Why are we "losing" when we play negative expectation games?
Specifically this questioned is aimed at the "advantage players" who scoff at the idea of anyone at a negative expectation game, especially something like video poker, where they say players must be at a postiive expectation game to win.
But this just came up on a craps discussion, so it's a concept that is really universal and I really don't understand it.
Here goes, starting with the comment on the craps forum:
Quote: superricksodawater
The craps tables are money making machines, when you think about their high cost of running one, you can see just how they can genterate so much money for the casinos. With every roll of the dice they are making money even of the winners they are paying out. Players never look at a winner as being a loser, but even when you are winning, at the same time you are losing money, because of the Vig you are paying on every bet you make.
I will never understand this, so someone will have to explain it to me slowly.
If I walk up to a craps table and I bet $5 on the passline and roll a come-out winner 7 and I am paid $5 how did I just lose money? Or if I am playing a video poker game with a negative pay table (let's say 9/6 Jacks or Better) and if I bet $5 for 5 coins and I hit two pair that pays me back 10 coins or $10 how did I just lose money?
And let's go to the extreme: I buy into a craps session with $500 and when the session is finished I leave the table an hour later with $600... what did I lose?
I depost $100 into a video poker machine and after 20 hands I leave with $100 -- what I started with -- what did I lose?
Take American roulette for a very simple example. There are 38 numbers, so your chances of winning straight up are 37 to 1. When you hit a loser, the casino doesn't do anything. It's not like the casino gets its edge by altering the odds of the games so that losing happens more than 37 times in 38.
What the casino does to earn its profit is short winners. When you hit a number on the wheel, they pay you at 35 to 1. What they are really doing is pocketing those other 2 units out of the 38. Hence, 2/38 = 5.26%, which is the house edge betting on a number straight up on an American roulette wheel.
Quote: AlanMendelson
And let's go to the extreme: I buy into a craps session with $500 and when the session is finished I leave the table an hour later with $600... what did I lose?
To answer this question, let's make it even simpler. You walk up to a roulette wheel. Place $1 on 00. It hits, you walk away with $36 for a profit of $35. What did you lose? You lost the $2 you would have had if the casino hadn't shorted your winnings from true odds.
The casino can't alter the actual chances of winning or losing, so it does the next-best thing -- offer shorter odds than are fair, and clipping its vig off winners.
All of the above is just an easy way to visualize the casino's edge. But in reality, every bet loses money before it is even resolved, because the casino will not be paying enough of a return on any bet to justify the risk of making that bet. A notable exception is the free odds bet at craps, where the casino does pay off at fair odds -- of course, you must make a negative-expectation line bet for the chance to take or lay the free odds.
Quote: sodawaterYou walk up to a roulette wheel. Place $1 on 00. It hits, you walk away with $36 for a profit of $35. What did you lose? You lost the $2 you would have had if the casino hadn't shorted your winnings from true odds.
There must be something wrong with how my brain is wired. I bet $1 on 00 and it hits and I am paid $36 for a profit of $35... and I lost $2 because I wasn't paid true odds???
Quote: AlanMendelsonThere must be something wrong with how my brain is wired. I bet $1 on 00 and it hits and I am paid $36 for a profit of $35... and I lost $2 because I wasn't paid true odds???
If it helps you, imagine you are paid $38 for a profit of $37, but then you drop two chips on the walk over to the cage. You lost $2. Well that happens every time you win a bet.
Quote: sodawaterIf it helps you, imagine you are paid $38 for a profit of $37, but then you drop two chips on the walk over to the cage. You lost $2. Well that happens every time you win a bet.
There really is something wrong with my brain. Somehow I cannot grasp this concept that you are talking about.
Let me try it again:
I make a bet for $1 and win $36 for a profit of $35. While walking to the cage, I drop two of my $1 chips and now I have $34. So my profit on the bet is now $33. And if I weren't a klutz I'd still have $35. Fortunately I don't drop chips everytime I walk to the cage.
