How are gambling sites dealing with edge competition?

[Kluge]

Back in the early lending days, when we accepted deposits (d'oh!), we all had serious difficulty when Pirate hit the scene, which eventually collapsed every FRB scheme in the lending section. The issue largely stemmed from people offering far too high of deposit rates (without an established market, we didn't have very good ideas of default rate and just how bad Pirate's collapse was going to fuck us over, so we over-competed). In the informal lending cartel made up of the largest lenders (with the notable exceptions of OgNasty and Goat, mentioned only to be accurate), which was set up as a direct response to this even though we all (or almost all) ended up sending money to Pirate, we all came to a gentlemens' agreement to limit how much we'd pay out to depositors. The idea behind this was to ensure we didn't have to send funds we had lent to us by depositors go to Pirate or a similar scheme to be able to continue allowing deposits without losing our shirts (we all wanted to keep deposits, even though increasingly unprofitable and risky, because we have much more flexibility and opportunities open to us when we have 10kBTC in assets rather than 1000 -- this was early days, remember). We ended up having one major lender go rogue, and since the rates were absolutely nuts, many new lenders popped up with fantastic rates and were able to establish reputation quickly due to the volume they could take on from "guaranteed" ultra-high interest on loans (guaranteed until Pirate decided he was boned).

Anyway -- I was wondering if casino ops have come to a similar agreement and what the suggested response is to rogue casinos given customer loyalty and first-mover only gets you so far. It looks like there's a possibly-agreed-to house edge minimum of 1%, but there have certainly been some casino ops who push the boundaries and compete with each other, going down to ~.9%. How low will you "let" them go, or are you willing to have a dry spell of little volume to let them die by attrition? (though by nature, they aren't really at risk of that assuming very low overhead compared to volume*edge)

[PvP]

Back in the early lending days, when we accepted deposits (d'oh!), we all had serious difficulty when Pirate hit the scene, which eventually collapsed every FRB scheme in the lending section. The issue largely stemmed from people offering far too high of deposit rates (without an established market, we didn't have very good ideas of default rate and just how bad Pirate's collapse was going to fuck us over, so we over-competed). In the informal lending cartel made up of the largest lenders (with the notable exceptions of OgNasty and Goat, mentioned only to be accurate), which was set up as a direct response to this even though we all (or almost all) ended up sending money to Pirate, we all came to a gentlemens' agreement to limit how much we'd pay out to depositors. The idea behind this was to ensure we didn't have to send funds we had lent to us by depositors go to Pirate or a similar scheme to be able to continue allowing deposits without losing our shirts (we all wanted to keep deposits, even though increasingly unprofitable and risky, because we have much more flexibility and opportunities open to us when we have 10kBTC in assets rather than 1000 -- this was early days, remember). We ended up having one major lender go rogue, and since the rates were absolutely nuts, many new lenders popped up with fantastic rates and were able to establish reputation quickly due to the volume they could take on from "guaranteed" ultra-high interest on loans (guaranteed until Pirate decided he was boned).

Anyway -- I was wondering if casino ops have come to a similar agreement and what the suggested response is to rogue casinos given customer loyalty and first-mover only gets you so far. It looks like there's a possibly-agreed-to house edge minimum of 1%, but there have certainly been some casino ops who push the boundaries and compete with each other, going down to ~.9%. How low will you "let" them go, or are you willing to have a dry spell of little volume to let them die by attrition? (though by nature, they aren't really at risk of that assuming very low overhead compared to volume*edge)

so what do You suggest? all should stick to 1% and not less but more than 1% would be allowed

[Kluge]

so what do You suggest? all should stick to 1% and not less but more than 1% would be allowed

Not necessarily. If I knew much about their thinking or organization (if any) - enough to make any suggestion - I wouldn't be asking or having to compare it to something so unrelated. I'm just curious what established, reputable casinos intend to do if house edge continues to push lower. Most large operations don't seem terribly different outside aesthetic choices, maybe country of operation, and reputation. Fundamentally, at least most dice sites seem quite similar in the unique services and features which largely came out of "here" - like gambler investment in the bankroll, which I've never heard of outside bitcoin casinos - or the perpetual referral bonuses, crypto-verified fairness, and, of course, non-referral, wide-scale signature campaigns. I think BTC casino ops are clearly looking to their competition with a kind of non-edge arms race in mind -- an innovation race, maybe you could call it - but even when one innovates, the others are days or maybe a week behind in mimicking. -And I don't mean to single out dice sites, but they're the clear market leaders... in the other major sphere, you seem to have the more traditional online non-PvP casino stuff; video poker, slots, etc.

Outside some games in those "traditional" gambling sites, there aren't many non-pure casinos in bitcoin (AFAIK, and I don't know much, so go easy on me, please), and Dragon's Tale is the only one I know of which is in a completely different field than the most commonly-used services which doesn't even seem to care what others are doing because they've made their own bubble.

