Dooglus "AMA"

[Kluge]

Hold on, before you jump on me for asking something ridiculously idiotic...

I was specifically thinking of the tendency for people to continue gamble until they're no longer able, especially on sites where you have to pre-fund accounts (you need to deal with the bother and, with BTC, confirmation wait times of withdrawal and possibly a withdrawal fee). I don't know of any figures which'd be relevant, but I'd be surprised if a very simple coinflip site, where there's always a 49% chance of the player winning, did not actually haul a 5% averaged profit or more due to gambling fallacies (letting it ride, then believing you can recover a loss by betting more, eventually losing their entire roll with a bad series of gambles).

-So, then, why not offer a casino where the player has an edge per play (maybe even significant), but still has the cards stacked against them simply by gambling psychology? The only concern, then, is with bots, but perhaps you could just raise the stakes high enough where bot-users would be hesitant or maybe even demand some kind of flat fee to play the game. Alternately, perhaps you could have it where players need to "unlock" that "EV+" game, perhaps through a large number of losses/bets with EV- games in the casino.

[a1choi]

Hold on, before you jump on me for asking something ridiculously idiotic...

I was specifically thinking of the tendency for people to continue gamble until they're no longer able, especially on sites where you have to pre-fund accounts (you need to deal with the bother and, with BTC, confirmation wait times of withdrawal and possibly a withdrawal fee). I don't know of any figures which'd be relevant, but I'd be surprised if a very simple coinflip site, where there's always a 49% chance of the player winning, did not actually haul a 5% averaged profit or more due to gambling fallacies (letting it ride, then believing you can recover a loss by betting more, eventually losing their entire roll with a bad series of gambles).

-So, then, why not offer a casino where the player has an edge per play (maybe even significant), but still has the cards stacked against them simply by gambling psychology? The only concern, then, is with bots, but perhaps you could just raise the stakes high enough where bot-users would be hesitant or maybe even demand some kind of flat fee to play the game. Alternately, perhaps you could have it where players need to "unlock" that "EV+" game, perhaps through a large number of losses/bets with EV- games in the casino.

Kluge, you seem to be a senior member here, but you really do have to brush up on your math and fallacies yourself.  I'll respond to this assuming you're not trolling all of us here.  

The math dictates that with large enough sample size, results will tend to the odds of the game.  Thus if the game has a 1% house edge, the house's profits will tend to 1% of the total wagered volume.  This holds true as players bet more.

If players bet more, they will tend to lose more relative to their overall wagered volume.  This is why a bankroll of a certain value will certainly go to zero as you play more, and that most wise people advise you to leave the tables and never play again when you are up.  As you play more, your total wagered will increase, and your expected loss (1% of that growing number) will definitely outgrow your total balance.

The profit of the house (house edge) can NOT increase to 5% as people play more.  It can fluctuate to 5% because of variance, but it will always tend to 1% as more bets are wagered/hands played.

A casino will definitely go out of business offering a +EV game because as more play is generated, their profits will fall in line with the math.  Their bankroll will dwindle, on average, with every bet.

What you might be thinking about is their actual profit.  Their total winnings minus operational costs.  That profit margin is definitely going to be very high, and not related to the house odds (1%)

Edit:  to address your point about players that lose their entire bankroll, roll to ruin so to speak.  If you have a lot of players, some will win and some will lose.  there will be enough winners that cancel out the losers, and still average back to the 1% in the long run.

[dooglus]

I'd be surprised if a very simple coinflip site, where there's always a 49% chance of the player winning, did not actually haul a 5% averaged profit or more due to gambling fallacies

This itself is a fallacy.  It doesn't matter why people play, or what they're thinking.  In a game with a 2% edge the house will average 2% profit on turnover in the long run(*).  Even if every player played until they bust, that doesn't change anything.  Some would get to play though their deposit more than 50 times over before busting, and some less.  On average they'd play through 50 times and so lose 2% of their total wagered amount.

-So, then, why not offer a casino where the player has an edge per play (maybe even significant), but still has the cards stacked against them simply by gambling psychology?