I'm not trying to make fun of what you wrote... it's just that I just don't understand.
Quote: AlanMendelsonThere really is something wrong with my brain. Somehow I cannot grasp this concept that you are talking about.
Let me try it again:
I make a bet for $1 and win $36 for a profit of $35. While walking to the cage, I drop two of my $1 chips and now I have $34. So my profit on the bet is now $33. And if I weren't a klutz I'd still have $35. Fortunately I don't drop chips everytime I walk to the cage.
I'm not trying to make fun of what you wrote... it's just that I just don't understand.
How about this... you make a $1 bet on all 38 numbers on the layout. It hits 00. You win $35 plus your $1 bet back. So now you have $36 where before the spin, you had $38. Yet you won. The casino pocketed $2 of what should have been your winnings. You lost 2 out of 38 bet, for a loss of 5.26%.
your team scores 5 goals.
You win 4:1.
Like?
Quote: CLOUDW4LKERHow about:
your team scores 5 goals.
You win 4:1.
Like?
do you mean my team scores five goals but one goal is disallowed, but I still won the game?
But to be honest: who gives a **** about 1 goal more or less, its forgotten after 2 minutes and what counts is the overall win.
It could have been better/more. That's it.
AlanMendelson your simply not getting it.....everybody loses and the idea that you can win a negative game is ludicrous. Everybody loses and never in the history of gambling has anybody won. The anecdotal stories of huge wins by gamblers throughout history are simply not true. Casinos throw the stories out there to keep the dream alive. sodawater is right....when you win you really didn't....even if you left the casino with more money than you came in with......I'm jealous of the AP's.....as the vaulted AP's say..."you can't smarten up a chump"Quote: sodawaterIf it helps you, imagine you are paid $38 for a profit of $37, but then you drop two chips on the walk over to the cage. You lost $2. Well that happens every time you win a bet.
Quote: CrystalMathI think it is clear when you pay commission in Pai Gow; you win, and you pay the house a portion of your win. Also, any player wins are only temporary if they continue to gamble.
or the ante/rake for Poker
p.s. what stony says about big wins is not true. Surely Casinos make up "big wins" to promote gambling but there are also people who made a fortune by gambling.
Quote: stoneynvAlanMendelson your simply not getting it.....everybody loses and the idea that you can win a negative game is ludicrous. Everybody loses and never in the history of gambling has anybody won.
You are absolutely correct, stoneynv, I'm not getting it. If I make a $5 bet and I win $6, what did I lose?
The real question is: how many bets do you place? I don't imagine anyone just going in a casino once in a lifetime, winning (say) $35, then never coming back again.
On one single bet, alright, you may win, because using expectation is not correct. If it were, nobody would take insurance, for example. Even national lotteries are in this category, due to the extreme variance between small losses and huge gain. People take into account the whole prob distribution of results. Economists have tried to formalize it with "expected utility" but it doesn't work fine.
However, on (sufficiently many) repeated bets and a reasonable variance, you'll end up with the expectation.
So, if you repeatedly play your Craps or Roulette or VideoPoker, inevitably the winning events will be overcompensated by the losing streaks. Law of large numbers.
You lost Alan.....we all know that 6 dollars is less than 5.....let it go Alan, you can never win.Quote: AlanMendelsonYou are absolutely correct, stoneynv, I'm not getting it. If I make a $5 bet and I win $6, what did I lose?
One team sucks. It has a 10% chance of winning the game.
Sure enough it will win some games here or there. In that event, the fans will boast "we won" like you say you won your 35$.
But at the end of the season, that team will NOT win the championship.
Playing in a casino is like winning some battles but losing the war.
From 1900 to 2013, the Los Angeles Stargazers were such a ridiculous beach volleyball team that they never had a winning season. There was one owner each year and out of despair each owner sold the team at the end of each season.
