Match Play Chips

In the 6/29/11 issue of Ask The Wizard, he states : If the casino allows you to use it on any bet, the proper strategy is to put it on a long-shot bet. This is because the cost of not getting the match play back after a win is a lot less on a long-shot bet than an even-money wager.

Could someone explain to me why this is so in a simple to understand way? I don't get it. James Grosjean wrote about this and it was fascinating (but I couldn't grasp it).

Since the coupon has no actual value, you can't lose the value of the coupon if you lose your bet.

If you get to play a chip until you lose, you want to do it on an as-even-money bet as you can find, so you have the best chance of it hitting more than once before it's lost.

If they're going to confiscate the match play or free chip whether you win, lose, or draw on a single bet, you want as long odds as you can get so that if it hits you get a multiple of its value. Since you got it for free, even if you lose 5 out of 6 times, and the 6th time you got a 5x or 6x pay (or even a 4x pay), it's better than those same 6 at even money, winning 1/2 of them for 3x. Most places won't let you put a free play or match play on an odds bet just because of this.

Does that help? Assuming I don't get overturned by a math guy, anyway?

Quote: Greasyjohn

In the 6/29/11 issue of Ask The Wizard, he states : If the casino allows you to use it on any bet, the proper strategy is to put it on a long-shot bet. This is because the cost of not getting the match play back after a win is a lot less on a long-shot bet than an even-money wager.

Could someone explain to me why this is so in a simple to understand way? I don't get it. James Grosjean wrote about this and it was fascinating (but I couldn't grasp it).

I wouldn't say that it's simple to understand. It's actually somewhat counter-intuitive. Let me try..

Suppose you have a normal bet (in cash). If you win, you get paid on your bet and you keep your original bet. If you lose, you lose your original bet.

With a match-play, or some types of promotional chips, if you win, you get paid but lose your match play coupon / promo chip. If you lose, you lose the coupon / chip.

So, the only difference between the coupon and cash is that with cash, if you win, you keep your original bet as well as the payoff. With the coupon, if you win, you lose the "original bet" (ie, the coupon).

In other words, the difference in value between, say a $10 coupon and $10 in cash is $10 when you win. They are worth the same when you lose. In order to maximize the value of the coupon, you want to minimize the difference between its value and the value of the cash. You can do this by minimizing the frequency at which you win the bet (since it's only worth less when you win).

So, if you can make a bet that has the same EV, but wins less often, the coupon will be worth more. A bet that has the same EV but wins less often is one that pays longer odds (ie, you are being properly compensated for losing less often).

Here is an example. Suppose I give you a $10 promotional chip. The rules on this chip state that if you bet it and win, you get paid as if it were a $10 bet, but you lose the chip. If you lose, you lose the chip. Now, suppose I offer you two fair (0 EV) bets. One is a coin-flip game which pays 1-1 when a head is flipped, and one is a dice-rolling game (one die) which pays 5-1 when a 6 is rolled.

Now, both of these bets have fair odds. If you bet the $10 promo chip on the coin flip, half the time you win and get $10, and half the time you lose and get nothing. Either way, you lose the chip after the one bet. Your EV is $10 / 2 = $5.

Say you bet it on the dice rolling game. One time in 6 you win $50, and the other 5 times you lose. You lose the promo chip no matter what. So your EV is $50 / 6 = $8.3333333....

Your EV on the dice rolling game is much higher, because you win much less frequently. For a fair bet, the EV of your chip is (1 - probability that you win) * $10, which is the same as (probability that you lose) * $10. In the coin-flipping game, that is 1/2 of $10; in the dice-rolling game, that is 5/6 of $10. If you could find a game that paid 99-1 where you won only 1% of the time, the value of the chip would be 99/100 of $10 = $9.90.

So, you want to use the chip on a bet that you lose as often as possible (so long as you are properly compensated for the your rare wins, by winning more)

Thanks, beachbumbabs,


When you say "If you get to play a chip until you lose, you want to do it on an as-even-money bet as you can find, so you have the best chance of it hitting more than once before it's lost." Does this mean that betting a one-way chip (play it till you lose it) would have better value on, say, betting 13-36 on roulette than a 50-50 wager?