Because that makes no sense at all.  In a game of no skill, psychology plays no part.  Actual returns approach expected returns over the long run.  Offer a +EV no-skill game and quickly go bust.

(*) I know, Just-Dice has a 1% edge but only 0.33% profit.  That's because "the long run" is longer than you think.

[a1choi]

Because that makes no sense at all.  In a game of no skill, psychology plays no part.  Actual returns approach expected returns over the long run.  Offer a +EV no-skill game and quickly go bust.

There must be some site in the existence of the internet that has tried to fight the math and done a +EV game.  haha.

actually, +EV games happen in land casinos.  Not intended of course, but usually due to some math error combined with game rules/dealer error (and perhaps some unscrupulousness on the players part).  There are a lot of APs (advantage players) who try to find these games and take advantage of them before the casinos find out.  This was how Phil Ivey won the amount away from the casinos playing baccarat.  Edge sorting.

[Kluge]

Thanks. I have to reconsider this. I was assuming people are more likely to let things ride until their bankroll's out, at which point they're unable to recover, even if it's EV+. The premise is that gamblers have already written off what they gamble, and should they be up, they'll continue gambling, but if they're down, they'll also continue gambling. Compared to the average user, the casino has an unlimited bank roll. They can wait out the user until luck turns against them for a while and wipes their relatively tiny bankroll out (assuming it eventually does, which is almost guaranteed, especially with high stakes where it takes far fewer bets to wipe the player out). JD doesn't do pre-funding (AFAIK), but that figure's enough to make me assume I'm wrong.

Someone have a simulator to help me fully realize I'm wrong? I dunno how to create the formula for doing this quickly. 1,000 users have a $1,000 bankroll and must make 1,000 $25 bets with a 51% chance of 2x return, 49% chance of 0x return. The casino has an unlimited bankroll. The casino only loses if someone cashes out their winnings, which in this simulator, requires someone to make 1,000 $25 bets without their bankroll ever hitting $0. They get to keep whatever's left at the end of that.

[dooglus]

Thanks. I have to reconsider this. I was assuming people are more likely to let things ride until their bankroll's out, at which point they're unable to recover, even if it's EV+.

The problem with this is that while most of your players will play until they lose, one of them will never go below zero.  He will win enough that he'll never run out of funds, and the positive edge you've given him will allow him to use basic bankroll management techniques to safely keep playing for bigger and bigger stakes until he breaks you.

This guy was playing on Just-Dice today, betting at 90% chance to win (generally a pretty bad idea) and winning.  Notice his profit at no point went negative.



Now imagine he was playing with a significant positive expectation...

JD doesn't do pre-funding (AFAIK), but that figure's enough to make me assume I'm wrong.

I don't know the term.  What's pre-funding?  And what figure?

[Kluge]

I don't know the term.  What's pre-funding?  And what figure?

Where you have to deposit something on the site to bet with. US land casino, you take $1,000 in and get chips. You can't use dollars, must use chips.

I updated my second post here. My stupid's getting in the way, here. I'll write up a script to help me out if there isn't one pre-made. I was thinking about what you ended up posting (thanks)... I'm just unsure if there's really no advantage to having an "unlimited" bankroll. The casino would definitely be screwed out of a lot if someone ended up themselves getting an "unlimited" bankroll from winnings, where they're relatively safe from going bust.

(eta: "figure" was just a reference to the % you posted on what JD "should" earn vs what it does)

[dooglus]

There must be some site in the existence of the internet that has tried to fight the math and done a +EV game.  haha.

actually, +EV games happen in land casinos.  Not intended of course, but usually due to some math error combined with game rules/dealer error (and perhaps some unscrupulousness on the players part).  There are a lot of APs (advantage players) who try to find these games and take advantage of them before the casinos find out.  This was how Phil Ivey won the amount away from the casinos playing baccarat.  Edge sorting.

I'm not sure Ivey admits to using edge sorting.  The story I heard suggests that the dealer was colluding with him, placing the high cards upside down in the deck for him.  That would probably be considered closer to "cheating" than "advantage play" wouldn't it?