In 2014 I buy the LA Stargazers, and I decide to buy them all new jock straps and better stretch clothing, and lo and behold 2014 is the year they win a championship. I sell the Stargazers at the end of 2014.
In 2015 the Stargazers lose all their jock straps in a laundry mishap and they never win another match.
Can I claim to be a winning owner of the Stargazers even though all of the previous owners never had a winning season?
Quote: AlanMendelsonI like the sports analogy, kubikulann, so let me work with that for a moment.
From 1900 to 2013, the Los Angeles Stargazers were such a ridiculous beach volleyball team that they never had a winning season. There was one owner each year and out of despair each owner sold the team at the end of each season.
In 2014 I buy the LA Stargazers, and I decide to buy them all new jock straps and better stretch clothing, and lo and behold 2014 is the year they win a championship. I sell the Stargazers at the end of 2014.
In 2015 the Stargazers lose all their jock straps in a laundry mishap and they never win another match.
Can I claim to be a winning owner of the Stargazers even though all of the previous owners never had a winning season?
I think so. As soon as you walk away, never to return to the game, you lock in your wins (or losses, for most people).
Remember Alan even though you won you didn't. You just thought your 2014 team won. You have a trophy but it's not real. Please....There is a 90% expectancy for a small business startup to fail within one year. 95% after five years. So why try even try? Congratulations in advance for your 2014 volleyball championship.Quote: AlanMendelsonI like the sports analogy, kubikulann, so let me work with that for a moment.
From 1900 to 2013, the Los Angeles Stargazers were such a ridiculous beach volleyball team that they never had a winning season. There was one owner each year and out of despair each owner sold the team at the end of each season.
In 2014 I buy the LA Stargazers, and I decide to buy them all new jock straps and better stretch clothing, and lo and behold 2014 is the year they win a championship. I sell the Stargazers at the end of 2014.
In 2015 the Stargazers lose all their jock straps in a laundry mishap and they never win another match.
Can I claim to be a winning owner of the Stargazers even though all of the previous owners never had a winning season?
Quote: CrystalMathI think so. As soon as you walk away, never to return to the game, you lock in your wins (or losses, for most people).
I think that's the point. The apple can walk away a winner, even if the oranges don't. (Or something like that.)
Thanks for putting up with me on this one. I just like to think about my former neighbor in Valencia who won the California pick-6 lottery twice. Is there a better example of beating a negative expectation game?
Quote: AlanMendelsonI think that's the point. The apple can walk away a winner, even if the oranges don't. (Or something like that.)
Thanks for putting up with me on this one. I just like to think about my former neighbor in Valencia who won the California pick-6 lottery twice. Is there a better example of beating a negative expectation game?
its not what we understand as beating.
we would call this "preference of randomness" or "luck"
why is it when somebody challenges the "Sultans of the slide rule" that said poster is "trolling"? In my case I've simply sought out intelligent conversation as it relates to gambling. I get the feeling that there is an "inside the beltway" mentality. As the sun rises and sets in Washington it's also rising and setting on the glorious slide rule.Quote: DeMangoThis thread is starting to approach the "myth" of the pass line and it's -1.41% disadvantage thread. Once again the troll is being fed.
You are saying "of course some people can beat it - there are winners." Of course this is true. No one would gamble if it were impossible to end up ahead. Someone can make one bet, win and quit. Someone will win the lottery and that will probably ensure that that person is a lifetime winner at gambling. Someone can hit the lottery twice.
When most people say "you can't beat a negative expectation game," they usually mean that the game cannot be consistently and reliably beaten.
It's like this - suppose I offered a lottery where I sold 1,000,000 tickets for $1 each, but agreed to put an extra $100 into the prize pool for every drawing (totally ridiculous, but bear with me). You can reliably beat this game. It has a positive expectation. You could make a living playing this game by buying every ticket. Now suppose I sell 1,000,000 tickets for $1 each, but took $10,000 out of the prize pool each time with a winner getting the rest. You could not reliably or consistently make a living at this game. It has a negative expectation.
