Several years ago I worked with this really funny older guy who was really into money, gambling, and girls. He eventually quit, got a better job, a beeper(yes this was a LONG time ago), and a new car. He had become a high roller in my mind. He would always say, "triple your bet, you can't lose!".
Anyways let's test his theory. Suppose we play a game where if you win, you double your money.
For example,
if you bet 1 penny then you win 1 penny
if you bet 4 pennies then you win 4 pennies
etc...
Ok so now let's take a fake scenario. Suppose you,
Bet 1 penny, lose, so TRIPLE your bet
Bet 3 pennies, lose, so TRIPLE your bet
Bet 9 pennies, lose, so TRIPLE your bet
Bet 27 pennies, lose, so TRIPLE your bet
Bet 81 pennies, WIN, so now you win 81 more pennies.
Ok so much did you lose in the previous games?
1 + 3 + 9 + 27 = 40.
But you won 81 pennies, so your total profit is then 81 - 40 = 41 pennies.
This works every single time. Try it, take some pennies or a piece of paper and a calculator and you will notice that if you ALWAYS triple your bet, you will always eventually end up a winner.
So why don't people do this? To be honest I have no idea, I don't go to casinos often. According to this "cool" guy I used to know casinos set betting limits at the tables. Also if they notice this kind of behavior eventually you will be kicked out.
I don't know why people don't do this. There has to be some kind of rule against this, because it NEVER fails:)
Showing posts with label Gambling. Show all posts
Showing posts with label Gambling. Show all posts
Saturday, August 9, 2014
Thursday, August 7, 2014
How much you really lose when playing the lottery
Most states have some kind of lottery, and for a ticket the minimum price is usually $1. Let's take a generic lottery game where you pick four numbers, 0 through 9, for example 2278. If those are the winning numbers you collect and win $5000.
Now suppose you go play this game tonight and buy a single ticket. If you lose you just lost $1. If you win you collect $5000, minus the one dollar it cost you to play, but who cares about that right?
Ok so here is how you work it out, for any lottery game, first workout the expected value.
Expected Value = (What you win) *(Probability of Winning) + (What you lose)*(Probability of Losing)
For our game, if you win, you collect $5000. If you lose tonight, you only lose $1, so we'll count that as -1.
To figure out the probability of winning, note there is only 1 way to win and 10*10*10*10 = 10,000 ways to play, so the P(winning) = (number of ways to win)/(number of ways to play) = 1/10000
To figure out the probability of losing, note there are 9999 ways to LOSE this game, yikes!
This means P(losing) = 9999/10000
So finally,
Expected Value = (5000)*1/10,000 + (-1)*(9999/10000)
Expected Value = -.4999, so let's call that a $0.50 loss.
What does this mean? There is no way you can lose 50 cents if you play this game tonight, you either win or lose, so what in the world is this?!
Well there is something called the Law of Large Numbers that says that in the long run, how much you lose on average approaches 50 cents per game. Think about it, if you keep playing over and over you will eventually win, and you will also lose a lot, but in the long run, if you had an infinite amount of money and just played a lot every single day forever, your average loss per game gets closer and closer to 50 cents.
In other words, you are still guaranteed to be a loser, no matter what!
Of course if things weren't this way, the lottery would be out of business, there wouldn't be any casinos, nor would there be any gambling, because all of these institutions would fail in the long run.
I hope someone has found this post helpful!
Now suppose you go play this game tonight and buy a single ticket. If you lose you just lost $1. If you win you collect $5000, minus the one dollar it cost you to play, but who cares about that right?
Ok so here is how you work it out, for any lottery game, first workout the expected value.
Expected Value = (What you win) *(Probability of Winning) + (What you lose)*(Probability of Losing)
For our game, if you win, you collect $5000. If you lose tonight, you only lose $1, so we'll count that as -1.
To figure out the probability of winning, note there is only 1 way to win and 10*10*10*10 = 10,000 ways to play, so the P(winning) = (number of ways to win)/(number of ways to play) = 1/10000
To figure out the probability of losing, note there are 9999 ways to LOSE this game, yikes!
This means P(losing) = 9999/10000
So finally,
Expected Value = (5000)*1/10,000 + (-1)*(9999/10000)
Expected Value = -.4999, so let's call that a $0.50 loss.
What does this mean? There is no way you can lose 50 cents if you play this game tonight, you either win or lose, so what in the world is this?!
Well there is something called the Law of Large Numbers that says that in the long run, how much you lose on average approaches 50 cents per game. Think about it, if you keep playing over and over you will eventually win, and you will also lose a lot, but in the long run, if you had an infinite amount of money and just played a lot every single day forever, your average loss per game gets closer and closer to 50 cents.
In other words, you are still guaranteed to be a loser, no matter what!
Of course if things weren't this way, the lottery would be out of business, there wouldn't be any casinos, nor would there be any gambling, because all of these institutions would fail in the long run.
I hope someone has found this post helpful!
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