[skleven]

I belive you really do have to single out dice sites (or at least only1game sites) regarding house edge. With regular bitcoin casinos, there are other more important factors, like entertainment value. Also the best games and biggest jackpots. In short, more like the regular online casinos.

[galbros]

I have often wondered about this myself.  

Wasn't satoshidice like a 1.6% edge or something?  I think off block chain dice games seem to have clustered around 1% but I keep expecting to see .88% or .5% but I don't.  I see the new PD3 is at .91% due to its jackpot feature.

Part of the problem may be that well heeled gamblers have shown the ability to win at dice sites and then walk away.  Just Dice had some early big winners that depressed profit below the expected level and the new dicebitco.in was in the hole after one month though it has recently soared to a profit.  So maybe the fear of variance is enough to keep the dice sites close to 1%.

[dooglus]

Wasn't satoshidice like a 1.6% edge or something?

Why do people talk about it like it's dead? It's probably just pining for the fjords.

The edge at satoshidice is 1.9%.

I think evorhees once said that it wasn't possible to run a profitable site with a 1% edge, and so set the satoshidice edge to 2%, and dropped it to 1.9% in response to competition (from btcdice.com maybe?) offering a slightly lower edge. He said he had the resources to keep dropping the SD edge and kill any competition, but it didn't play out like that.

I think off block chain dice games seem to have clustered around 1% but I keep expecting to see .88% or .5% but I don't.  I see the new PD3 is at .91% due to its jackpot feature.

For the longest time there seemed to be an unspoken agreement that 1% was the edge for offchain dice sites. I was curious when PD dropped their edge to 0.91% whether it would lead to a price war, resulting in a race to the bottom but apparently nobody cares. Dice players don't seem to care whether they are getting a 0.91% or 1% edge. Volume at PrimeDice's recently launched "PD3" site, with exciting new features (levels, achievements, player-vs-player, a faucet) has been matched very closely by that at dicebitco.in (no new features, 1% edge, no faucet), so I guess giving up almost 10% of expected profit is a losing move by PD that won't last too long.

Another issue preventing any credible competition from appearing with a lower edge is the need for a bankroll. It seems to be accepted knowledge that in order to offer bets with a 1% edge you need to have about 200 times the maximum win in your bankroll. The smaller the edge, the bigger that multiplier. To offer a 0.5% edge, you need 400 times the maximum win per bet in your bankroll. When the established sites are offering around 20 BTC wins per roll that means you need a 8000 BTC bankroll to offer 0.5% edge bets, and that's a lot of money. If you're trying to crowd-fund such a bankroll you're going to have a hard time - who wants to invest in a site with a low edge when you can just as easily invest in one with a full 1% edge...

And so we're left with 1% sites for the most part. We see sites like 999dice with a 0.1% edge, but that's hard to take seriously. When challenged to prove that they are bankrolled to offer such bets they refuse, and so can't really be taken seriously.

[a1choi]

Anyway -- I was wondering if casino ops have come to a similar agreement and what the suggested response is to rogue casinos given customer loyalty and first-mover only gets you so far. It looks like there's a possibly-agreed-to house edge minimum of 1%, but there have certainly been some casino ops who push the boundaries and compete with each other, going down to ~.9%. How low will you "let" them go, or are you willing to have a dry spell of little volume to let them die by attrition? (though by nature, they aren't really at risk of that assuming very low overhead compared to volume*edge)

I'm fairly certain what you're seeing is an equilibrium of sorts where the market has decided that 1% is what works for operators and players alike.  Anything lower, and profits just aren't sustainable, and any higher and you're not competitive against the market.  I will venture forward that we might see this % go up in the future as smaller players die out and the big boys are left to compete against fuller casino-games sites which offer a higher house edge.

[Kluge]

And so we're left with 1% sites for the most part. We see sites like 999dice with a 0.1% edge, but that's hard to take seriously. When challenged to prove that they are bankrolled to offer such bets they refuse, and so can't really be taken seriously.

Fractional Reserve Bankrolling.

You just need a Casino Fed.

[Lamigo]

For the longest time there seemed to be an unspoken agreement that 1% was the edge for offchain dice sites. I was curious when PD dropped their edge to 0.91% whether it would lead to a price war, resulting in a race to the bottom but apparently nobody cares. Dice players don't seem to care whether they are getting a 0.91% or 1% edge. Volume at PrimeDice's recently launched "PD3" site, with exciting new features (levels, achievements, player-vs-player, a faucet) has been matched very closely by that at dicebitco.in (no new features, 1% edge, no faucet), so I guess giving up almost 10% of expected profit is a losing move by PD that won't last too long.