Make sense?
UnderstoodQuote: G71I don't know why I'm even indulging this. Obviously, the misunderstanding is caused by a different understanding of the word "beat."
You are saying "of course some people can beat it - there are winners." Of course this is true. No one would gamble if it were impossible to end up ahead. Someone can make one bet, win and quit. Someone will win the lottery and that will probably ensure that that person is a lifetime winner at gambling. Someone can hit the lottery twice.
When most people say "you can't beat a negative expectation game," they usually mean that the game cannot be consistently and reliably beaten.
It's like this - suppose I offered a lottery where I sold 1,000,000 tickets for $1 each, but agreed to put an extra $100 into the prize pool for every drawing (totally ridiculous, but bear with me). You can reliably beat this game. It has a positive expectation. You could make a living playing this game by buying every ticket. Now suppose I sell 1,000,000 tickets for $1 each, but took $10,000 out of the prize pool each time with a winner getting the rest. You could not reliably or consistently make a living at this game. It has a negative expectation.
Make sense?
When a gambler puts $5 on the passline at craps, does he care if the house edge is 1.41% ?? No, he just cares if the bet wins or not and whether he will win $5 or lose $5.
I hit the damn fire bet at Rincon the other night for $1250 with a $5 bet. Don't tell me it was a lousy bet. (It was, but don't tell me. LOL)
Quote: AlanMendelsonG71 what you wrote makes perfect sense when you look at all gamblers as a body.
This is how it is from the casino's perspective. This is why casinos are winners in the long run... and the corollary to that is players are losers in the long run.
Quote: AlanMendelsonI am math-challenged so send me to my room if I have this all wrong and tell me no more desserts at the buffets too, if you must. But please explain to me why we must "lose" when we play negative expectation games. Why can't we win playing negative expectation games?
Nobody ever said you must lose, in quotes or otherwise. I'm up lifetime in craps as a result of three monster hands that -- to date -- haven't been whittled away by the house edge in my subsequent play. But I digress...
The issue isn't whether you must lose but in which direction your bankroll is likely to head. Let's suppose you play a simple dice game at the casino.
Game 1:
Bet $10. Roll one die. If it shows 1, you win $30. If a 2 rolls you win $20. 3 through 6 are losers. You have only a 1/3 chance of winning but you have the edge overall. (As an exercise, try to figure out what the edge is.) The longer you play, the more likely it is that your bankroll increases.
Game 2:
Bet $10. Roll one die. If it shows 1, you win $20. If a 2 rolls you win $10. 3 through 6 are losers. You still only have a 1/3 chance of winning but now the house has the edge. The longer you play, the more likely it is that your bankroll decreases.
In both cases, the house edge is analogous to the annual yield on a mutual fund. If you invest your money, the yield is a historical indicator of your results. The difference is that mutual funds typically have far less variance (beta) in their outcomes, and the distribution of those outcomes isn't calculable in advance. With the dice games above, you know exactly what the distribution, mean, and variance look like. Game 1 is a great investment. Game 2 is a terrible one. Craps is between the two, but closer to game 2 than game 1.
Since we can never win in the long run, what's left....poker?Quote: MathExtremistNobody ever said you must lose, in quotes or otherwise. I'm up lifetime in craps as a result of three monster hands that -- to date -- haven't been whittled away by the house edge in my subsequent play. But I digress...
The issue isn't whether you must lose but in which direction your bankroll is likely to head. Let's suppose you play a simple dice game at the casino.
Game 1:
Bet $10. Roll one die. If it shows 1, you win $30. If a 2 rolls you win $20. 3 through 6 are losers. You have only a 1/3 chance of winning but you have the edge overall. (As an exercise, try to figure out what the edge is.) The longer you play, the more likely it is that your bankroll increases.
