing or betting they experience a slight defeat, this knowledge is very rarely used. Because yes, there is only high emotion and greed, so it makes them forget and continue playing without thinking about defeat.

Bottom question I guess is concerned with the legitimacy. Ofcourse there will always be risk;small or big, in gambling. But getting an odd of winning more than 40% I guess is already big so what more with the given computation of OP. Most of the people here would be interested with such offer but if this won't be paying on casino's end, then this will just be a waste of time. If the offer is a bit unrealistic, think or doubt already. A gambling casino won't allow its players to win most of the because it will only yield to bankruptcy unless that casino to offer such thing qould find a way to generate profit inspite of giving such odd to the players.

[QueenVera]

Most times it's not about how much you're losing but rather how much one is expected to win and that's one thing that is fixed on most minds of gamblers.
Answering your first question, I think I will take the bet and I also do believe every gambler would also take the same bet regardless of the risk percentage involved.

And secondly the percentage of my capital to out inside will definitely depend on the available capital I have and one thing I try never to do as a gambler is putting all my gambling capital into just one game, so therefore for every game I go into, I use mostly 30 percentage of my available balance after a win.

[pawel7777]

...

I think by asking if somebody should take the bet in your hypothetical scenario, it misses the point of why we should take spots that are +EV.  It wouldn't really matter if you're just allowed to be in a +EV spot just once then nothing.  It's all about the long run and taking on enough of these spots to make some profit.

But if you're just asking for the sake of asking..?  Sure, why not, it's like a value bet for a mispriced underdog spot in sports betting.

Not sure if I understand you correctly. Of course it does matter (a lot) if you only have one opportunity of making a single +EV bet. If you could do it multiple times then it's a no brainer - absolutely everyone would take such chance.

But when there's no guarantee that similar opportunities will ever arise - that's a whole different story, after all, you are still more likely to lose than to win, so there's also a logic behind not taking that bet.

As mentioned in the posts above - I'd be definitely in favour of taking a bet, but not sure what would be the most sensible approach in determining the right stake for it (or for mispriced underdogs in sports bets).

[jackg]

I you knew if was legit and on a site you regularly visit, I doubt anyone would be saying no.
...

You'd be surprised. A lot of people (especially women) are unreasonably risk-averse.
In this case though - you're still most likely to lose money than win, so not taking such bet at all would be fairly reasonable IMO.

This might be a case where social and economic outset changes things a bit.

Generally, younger people can afford to take more risks as someone older than them will probably bail them out. Older people still take quite a lot of risks but their risk tolerance generally relates to how many responsibilities they have (someone with more possessions/family members will take less risks than someone without). This is true for where in from where most things seem quite affordable and disposable income is high, I assume this changes even within this country..

If it were me, I'd consider anything up to a third of what you could afford to lose
...

Fair enough, but is there any reason you would risk max. third of your funds (not more or less)?
What I'm trying to figure out is to see if there's any reasonable/mathematical approach to making such decision.

30% isn't too hard to get back with a decently managed stock investment (such as buying something diversified after it's fallen - such as indices or some companies).

Also 30% seems like an affordable loss to me to still be able to do something on the site afterwards (assuming that's why you made the initial deposit anyway). It opens up the opportunity to double your affordable losses and likely give you something you can spend on other things (a holiday, a day trip, a few trips to the theatre/other activities).

[pawel7777]

Just an update for those interested. I knew there must've been some formula for determining bet size and I wasn't wrong. The good old Kelly Criterion could be helpful here (something I completely forgot about) and the formula goes:

f = p-(q/b)

f - is the fraction of the current bankroll to wager.
p - is the probability of a win.
q - is the probability of a loss (q=1-p).
b - is the proportion of the bet gained with a win

So in this case:

f = 0.17 - (0.83/11) = 9.5% of the bankroll

That's much lower than I expected. And of course, applying Kelly Strategy is not a guarantee of making a profit, and the strategy is designed to do better than other strategies in the long run, so not necessarily the best way of determining a single, non-occurring bet.

[tokeweed]

...

I think by asking if somebody should take the bet in your hypothetical scenario, it misses the point of why we should take spots that are +EV.  It wouldn't really matter if you're just allowed to be in a +EV spot just once then nothing.  It's all about the long run and taking on enough of these spots to make some profit.

But if you're just asking for the sake of asking..?  Sure, why not, it's like a value bet for a mispriced underdog spot in sports betting.

Not sure if I understand you correctly. Of course it does matter (a lot) if you only have one opportunity of making a single +EV bet. If you could do it multiple times then it's a no brainer - absolutely everyone would take such chance.

But when there's no guarantee that similar opportunities will ever arise - that's a whole different story, after all, you are still more likely to lose than to win, so there's also a logic behind not taking that bet.

As mentioned in the posts above - I'd be definitely in favour of taking a bet, but not sure what would be the most sensible approach in determining the right stake for it (or for mispriced underdogs in sports bets).

What I'm trying to say is what would be the point of asking for such an exercise if you're just allowed to bet once then nothing?  It would be pointless talking about EV if you're just allowed to bet once.  

EV in gambling is the amount of money won a certain bet makes on average.  'On average' is a key phrase here as it means it isn't just making one bet.  It's about taking these +EV spots as much as possible and coming out ahead in the long run.  And it shouldn't be from a small sample size either, it should be from a large sample size to even things out and minimize variance from the equation.

It should be a repetitive bet over a large sample to achieve this...

EV = (83% x -BTC1) + (17% x BTC11) = +BTC1.04

[QueenVera]

Personally I will definitely take the bet because I know that betting is risk and the moment I'm out to bet, it's either a win or loss and watching my losses has always been one of my greatest strategy to not chasing my losses.
Most times, the only reason why people get so carried away in betting and later on seem to be addicted is the quest to recover all their losses at a time and that will lead to a greeedy approach and possible loss of funds and blowing of accounts.
Well, the percentage of my capital I would risk in the bet all depends on how much capital I would be having as at the time and one thing I'm certain of is that no matter how much my capital might seem, I will never bet of gamble with money I'm not willing to lose.
So Ir also depends on how much my mind approves of the game.

[348Judah]

For me to be placing a bet it is assumed that i have understand the full insights about the risk involved, the higher the risk the higher the winning regardless of how much you stake, but it will make more meaning if you can stake with a smaller amount with higher risk and winning, if the place you a double of your winning then they already have the calculations to be 90% sure of what they are giving as offer for you, but you ain't sure about yours, this makes it high risk but on a rare occasions some gamblers prove smart and win them after taking the risk.