Thanks, AxiomOfChoice,

It would be hard to bet it on roulette with a smile, considering how often it loses. It reminds me of the example: If you won one million dollars but you had to wager it on one hand of blackjack (3:2), and you get a snapper and the dealer's up card is an ace, would you take even-money? ( I would.) If I did the math correctly you'd make $40,800 more, in a single-deck game, on average, not taking even-money. But if I was worth ten million, maybe I wouldn't "insure."

Love your nickname, Greasyjohn

I used to love to go to the El Rancho Vegas and eat fried chicken.

Ah, I thought it was a play on Grosjean (flip the vowels)

Quote: Greasyjohn

Thanks, AxiomOfChoice,

It would be hard to bet it on roulette with a smile, considering how often it loses. It reminds me of the example: If you won one million dollars but you had to wager it on one hand of blackjack (3:2), and you get a snapper and the dealer's up card is an ace, would you take even-money? ( I would.) If I did the math correctly you'd make $40,800 more, in a single-deck game, on average, not taking even-money. But if I was worth ten million, maybe I wouldn't "insure."

I wouldn't cause even if you push you still get the million!

Quote: Greasyjohn

Thanks, AxiomOfChoice,

It would be hard to bet it on roulette with a smile, considering how often it loses. It reminds me of the example: If you won one million dollars but you had to wager it on one hand of blackjack (3:2), and you get a snapper and the dealer's up card is an ace, would you take even-money? ( I would.) If I did the math correctly you'd make $40,800 more, in a single-deck game, on average, not taking even-money. But if I was worth ten million, maybe I wouldn't "insure."

I wouldn't insure if my net worth was large enough that not insuring was the correct Kelly bet. Otherwise I would.

(Note that I am too lazy to calculate the exact amount that this is. But, basically, we agree)

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Quote: Ibeatyouraces

I wouldn't insure or take even money no matter the amount our my net worth unless the count or other situation dictated it.

That's a big mistake. Overbetting Kelly hurts in the long term; consistently betting more than 2x Kelly guarantees (ie, probability 1) that you will eventually go broke (even if you exclusively play +EV games!)

EV is only half of the equation. Variance is just as important!

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Quote: Ibeatyouraces

I wasn't using bankroll as a requirement. Regardless of the bet amount, I would not take even money in this situation. Worst case scenario, I push. That said, I am not foolish to over bet my BR. If I knew my first card was an ace, I'd make the proper bet, not bet everything.

But in this situation, you've won $1 million that you must bet on a blackjack hand. Once the you get dealt the blackjack and a dealer has an A showing, you can basically add 2 million to your bankroll.

Now you have to choose between not betting (taking even money) or betting 1 million to try to win 1/2 million. You should use Kelly and your entire bankroll (including the 2 million) to make this decision.

Essentially, not insuring IS overbetting your bankroll (unless you have the correct bankroll to not insure!)

This is an important concept, especially if you are doing things like being able to size bets knowing what the next card is. If you know that the next card is an ace and you put up a big chunk of your bankroll, you get dealt a blackjack, and the dealer is showing an ace, you DO NOT have the bankroll to not take even money (since you put out the correct Kelly amount when you knew that the ace is coming). You should insure here, regardless of the count. Even though the EV of this play is lower than not insuring, you will make more in the long run if you do (due to the proper Kelly betting)

It is similar to how you say that if you know your card is an ace, you don't put your whole bankroll out there. Putting your whole bankroll out there is higher EV, but in the long run you will not do as well. Same thing with not taking insurance in this instance -- higher EV, but worse long-term results.

Did I tell you about the time I knew my next card was a ten, pushed out my whole stack, got dealt a 20, and the dealer had a ten up blackjack?!?

You can bet your a$$ I would have taken even money if I got a blackjack and the dealer had an ace up!

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