Game 2:
Bet $10. Roll one die. If it shows 1, you win $20. If a 2 rolls you win $10. 3 through 6 are losers. You still only have a 1/3 chance of winning but now the house has the edge. The longer you play, the more likely it is that your bankroll decreases.
In both cases, the house edge is analogous to the annual yield on a mutual fund. If you invest your money, the yield is a historical indicator of your results. The difference is that mutual funds typically have far less variance (beta) in their outcomes, and the distribution of those outcomes isn't calculable in advance. With the dice games above, you know exactly what the distribution, mean, and variance look like. Game 1 is a great investment. Game 2 is a terrible one. Craps is between the two, but closer to game 2 than game 1.
Quote: IbeatyouracesThere ARE ways to win in the long run. You have to seek these games out and learn the strategies.
I'm going to agree that for the individual there are ways to win in the long run. First, you have to determine what is your long run. Do you have to give it back after you won it?
Thanks for the hope.....card counting in blackjack? Years ago I read a piece Scarne put out referencing card counters. As I remember he was a consultant at some casino...Bahamas? He claimed to welcome counters, they came and the casinos take didn't change.Quote: IbeatyouracesThere ARE ways to win in the long run. You have to seek these games out and learn the strategies.
Well, if you are speaking "casino games", I doubt it is worth the effort. Rather put the effort in a profitable activity from the start, or go to the stock exchange. Returns are better.Quote: IbeatyouracesThere ARE ways to win in the long run. You have to seek these games out and learn the strategies.
And don't mention those who gamble millions. Definitely they have a way of getting the millions in that is way more efficient than gambling.
Long run here is not only a term of duration, it must be relative to the amounts earned. Not interested in winning $1000 if it takes a lifetime...
Wow....oblivious? Rarely accused of being "oblivious" outside of ex wife. "We" beat the casino games.....what you and your imaginary buddies? Just kidding.Quote: IbeatyouracesI still count to this day 15 years later although its last on my list and I wasn't necessarily talking about just those people that are counters. Trust me on this, you are oblivious to the ways we beat casino games.
O.K. Ibeatyouraces......I'm guessing you want me to ask how you beat casino games.....only to make a point/chump out out me.....not going to give you the satisfactionQuote: IbeatyouracesWell, Teddys is not imaginary and he is a friend although he doesn't necessarily do what I do. I don't know him personally but I don't think KewlJ is imaginary. Certainly the Wizard isn't. Now if only we could get casinos to think we that are.
But this thread isn't about AP so I'll end that there.
I haven't read through the entire thread, but I see what you're asking..and I'll relate it to you as best I can, so you WILL understand the point of "Even if you win, you're still losing."
Example:
In craps...you make Buy Bets, correct?
Let's say you BUY the 4 for $25...
The 4 hits, you get $50 win, but must pay $1 "vig"...
You're happy!
The casino is too...because it just made $1 on a coin-flip. (ie: 50/50 chance)
You "lost" $1...it may be inconsequential to YOU...but repeat that 1000 times per DAY and it adds up doesn't it?
I could make hundreds more examples...but that's the quickest and easiest for you to understand.
FWIW: $1 for $25 on the win on a Buy-4 bet is actually a GREAT bet (even better if you can buy it for $30 for $1 win only)
Is my profit of $380 a short term event?
What is long term and what is short term? I think this is a question that has not been answered
in this forum.
I win (my stats say) 77% of the times I go to a casino. My wins well exceed my losses based
on records since November 2011.
So even though I am winning am I still losing as I am playing a negative expectation game??
You were still shorted on your wins. and on every single win.Quote: PandoLast Sunday I went to my local casino to play single zero roulette, bankroll $400, I left with $780
Is my profit of $380 a short term event?
Maybe you should have won about $500 total if the winning payouts were more fair, but were happy to only win $380.
yes it has. It is all about the degree of certainty.Quote: PandoWhat is long term and what is short term? I think this is a question that has not been answered
in this forum.
if you want to be just 50% confident in your net results, try playing just 100 spins.
