Maximum Acceptable Loss Question

I put this question in the BJ Forum even though it is not specifically about BJ because professional BJ players are very knowledgeable about money management issues.
Let's say you received a promotion for one bet at a roulette table in which the casino, in order to entice you will return one half of your bet if you lose. I'm pretty sure that some casinos occasionally offer this promotion.
This would have to mean that for that one bet, the bettor would have a huge edge although I have not calculated how great the edge for the player would be.
Let's say that the bet can only be placed on the even money bets; black/red; odd/even, or high/low.
Let's say that you are allowed to bet anywhere in between or at table limits of $10 to $50,000. (I know these table limits are not realistic)
Let's say that you are a professional BJ player with a relatively small BR of 50k; and that you have a relatively small net worth of 150K.

So the question is: How much would you bet and how would you make that decision? Would you use Kelly? Or would you use your personal feelings about an acceptable maximum loss? Or what other ways would you use to make your decision?


Here is a cut and paste from Mission about your edge in this situation. I his example the bet was 10K. :

This is what happens when you play one spin of Double-00 with a 50% Rebate if you lose:
350000 * 1/38 = 9210.526315789473
See, but if your plan is to play one spin and stop, you can only lose $5,000.
-5000 * 37/38 = 4868.421052631579
Expected Value: 9210.526315789473 - 4868.421052631579 = 4342.105263157894 or 43.42105263157894% PE

Quote: lilredrooster

I put this question in the BJ Forum even though it is not specifically about BJ because professional BJ players are very knowledgeable about money management issues.
Let's say you received a promotion for one bet at a roulette table in which the casino, in order to entice you will return one half of your bet if you lose. I'm pretty sure that some casinos occasionally offer this promotion.
This would have to mean that for that one bet, the bettor would have a huge edge although I have not calculated how great the edge for the player would be.
Let's say that the bet can only be placed on the even money bets; black/red; odd/even, or high/low.
Let's say that you are allowed to bet anywhere in between or at table limits of $10 to $50,000. (I know these table limits are not realistic)
Let's say that you are a professional BJ player with a relatively small BR of 50k; and that you have a relatively small net worth of 150K.

So the question is: How much would you bet and how would you make that decision? Would you use Kelly? Or would you use your personal feelings about an acceptable maximum loss? Or what other ways would you use to make your decision?


Here is a cut and paste from Mission about your edge in this situation. I his example the bet was 10K. :

This is what happens when you play one spin of Double-00 with a 50% Rebate if you lose:
350000 * 1/38 = 9210.526315789473
See, but if your plan is to play one spin and stop, you can only lose $5,000.
-5000 * 37/38 = 4868.421052631579
Expected Value: 9210.526315789473 - 4868.421052631579 = 4342.105263157894 or 43.42105263157894% PE

I may not be understanding this, but the PE calculated above appears to be for an inside bet of a single number. Since the casino restricts you to even money bets, it's not really reflective of the PE.

Quote: beachbumbabs

I may not be understanding this, but the PE calculated above appears to be for an inside bet of a single number. Since the casino restricts you to even money bets, it's not really reflective of the PE.

You're right and I overlooked that. But obviously the player has a large edge. I'm not a mathematician but if he makes 2 $100 bets and he wins one and loses one and he gets $50 back on the losing bet on $200 action he has won $50 which looks like an edge of 25% but then you have to deduct the house edge of 5.26% which means he has an edge of about 20%. I am assuming that this house does not have the "en prison" rule and I think most houses with 2 zero roulette wheels do have this rule. So now maybe, unfortunately it has become more complicated than I wanted it to be. But basically I was just curious as to whether a player in this situation, with a very large edge would size his bet according to Kelly; or would he use his personal feelings about potentially losing or winning a very large bet to guide him; or possibly make his decision some other way.

I think I can say 10k is too large a portion of 150k

so this gets away from Kelly and into the Utility of Money theory it seems. That can be evaluated in a mathematical way, but I am not the guy for that.

Relating it to myself, I seem to be comfortable with a gambling bankroll set at about 1% of total easily liquidatable assets. I would up that if such a great +EV situation came around, but to be realistic I think we can say such offers come almost exclusively to players who have it coming from their theo. That complicates things.

Then again, there are the Don Johnsons of the world .