Citation please? A cursory search suggests that machines go through +EV phases, just like blackjack, but that individual machines are -EV. It’s not just that they expect people to plow the money back in, but that pros have to wait for fish to plow money in to get to the +EV situation.
The difference with blackjack is that you can (in theory) adjust your bet to take advantage of the different phases of blackjack. Your first sentence seems to match Roland’s comment about the Kelly criterion (you lose betting against snake eyes if you bet your whole bankroll every time), but that doesn’t make sense with fixed-bet slots. There, if it made sense to make the first bet, it makes sense to continuing betting after a jackpot.
This comes up frequently in gambling and statistics circles. “Citation please” is the correct response—casinos do NOT expect to make a profit by offering losing (for them) bets and letting “gambler’s ruin” pay them off. It just doesn’t work that way.
The fact that a +moneyEV bet can be -utilityEV for a gambler does NOT imply that a -moneyEV bet can be +utilityEV for the casino. It’s -utility for both participants.
The only reason casinos offer such bets ever is for promotional reasons, and they hope to make the money back on different wagers the gambler will make while there.
The Kelly calculations work just fine for all these bets—for cyclic bets, it ends up you should bet 0 when -EV. When +EV, bet some fraction of your bankroll that maximizes mean-log-outcome for each wager.
Because slot machines are designed to hook you in, you’re going to get some return on investment from them if you hold yourself to a specific amount. At the Casino de Lac Leamy, up in Canada (run, I would add, by the Quebec provincial government. Now that’s a lottery system), the slots are ‘loose.’ They pay out relatively often. In fact, when Weds and I have played twenty dollars worth of slots together, we’ve never failed to leave the casino floor with more money than we had entering the floor. That twenty dollars has been anything from thirty to sixty-five dollars, the three or four times we’ve done this.
I’ll give you that “many” is almost certainly flat wrong, on reflection, but such machines are (were?) probably out there.
That move was full of falsehoods. For example, people named Silas are actually no more or less likely than the general population to be tall homicidal albino monks—but you wouldn’t guess that from seeing the movie, now, would you?
That twenty dollars has been anything from thirty to sixty-five dollars, the three or four times we’ve done this.
I’m pretty sure it’s not that unlikely to come up ahead ‘three or four’ times when playing slot machines (if it weren’t so late I’d actually do the sums). It seems much more plausible that the blog author was just lucky than that the machines were actually set to regularly pay out positive amounts.
Some casinos advertise that they have slots with “up to” a 101% rate of return. Good luck finding the one machine in the casino that actually has a positive EV, though!
Citation please? A cursory search suggests that machines go through +EV phases, just like blackjack, but that individual machines are -EV. It’s not just that they expect people to plow the money back in, but that pros have to wait for fish to plow money in to get to the +EV situation.
The difference with blackjack is that you can (in theory) adjust your bet to take advantage of the different phases of blackjack. Your first sentence seems to match Roland’s comment about the Kelly criterion (you lose betting against snake eyes if you bet your whole bankroll every time), but that doesn’t make sense with fixed-bet slots. There, if it made sense to make the first bet, it makes sense to continuing betting after a jackpot.
This comes up frequently in gambling and statistics circles. “Citation please” is the correct response—casinos do NOT expect to make a profit by offering losing (for them) bets and letting “gambler’s ruin” pay them off. It just doesn’t work that way.
The fact that a +moneyEV bet can be -utilityEV for a gambler does NOT imply that a -moneyEV bet can be +utilityEV for the casino. It’s -utility for both participants.
The only reason casinos offer such bets ever is for promotional reasons, and they hope to make the money back on different wagers the gambler will make while there.
The Kelly calculations work just fine for all these bets—for cyclic bets, it ends up you should bet 0 when -EV. When +EV, bet some fraction of your bankroll that maximizes mean-log-outcome for each wager.
On the scale from “saw it in The Da Vinci Code” to “saw it in Nature”, I’d have to say all I have is an anecdote from a respectable blogger:
I’ll give you that “many” is almost certainly flat wrong, on reflection, but such machines are (were?) probably out there.
That move was full of falsehoods. For example, people named Silas are actually no more or less likely than the general population to be tall homicidal albino monks—but you wouldn’t guess that from seeing the movie, now, would you?
That’s why it represents the bottom end of my “source-reliability” scale.
The only relevant part of the quote seems to be:
I’m pretty sure it’s not that unlikely to come up ahead ‘three or four’ times when playing slot machines (if it weren’t so late I’d actually do the sums). It seems much more plausible that the blog author was just lucky than that the machines were actually set to regularly pay out positive amounts.
Some casinos advertise that they have slots with “up to” a 101% rate of return. Good luck finding the one machine in the casino that actually has a positive EV, though!