The results from those 100 spins, just 50% of the time will a session be like those 100 spins.
If you want to be 99.9% confident, you WILL need more spins in your sample space.
The trick is to keep on winning more times you play.Quote: PandoI win (my stats say) 77% of the times I go to a casino. My wins well exceed my losses based
on records since November 2011.
So even though I am winning am I still losing as I am playing a negative expectation game??
The short payoffs on each and every win makes it more difficult the longer you continue to play to come out ahead.
of course, any one player or many players can win over many bets, it is luck
some may say it is bet selection and bankroll management that makes it possible to win at a -EV game,
OK, if it makes you feel good.
Continued Good Luck
Quote: TIMSPEEDLet's say you BUY the 4 for $25...
The 4 hits, you get $50 win, but must pay $1 "vig"...
You're happy!
The casino is too...because it just made $1 on a coin-flip. (ie: 50/50 chance)
You "lost" $1...it may be inconsequential to YOU...but repeat that 1000 times per DAY and it adds up doesn't it?
Oh no. No. No. No.
I just won $49 net and you're trying to tell me that the casino is happy because I paid them a fee of $1 when they handed me $50 ??
Let's turn it around. Make believe you are the casino.
How many times will you let a player exchange $1 for $50 before you go broke?
The ONLY reason why a casino books that buy bet is because it knows it will win that bet two out of three times. It is not booking that bet for the $1 commissions.
TIMSPEED is right on. and looks like you are too.Quote: AlanMendelsonThe ONLY reason why a casino books that buy bet is because it knows it will win that bet two out of three times. It is not booking that bet for the $1 commissions.
Casino wins $25, 2 times. net win $50 (wins 2 out of 3)
Casino lost 1 time, paid $49 (or casino paid $50 but the player gave the casino $1)
They won 2 out of 3 bets for a net win of $1
Exactly the $1 paid on the win by the player (actually kept by the casino)
Gotta love the math
Your answer that short and long term are in fact about degrees of certainty makes sense.
I hadnt considered the arguement from that perspective.
Yes of course the trick is to keep winning. I find that by visiting only occasionally (once or twice
a week), and limiting my sessions by playing a stop loss, and having a winning target, I can
get on the plus side more often than not. Some days (dealers) are much harder than others.
Its sometimes difficult to walk away with a modest profit, but thats the advice given my many
experts in this forum who have been playing longer than I have. So thats what I do.
By the way, I play only single zero (Rapid) Roulette
Quote: AlanMendelsonOh no. No. No. No.
I just won $49 net and you're trying to tell me that the casino is happy because I paid them a fee of $1 when they handed me $50 ??
Don’t think in terms of just you. You are just a piece of a larger body, “the patron”, which is what the casino plays against. For every “you” that wins $49, there’s a counterpart “you” that loses $50. If you win 10x’s for $490, there’s bizarro you that loses $500. The casino made $10 off of YOU.
I’ve gambled maybe 10-15 times in my life. Not once have I ever left the casino a loser. Somewhere there’s a bizarro me that’s been 10-15 times and never left a winner. Combine us together, and I’m the one keeping the lights on in the joint.
If I hire you to come film my fishing show for an hour at a rate of $500 an hour, and I get $500 worth of your work, and I pay you $490…
I would use it for mine, but I don't want to be disrespectful. Mine would be "It doesn't matter whether you had a good bet, or a bad bet, it's whether or not you win the bet"
And this is the same argument. At the end of the day, I don't care if I was playing at a 1% disadvantage or a 50% disadvantage. If I win $10,000, I won. If I lose $10,000, I lost. I think that is what Alan's trying to say.
Now, that doesn't mean it doesn't matter what game you're playing, as long as you know what you're doing. That's even a better tagline. "It doesn't matter whether or not you had a good bet, it's whether or not you know what you are doing"
Guys I grew up with mostly had the following belief :
" Win if you can, lose if you must, but always cheat. "