Poker is the most obvious +EV game in land casinos.  You're playing against other customers with the casino taking a rake, so as long as you're a good enough players that you can beat your peers and beat the rake, you make a profit.

Blackjack is another obvious example if you can find a game where you can count cards.  I used to count cards at Bitcoin casino strikesapphire.com until they changed the penetration and banned me.  Made a few hundred dollars, withdrew into five dollar Bitcoins and hedl.

And a third example is sign-up bonuses.  If a casino offers you 2x your deposit as a sign-up bonus, it's often +EV if you play the right games.  They often make you play through the bonus 20 times or something, in the hope that that's enough to make you lose it, but unless the edge is 5%, your expectation is positive even after playing through it 20 times.  You need to do the math carefully, but it's possible to find +EV promotions.

Some places offer "no zero" roulette, where all bets pay out their actual fair odds.  You get 36x for a single number for example.  That's a zero house edge.  I've seen it suggested that it's +EV for the house because people play until they bust, but I don't believe it.  I think it's offered as a loss-leader to get new customers, and then withdrawn in the hope that they'll play "proper" 2.7% edge roulette.

[dooglus]

Where you have to deposit something on the site to bet with. US land casino, you take $1,000 in and get chips. You can't use dollars, must use chips.

You have to deposit to JD before you can play.  All bets are off-blockchain.  You play with your balance, and withdraw when you're done.  In a sense you don't play with Bitcoins, you play with JD-IOUs.  When you're done, you click 'withdraw' and hope that we send you real Bitcoins in exchange for your IOUs, in much the same way you hope the casino is going to give you dollars for the clay chips you won.  They might not, but they always have so far.

I'm just unsure if there's really no advantage to having an "unlimited" bankroll. The casino would definitely be screwed out of a lot if someone ended up themselves getting an "unlimited" bankroll from winnings, where they're relatively safe from going bust.

As far as the house is concerned, isn't everyone the same player?  All the site sees is an endless stream of bets which either win or lose.  In a sense that's indistinguishable from a single player with an unlimited bankroll.  If we can handle an endless stream of finite bankrolls, can't we also handle a single player with infinite funds?

For a week or so before JD launched, we ran the site in "testnet" mode.  People could deposit testnet coins and play with them.  I also made up "fractional reserve" testnet coins out of thin air and gave them away generously.  The site was full of whales with huge bankrolls.  They didn't manage to get anywhere close to bankrupting the site.  Not that that proves anything.  Nakowa came closer with a few real coins than the testers did with their millions of fake testnet coins.

(eta: "figure" was just a reference to the % you posted on what JD "should" earn vs what it does)

This is a chart showing the actual and (offset) expected profit since nakowa finished his insane run.  Notice how close the two lines run to each other:



There's an offset of some 36k BTC which nakowa "should" have lost but didn't.  We don't expect to ever make that back again.  The expectation is that we stay 36k below 1%, but that it becomes less and less significant over time.

By my estimation in about 100 years if we keep the same volume as this year and have average luck, the site profit will be around 0.99%.  

Edit: and what you should reply is: look at how the black line goes up twice as steeply as the green line since the start of March.  that shows the site has been keeping 2% of turnover when it should only keep 1%.  That's because players play until they bust.  I don't have an answer for that, except that the site has been consistently almost twice as lucky as expected since March.  Weird.

[littlebox]

yes, by being a game creator at CrowdDice.com you get a slight edge (EV+) over the game players.

[Light]

I don't have an answer for that, except that the site has been consistently almost twice as lucky as expected since March.  Weird.

Well the answer is the same answer as pretty much every single question about why people lost. It's just variance. People are foolish to think that variance occurs over a set period of days, it can occur for any period in the 'short term' which is any point in time that is non-infinite.

