babyyeespoppy
babyyeespoppy
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March 31st, 2017 at 4:17:39 AM permalink
There is a prize draw at the local casino every week where the prize draw winner is offered $5,000 cash or the option to pick a mystery bag containing one of the following prizes:

-$2,000 cash;

-$4,000 Non-Negotiable Chips;

-$6,000 Non-Negotiable Chips;

-$8,000 cash; and

-$10,000 cash.

What would you choose and why?
ThatDonGuy
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March 31st, 2017 at 7:05:38 AM permalink
It depends on three things:
(a) Are the five prizes in the bag equally likely;
(b) What table games are available;
and (c) Are there any special conditions in the chips?

If (a) is "yes," I would take the bag. Even if the only game was single-zero roulette, so every $2000 in chips had an expected value of about $1895, the EV of the draw is $5895, and there is a 60% chance of ending up with more than $5000.
If, on the other hand, these are "matchplay" chips, where they are replaced with real chips of the same value when you win, then $2000 of chips has an expected value of about $950, so the $5000 sure thing is now the better play.
A chip that you get to keep until you lose has a value depending on the bet. If the probability of winning is p, and the payout is n (e.g. 1 for even-money), then the EV of each $1 of chips is pn / (1-p). For even money single-zero roulette bets, where n = 1 and p = 9/19, the EV of $2000 in chips is $1800.
Last edited by: ThatDonGuy on Mar 31, 2017
DJTeddyBear
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March 31st, 2017 at 7:31:54 AM permalink
If the bags were equally likely to be picked, and there was no time limit on the NV chips, I'd take a bag.
I invented a few casino games. Info: http://www.DaveMillerGaming.com/ 覧覧覧覧覧覧覧覧覧覧覧覧覧覧覧覧覧覧 Superstitions are silly, childish, irrational rituals, born out of fear of the unknown. But how much does it cost to knock on wood? 😁
DJTeddyBear
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March 31st, 2017 at 7:56:32 AM permalink
Let me clarify and elaborate.

Assuming the non-negotiable chips can be used just like regular cheques, that they can be received in 5NN ($5 Non-Negotiable) denomination, and can take them home to use a little at a time, then I value them exactly at face value.

I.E. If I can, for example, make a craps place bet on 6 or 8 using 5NN plus $1, and get paid $7 with the 5NN chip staying live, then I'll pick a bag.

In other words, let's say my normal bankroll is $1,000 and I got the bag with the 6,000NN chips. As long as I can use them on my next six trips without any problems, then it's like the bag contained $6,000 cash. After all, unless I drop dead soon, I'm gonna make at least another 6 trips to the casino.

I would NOT increase my normal bet size, except due to pressing, which I would keep to my normal pattern. I would take the wins, and press using the NN chips. Therefore, if the NN chips weren't available in 5NN denomination, it's a deal-breaker.

On a side note, it would be interesting to do this. After all, forcing you to keep the NV chips separate from the cash cheques which are winnings, you will see how long the money lasts before you're forced to churn.


If the minimum size chip was 25NN, I'd have to play with Excel to think about it. After all, I typically press bets to at least $25 after the first hit. If I can swap in the NN chip, it might still be worth it.
I invented a few casino games. Info: http://www.DaveMillerGaming.com/ 覧覧覧覧覧覧覧覧覧覧覧覧覧覧覧覧覧覧 Superstitions are silly, childish, irrational rituals, born out of fear of the unknown. But how much does it cost to knock on wood? 😁
Wizard
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March 31st, 2017 at 8:28:53 AM permalink
I assume the "non-negotiable chips" are the use till you lose type. There needs to be consistent terminology but here in Vegas a "Non Neg" as they are called in the industry are the use till you lose type. The term for a "use once" chip is usually a "free play chip." Unfortunately, you still hear "promotional chip" a lot and there is not consistency in which type of chip that is.

That said, the value of a Non Neg chip is about 98% of face value, depending on the games available. So, I put the value of a random bag at a little under $6000. That is more than $5000 so I would definitely take the bag.
"For with much wisdom comes much sorrow." -- Ecclesiastes 1:18 (NIV)
Ibeatyouraces
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March 31st, 2017 at 8:33:02 AM permalink
Tax issues are a factor as well. The $5000 cash WILL get hit from federal taxes and possibly the state your in, but the chips may not.
DUHHIIIIIIIII HEARD THAT!
TigerWu
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March 31st, 2017 at 8:43:07 AM permalink
I'd take the $5,000 cash in a heartbeat, and here's why:

There are two prizes that are worth less and two prizes that are worth more, so those cancel each other out in the equation. That leaves $5,000 in cash vs. $6,000 in chips. $5,000 in cash is a much more viable and practical prize to me personally than $6,000 in chips.
Wizard
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March 31st, 2017 at 8:50:21 AM permalink
Quote: TigerWu

I'd take the $5,000 cash in a heartbeat, and here's why:

There are two prizes that are worth less and two prizes that are worth more, so those cancel each other out in the equation.



