Saturday, 11 July 2015

What A Load Of Craps

I am left with a few thoughts after reading the Martingale posts on the winnerswinonsports blog, the primary one being that it is hard to believe that anyone, never mind anyone in a well paying job, could be so stupid.

Having come up with a similar idea myself at the age of 10, as written in the "About Me" section of this blog, at least I had the excuse of inexperience:
The first system I came up with was a simple one - back the favourite and double up after a loss until a winner. Simple enough in theory, and I told my Dad about it. Not being a betting man himself, he ran it by some of his colleagues, and came home to tell me that it wouldn’t work because a long losing run would mean that the bank would be empty.
I may have mentioned this story before, but some years ago a friend told me that he was going to Las Vegas and had a guaranteed winning system. It was the 'double up after a loss on any of the even money shots' on Roulette. When I pointed out the flaw in his cunning plan, he said to me - "Ah! But here's the clever part. I wait until something has lost three times in a row before starting to bet on it". So after three consecutive reds for example, he bets on black. Not for the first time in my life, someone failed to be convinced by my logic, but he is still working (and betting) so it appears his fortune is yet to be made.

Why anyone would try this progressive system by betting on Draws or the numbers 1 to 12 on a Roulette wheel is even more puzzling. Fewer than one draw in three (unless you are following the XX Draw selections perhaps) ends up as a winning bet, so you are soon going to hit a long enough losing run to scupper the whole idea, either by hitting the house limit in the casino, or the limit in your bank account.

At odds of 2-1 or greater, there is no 'need' to double up. You only 'need' to double up after a loss if you are betting at evens - 'need' here meaning to recover previous losses, but I would question why you 'need' to recover the loss in one bet anyway. When you have a negative expectancy on each individual bet, you are doomed long-term anyway - but even if you do have an edge in say sports betting, the size of your stake should be determined by the size of your edge on that specific bet, not on the size of previous losses.  

Flash concludes the post saying that:
I remember him saying that with roulette you had the best odds of all the games in the casino, ie the odds were the closest to the true odds of all their games. The way you should look at it is that the casino always has the edge, so don’t even bother especially with a system like this.
This is not true however. The house edge on a single zero Roulette wheel is 2.7% (on the American double zero it is 5.26%) .

My own favourite casino game is Craps, and here the house edge on the Don't Pass / Don't Come bet is 1.36%, although I prefer to play the more usual Pass / Come bets at a 1.41% edge to the casino.

The numbers vary for Blackjack as casinos have different rules, but in Las Vegas, in a casino offering 'liberal' rules - i.e. a Dealer stands on soft 17, player may double on any two cards, player may double after splitting, resplit aces, late surrender - the edge is just 0.28%.

Baccarat also offers relatively good value, the edge being as low as 1.24% (as a player) or 1.06% (as a banker).

The way you should look at casino games is this - they are entertainment. Expect to lose, but an occasional visit is a lot of fun, and can be profitable. The likelihood of winning in the short-term is increased by playing the low house edge games.

For me Craps is perfect - a low house edge and great entertainment for a few hours. A couple of hundred dollars usually last a few hours in Las Vegas if you find a low minimum bet table (on the Strip, table minimums are generally higher, especially at weekends), and the drinks are all free. Watch the time though - in my younger years (a ridiculous expression, since I have never been as old as I am now), I once stood at a table for over eight hours before they closed it down at 5am. It was a good job they did - I almost missed my flight home. With no windows, plenty of free oxygen, and a constant stream of gamblers coming to the table, it's easy to lose track.

Bet for long enough, and casinos will often comp you a meal or even a room for the night. It doesn't matter if you are winning or losing - you earn credits by putting in the time. It's almost guaranteed that you will meet some interesting people while you are playing, from drunk girls who can't keep the dice on the table, to serious looking gamblers who carefully select their dice and align them in a special way, which strangely seems to result in the exact same outcomes as when you cast them without care.

And you might even walk away with some winnings. The best night of craps for me was walking away from the table with around $4,000 after starting with $200. The last three visits have all been losers though - so I am due a win!

1 comment:

James said...

Psychology. Psychology. Psychology.

I haven't done any research but I guess everything harks back to a more primitive time. Everyone has a comfort level, be it for danger or stupidity.

Up until the end of last year I was a member of a tennis club. Finishing my book became a priority at the beginning of this year and so I didn't renew my subscription. Now the book is published, increased arthritis means no more tennis, fullstop.

Any way, you meet a lot of different people in tennis clubs compared to say the knuckle draggers in the park playing Sunday league footy. Heirs to the Jeyes cleaning fluid empire, Nick Bollettieri swanning in to look at up and coming juniors but ostensibly to clean out their parents' bank accounts and the odd PhD.

One PhD I met was a graduate of Cambridge who now works in a university bio-tech spin-off. Okay I am thinking, bio-tech is science, graduate from a top 10 in the world university, I don't mind talking to him about what I do away from the courts. After discovering that I was from the otherside of the Oxbridge divide he wanted to know more; computational finance, AI... sports trading. "Ah!" he said, "I have a system..."

You know exactly what he said. I couldn't believe my ears. A PhD in an area where you'd think a smattering of maths and stats would help. I tried to explain to him his fallacy but nothing registered on his face. Even the most logical people can be quite illogical.

My next book is going to include a betting simulator to try and demonstrate risk and reward visually. However, I am guessing that a good many readers will avoid looking at the downside and only look at the upside. There is something in the psychology of people that makes them avoid thinking about things they fear and only to be attracted to things they feel comfortable with.

My parents are another example. They have used the same bank all their adult lives because they got their mortgage from them. Interest rates are meaningless to them. They feel their money is safe and will be well looked after. I tell them about the superior interest rates I get from P2P investing in addition to my other investments but all I get is a blank stare. In their minds, I am the one that doesn't understand. And when it comes to the Martingale, again we don't understand how comfortable the Martingale player feels.

I too have felt the comfort of ignorance but I am wired up to realise it and to drop it. When I worked in The City I would head off to the casino to play poker. I avoided the house games, knowing about the negative expectation. Poker is ostensibly a zero sum game minus a table charge. At first I had no problems against the people who played there. I had a small notebook into which I wrote the tells of each of the money bags players who played for fun and didn't mind losing. A year or two later, Internet poker had started and then a younger more savvy crowd started appearing in the casino. They were full of odds, outs, this, that and the other. If it was algo trading on a computer I would have learned but for a night out in a casino playing a fun game of cards, no thanks and so my bankroll started to head south and I stopped playing. I haven't played poker for 13 years. Rather than stay in my comfort zone and lose money, I left the zone altogether and invest my money elsewhere.

There is nothing comfortable about losing money.

JayBee @ BetfairProTrader.