From my experience, a lot of gamblers that I know both online and offline don't really trust the math.
When we have several 1% dice sites, some people enjoy playing roulette which is essential just a higher edge dice game with more restriction (only a few win chances to choose from).

[dooglus]

From my experience, a lot of gamblers that I know both online and offline don't really trust the math.
When we have several 1% dice sites, some people enjoy playing roulette which is essential just a higher edge dice game with more restriction (only a few win chances to choose from).

We had quite a few people at Just-Dice asking when I would add roulette... I tried explaining that roulette was just dice with less choices of payout and a much bigger house edge, but they don't care.

When you have a roughly 50/50 chance of doubling your money or losing it all, you don't care if the chance is 49.5/50.5 or 47.3/52.7 - it's still pretty much 50/50.

And maybe it's all fate / lady luck / karma to the gambling mind anyway, so the probabilities themselves don't matter at all.

[Lamigo]

We had quite a few people at Just-Dice asking when I would add roulette... I tried explaining that roulette was just dice with less choices of payout and a much bigger house edge, but they don't care.

You should have just created a Just-roulette to earn more for yourself and your bankroll investors lol.

When you have a roughly 50/50 chance of doubling your money or losing it all, you don't care if the chance is 49.5/50.5 or 47.3/52.7 - it's still pretty much 50/50.

And maybe it's all fate / lady luck / karma to the gambling mind anyway, so the probabilities themselves don't matter at all.

I have seen some gamblers using martingale and hoping to double their bitcoin, without understanding the chance is a lot worse than 49.5%.

[dooglus]

I have seen some gamblers using martingale and hoping to double their bitcoin, without understanding the chance is a lot worse than 49.5%.

Good point. I regularly martingale even though I know it doesn't work.

[DiceBitcoin]

I have seen some gamblers using martingale and hoping to double their bitcoin, without understanding the chance is a lot worse than 49.5%.

Good point. I regularly martingale even though I know it doesn't work.

profit of +30 BTC says you wrong!:p It works, just not forever 

edit : on a side note, do you ever sleep?? lol

[dooglus]

edit : on a side note, do you ever sleep?? lol

Statistically, I appear to sleep from 3am to 8am:

[Kluge]

Sleep is for the weak.

[BeatMo]

edit : on a side note, do you ever sleep?? lol

Statistically, I appear to sleep from 3am to 8am:

https://i.imgur.com/MdClOBG.png

now i know what should i do to become Legendary

[a1choi]

I have seen some gamblers using martingale and hoping to double their bitcoin, without understanding the chance is a lot worse than 49.5%.

Good point. I regularly martingale even though I know it doesn't work.

it doesn't work, but it works more than flat betting!

[BitsBitsBits]

Wasn't satoshidice like a 1.6% edge or something?

Why do people talk about it like it's dead? It's probably just pining for the fjords.

The edge at satoshidice is 1.9%.

I think evorhees once said that it wasn't possible to run a profitable site with a 1% edge, and so set the satoshidice edge to 2%, and dropped it to 1.9% in response to competition (from btcdice.com maybe?) offering a slightly lower edge. He said he had the resources to keep dropping the SD edge and kill any competition, but it didn't play out like that.

I think off block chain dice games seem to have clustered around 1% but I keep expecting to see .88% or .5% but I don't.  I see the new PD3 is at .91% due to its jackpot feature.

For the longest time there seemed to be an unspoken agreement that 1% was the edge for offchain dice sites. I was curious when PD dropped their edge to 0.91% whether it would lead to a price war, resulting in a race to the bottom but apparently nobody cares. Dice players don't seem to care whether they are getting a 0.91% or 1% edge. Volume at PrimeDice's recently launched "PD3" site, with exciting new features (levels, achievements, player-vs-player, a faucet) has been matched very closely by that at dicebitco.in (no new features, 1% edge, no faucet), so I guess giving up almost 10% of expected profit is a losing move by PD that won't last too long.

Another issue preventing any credible competition from appearing with a lower edge is the need for a bankroll. It seems to be accepted knowledge that in order to offer bets with a 1% edge you need to have about 200 times the maximum win in your bankroll. The smaller the edge, the bigger that multiplier. To offer a 0.5% edge, you need 400 times the maximum win per bet in your bankroll. When the established sites are offering around 20 BTC wins per roll that means you need a 8000 BTC bankroll to offer 0.5% edge bets, and that's a lot of money. If you're trying to crowd-fund such a bankroll you're going to have a hard time - who wants to invest in a site with a low edge when you can just as easily invest in one with a full 1% edge...

And so we're left with 1% sites for the most part. We see sites like 999dice with a 0.1% edge, but that's hard to take seriously. When challenged to prove that they are bankrolled to offer such bets they refuse, and so can't really be taken seriously.

Your rank is on par with your posts. Thank you.