So far the responses in this thread have been pretty much spot on - no matter what psychology you're using to explain it, it should be irrelevant as your profit will trend towards your house edge eventually. Not to mention the idea of having 'pre-funded' accounts might not take into account people like myself who if actually given +EV would be more than happy to pound the casino in the long term for profits. If I've actually got an edge no reason you couldn't just abuse it via botting all day long and eventually approaching your 1%. Unlocking +EV after losing a certain amount is interesting, but once again unless you cap the +EV such that it ends after a certain period it's completely open to abuse.

[Kluge]

Edit: and what you should reply is: look at how the black line goes up twice as steeply as the green line since the start of March.  that shows the site has been keeping 2% of turnover when it should only keep 1%.  That's because players play until they bust.  I don't have an answer for that, except that the site has been consistently almost twice as lucky as expected since March.  Weird.

Dammit. I'll write a script next week, because now I have absolutely no idea if I'm being stupid or not. I've gotta write it out. What you say makes complete sense, though. Fucking statistics, HOW DO THEY WORK?! Thanks. I'll go lose some money, now. ETA: Yay, winrar.

[a1choi]

I'm not sure Ivey admits to using edge sorting.  The story I heard suggests that the dealer was colluding with him, placing the high cards upside down in the deck for him.  That would probably be considered closer to "cheating" than "advantage play" wouldn't it?

http://apheat.net/2013/05/11/phil-ivey-won-7-8-million-pounds-by-edge-sorting-baccarat/ From what i heard, the rules of the game were agreed upon before hand which included that his requests to the dealer to flip certain cards would be upheld.  The casino must have thought it was a superstitious ritual and not know that it could allow him to perceive small defects in the cards.  

Poker is the most obvious +EV game in land casinos.  You're playing against other customers with the casino taking a rake, so as long as you're a good enough players that you can beat your peers and beat the rake, you make a profit.

yes agree!  but this game has an element of skill which affects EV.

Blackjack is another obvious example if you can find a game where you can count cards.  I used to count cards at Bitcoin casino strikesapphire.com until they changed the penetration and banned me.  Made a few hundred dollars, withdrew into five dollar Bitcoins and hedl.

also agree!  counting on online gambling sites is just too easy as well.  You could set up a bot to give you the exact count and EV and perfect bet amount based on kelly.  i'm not surprised they quickly changed their game after that and banned your IP.  you're too smart for them!

And a third example is sign-up bonuses.  If a casino offers you 2x your deposit as a sign-up bonus, it's often +EV if you play the right games.  They often make you play through the bonus 20 times or something, in the hope that that's enough to make you lose it, but unless the edge is 5%, your expectation is positive even after playing through it 20 times.  You need to do the math carefully, but it's possible to find +EV promotions.

Some places offer "no zero" roulette, where all bets pay out their actual fair odds.  You get 36x for a single number for example.  That's a zero house edge.  I've seen it suggested that it's +EV for the house because people play until they bust, but I don't believe it.  I think it's offered as a loss-leader to get new customers, and then withdrawn in the hope that they'll play "proper" 2.7% edge roulette.

definitely have seen +EV signup bonuses, sometimes used as loss leaders or just management ignorant of the math behind the scenes.  I always feel great when i can find a good deal.  even if its just for a hundred or so dollars.  haha!

and I don't believe 0% roulette could ever be +EV for the house, at least not from the winnings directly from that game.  I'd hesitate to offer that the variance of the game would wreak more havoc than the winnings would provide comfort.  But overall, as long as its doing its job as loss leader, and bringing players to play other games, it might be worth it.  Just keep the limits lower on that 0% table.  I remember reading some scientific paper that if the bankroll of the player is bigger than the house, the player will bankrupt the house playing 0% odds.  i'll try to search for that paper.

[a1choi]

I remember reading some scientific paper that if the bankroll of the player is bigger than the house, the player will bankrupt the house playing 0% odds.  i'll try to search for that paper.

