Greasyjohn
Joined: Dec 8, 2013
• Posts: 2169
December 13th, 2013 at 8:52:00 AM permalink
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).
Joined: Jun 20, 2012
• Posts: 297
December 13th, 2013 at 9:15:05 AM permalink
Since the coupon has no actual value, you can't lose the value of the coupon if you lose your bet.
beachbumbabs
Joined: May 21, 2013
• Posts: 14232
December 13th, 2013 at 9:18:17 AM permalink
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?
If the House lost every hand, they wouldn't deal the game.
AxiomOfChoice
Joined: Sep 12, 2012
• Posts: 5761
December 13th, 2013 at 9:20:33 AM permalink
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)
Greasyjohn
Joined: Dec 8, 2013
• Posts: 2169
December 13th, 2013 at 12:06:54 PM permalink
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?
Greasyjohn
Joined: Dec 8, 2013
• Posts: 2169
December 13th, 2013 at 12:10:04 PM permalink
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."
wudged
Joined: Aug 7, 2013
• Posts: 998
December 13th, 2013 at 12:14:07 PM permalink
Greasyjohn
Joined: Dec 8, 2013
• Posts: 2169
December 13th, 2013 at 12:30:10 PM permalink
I used to love to go to the El Rancho Vegas and eat fried chicken.
wudged
Joined: Aug 7, 2013
• Posts: 998
December 13th, 2013 at 12:34:18 PM permalink
Ah, I thought it was a play on Grosjean (flip the vowels)
OzzyOsbourne
Joined: Jul 10, 2012
• Posts: 184
December 14th, 2013 at 11:21:33 AM permalink
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!
casino's money disappears the execs worry when the wizard is near He turns tears into joy Everyone's happy when the wizard walks by