What if the five prizes were $4000, $4500, $1,000,000 and $2,0000,000?
"For with much wisdom comes much sorrow." -- Ecclesiastes 1:18 (NIV)
TigerWu
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March 31st, 2017 at 9:08:05 AM permalink
Quote: Wizard

What if the five prizes were $4000, $4500, $1,000,000 and $2,0000,000?



Then I would definitely take my chances with the bag.
Wizard
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March 31st, 2017 at 9:30:44 AM permalink
Quote: TigerWu

Then I would definitely take my chances with the bag.



Thank you.
"For with much wisdom comes much sorrow." -- Ecclesiastes 1:18 (NIV)
TigerWu
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March 31st, 2017 at 9:45:30 AM permalink
Quote: Wizard

Thank you.



Looking back at my reasoning, I should have also said that the "spread" of the prize packages is also a crucial determinate.

A guaranteed $5,000 prize in a $2,000 to $10,000 spread is a no-brainer to me, personally.

But that same $5,000 in a $4,000 to $2,000,000 spread would be an incredibly stupid choice (again, to me, personally).
babyyeespoppy
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March 31st, 2017 at 12:52:03 PM permalink
Quote: ThatDonGuy

(a) Are the five prizes in the bag equally likely;


Yes, the five prizes in the bag are equally likely.

Quote: ThatDonGuy

(b) What table games are available;


Blackjack with good rules, single & double zero roulette, baccarat etc

Quote: ThatDonGuy

(c) Are there any special conditions in the chips?


The chips are not promotional nor match-play. See below link for more on Non-Negotiable Chips.
/gambling/promotional-chips/

Thank you for taking the time to reply. =)
babyyeespoppy
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March 31st, 2017 at 1:05:09 PM permalink
Quote: Wizard

I assume the "non-negotiable chips" are the use till you lose type. There needs to be consistent terminology but here in Vegas a "Non Neg" as they are called in the industry are the use till you lose type. The term for a "use once" chip is usually a "free play chip." Unfortunately, you still hear "promotional chip" a lot and there is not consistency in which type of chip that is.

That said, the value of a Non Neg chip is about 98% of face value, depending on the games available. So, I put the value of a random bag at a little under $6000. That is more than $5000 so I would definitely take the bag.



Hi Wizard

Firstly, I want to say that I am a BIG fan of your site. It is so so so informative. I just love it!

And, thank you for taking the time to respond. I didn't expect to get a respond from the wizard himself, what a pleasant surprise!

I ended up choosing a bag and won $2,000 cash (the missus is not happy with my decision, lol). Can't complain though.

Have an awesome day!

Cheers.
DiscreteMaths2
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March 31st, 2017 at 1:13:30 PM permalink
Just to throw a tax number out there (everyone's will be different) but let's say 25% because that's not an unreasonable rate. For the $5000 prize at 25% you would be taking a $1250 hit so your actual take home is $3750. So in that case all the prizes would be better with the exception of the $2000 cash one. If you can still generate comps from the chips thats an even further bonus. I would go with the random bag unless you have an important expense to pay off that the guaranteed prize is worth it (but if thats the case you probably wouldn't be in a casino anyway).
Assume the worst, believe no one, and make your move only when you are certain that you are unbeatable or have, at worst, exceptionally good odds in your favor.
Wizard
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March 31st, 2017 at 3:30:20 PM permalink
Quote: babyyeespoppy

Hi Wizard

Firstly, I want to say that I am a BIG fan of your site. It is so so so informative. I just love it!



Thank you!

Quote:

And, thank you for taking the time to respond. I didn't expect to get a respond from the wizard himself, what a pleasant surprise!



You caught me on a slow day.

Quote:

I ended up choosing a bag and won $2,000 cash (the missus is not happy with my decision, lol). Can't complain though.



As my tag line says, it isn't whether you win or lose, it is whether or not you made the right decision/bet. However, you'll never get Mrs. Wizard to agree with that. I would have caught hell too if I picked the $2,000 bag and she witnessed it, which I would make every effort to avoid.
"For with much wisdom comes much sorrow." -- Ecclesiastes 1:18 (NIV)
Keyser
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March 31st, 2017 at 3:40:40 PM permalink
I'd pick a bag. But only if it also came with a free room and a buffet! And the buffet better have crab legs. And ice cream. And some lip balm. The Las Vegas air is very dry.
AxelWolf
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March 31st, 2017 at 5:04:26 PM permalink
Since Casinos have been known to pull various shenanigans, there is a chance I would just take the cash and get out while the getting is good, at least in this situation.
♪♪Now you swear and kick and beg us That you're not a gamblin' man Then you find you're back in Vegas With a handle in your hand♪♪ Your black cards can make you money So you hide them when you're able In the land of casinos and money You must put them on the table♪♪ You go back Jack do it again roulette wheels turinin' 'round and 'round♪♪ You go back Jack do it again♪♪
Keyser
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March 31st, 2017 at 5:32:36 PM permalink
Good point.
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