Calculating expected loss from House Edge
December 28th, 2011 at 10:57:21 AM
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How does one calculate the expected dollar amount loss for BJ using the House Edge? Are the additional bets for doubles and splits considered?
For example, if a particular BJ game has a realistic house edge of .4500%, and 1,000,000 (original) hands are played using correct basic strategy at $10 a hand, is the expected loss $10,000,000 x .0045 = $45,000? Or, do you have to consider all the additional money wagered for doubles and splits (i.e. Total Amount Wagered x .0045)?
For example, if a particular BJ game has a realistic house edge of .4500%, and 1,000,000 (original) hands are played using correct basic strategy at $10 a hand, is the expected loss $10,000,000 x .0045 = $45,000? Or, do you have to consider all the additional money wagered for doubles and splits (i.e. Total Amount Wagered x .0045)?
December 28th, 2011 at 12:10:46 PM
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House edge includes all money wagered. There's a better calculation for expected loss though. I think it's called probability of ruin (please correct me here) because there are Standard Deviations to consider.
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December 28th, 2011 at 12:59:11 PM
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Different concepts I think.
Risk of ruin refers to losing your entire bankroll during a certain time period of normal variation and is usually expressed as to a certain degree of certainty.
Now expected loss is really two different concepts: the gamblers expected loss for comp purposes which is clearly a figure oft based on historical assumptions about rate of play and rounding off for ease of calculation purposes and the expected loss based on more precise measurements of rate of play and customary player mistakes.
Risk of ruin refers to losing your entire bankroll during a certain time period of normal variation and is usually expressed as to a certain degree of certainty.
Now expected loss is really two different concepts: the gamblers expected loss for comp purposes which is clearly a figure oft based on historical assumptions about rate of play and rounding off for ease of calculation purposes and the expected loss based on more precise measurements of rate of play and customary player mistakes.