I'm thinking about this paper which doesnt corroborate with what i said earlier..  http://www.library.unlv.edu/center-gaming-research/2008/09/article-impact-finite-bankroll-even-money-game.html.

but still i think the math stands up that if the player has a larger bankroll than the house, player has a larger chance to bankrupt the house than the house has to bankrupt the player on a 0% game

and this is where i calculated the ruin %..  if you input the odds of the house win as 0.505 and loss at 0.495, at 100x bankroll compared to max bet, the chance of ruin is 14%...  which is really high.  i wonder how they came up with that formula.
http://www.urbino.net/digital-books.cfm?dID=13&p=3&sID=87  bottom of the page.

[dooglus]

but still i think the math stands up that if the player has a larger bankroll than the house, player has a larger chance to bankrupt the house than the house has to bankrupt the player on a 0% game

It seems kind of obvious that in a 0% edge game whoever has the biggest bankroll has the smaller chance of going bust...  Not to say that everything is intuitive with probability stuff, but in this case I think it makes sense.

and this is where i calculated the ruin %..  if you input the odds of the house win as 0.505 and loss at 0.495, at 100x bankroll compared to max bet, the chance of ruin is 14%...  which is really high.  i wonder how they came up with that formula.

Pretty sure they're assuming the max bet is a constant.  Casinos generally don't reduce the max bet as players win...

When the bankroll is crowd-sourced and changes dramatically over time like it does at JD it makes sense to set the maximums dynamically so they change with the bankroll.  That has a side-effect of vastly reducing the risk of ruin.

[a1choi]

Pretty sure they're assuming the max bet is a constant.  Casinos generally don't reduce the max bet as players win...

When the bankroll is crowd-sourced and changes dramatically over time like it does at JD it makes sense to set the maximums dynamically so they change with the bankroll.  That has a side-effect of vastly reducing the risk of ruin.

makes lots of sense.  i guess the best way to calculate risk of ruin is to go through a bernoulli process then.  Assuming a reasonal bankruptcy point > 0.  maybe 30-40% of original bankroll.  since going to 0 would be infinite time.

[dooglus]

makes lots of sense.  i guess the best way to calculate risk of ruin is to go through a bernoulli process then.  Assuming a reasonal bankruptcy point > 0.  maybe 30-40% of original bankroll.  since going to 0 would be infinite time.

Maybe consider the risk of losing half the bankroll - a kind of a 'half life' thing.

Also, what if someone came with enough coins to bet the maximum at 98% over and over.  Each time they have a very good chance of winning 0.5% of the house bankroll.

If they win 138 times in a row, they've won half the bankroll, and they can do so with 6% chance:

>>> 0.995 ** 138 = 0.5007
>>> 0.98 ** 138 = 0.06154

If the max profit per roll was a full 1% of the bankroll, they only need to win 69 times in a row, and they can do so with 25% chance:

>>> 0.99 ** 69 = 0.4998
>>> 0.98 ** 69 = 0.24808

So by cutting the max profit from 1% to 0.5% we've made it ~4 times harder to win half the bankroll by max-betting at 98%.

[a1choi]

So by cutting the max profit from 1% to 0.5% we've made it ~4 times harder to win half the bankroll by max-betting at 98%.

i remember halving the kelly lead to quartering the risk.  something to do with a squared of the denominator thing...

[jambola2]

This guy was playing on Just-Dice today, betting at 90% chance to win (generally a pretty bad idea) and winning.  Notice his profit at no point went negative.

What does generally a pretty bad idea mean ? As far as I can understand , the house edge should be equal at all levels and that would just be a lot less fun (as you have no chance of winning something substantial) , with the same amount of risk.

Is my understanding wrong ?

[a1choi]

This guy was playing on Just-Dice today, betting at 90% chance to win (generally a pretty bad idea) and winning.  Notice his profit at no point went negative.

What does generally a pretty bad idea mean ? As far as I can understand , the house edge should be equal at all levels and that would just be a lot less fun (as you have no chance of winning something substantial) , with the same amount of risk.

Is my understanding wrong ?

its probably just the risk of gambling so much to win so little.  I dont think Doog means that only 90% is a bad idea.  maybe he has a range of 85-95% thats bad in his mind..  or perhaps 90% up to 98.99% is a bad range..  dunno.  i think its subjective.