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Monte Carlo methods – Why it's a bad idea to go to the casino

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Re: Monte Carlo methods – Why it's a bad idea to go to the casino

#61

Post by ojbyrne »

eric_h wrote: post #54
RomanBob wrote: post #47

Earlier quoted context omitted.

This is a common misconception about why casinos win. That 'casinos have infinite bankroll so they cannot lose' isn't actually an argument because casinos have limited bankroll. If they would allow me to play a +EV game I can crush them even if they had infinite bankroll by varying my betsize. The 'random walk' argument only works for fixed bet size.

> If they would allow me to play a +EV game If a business offered a positive EV gambling game, it wouldn't be called a casino and would only last as long as the venture capital lasted.

Actually there are still +EV video poker games in Vegas.

http://www.slotsmamma.com/blog/how-do-you-find-full-pay-deuc...

There are a few catches though. Mostly if you play perfectly (which is not simple) the most you can expect to make is less than eight dollars an hour.

Re: Monte Carlo methods – Why it's a bad idea to go to the casino

#62

Post by roenxi »

petermcneeley wrote: post #10
roenxi wrote: post #2

I have a pet peeve about Monte Carlo methods; although it might be more fairly characterised as a rookie mistake I saw once. MCM are not strong if the tail variance isn't an important feature of what is being modeled. I've seen simulations where the modeler starts with an analytic model - from which they could trivially calculate the mean and variance of a KPI - then used a MCM simulation to find out essentially what…

Really dependents on your philosophy. Would you rather do error propagation using this method http://lectureonline.cl.msu.edu/~mmp/labs/error/e2.htm or would you rather perturbate your variables and resolve mean and variance. My philosophy drives me towards the computational approach over the analytical mathematical approach.

Are you sure there is even a philosophical difference there? I'm still going to use a program to do the heavy lifting of calculating the errors. I'm happy to argue that there is no philosophical difference; if both approaches are feasible and take comparable amount of time to implement then one gets the exact answer to the question at hand and the other is a poor man's shortcut for people who aren't confident in their maths skills.

The calculations should be arriving at the same numbers in the end, and implementing a simulation vs. an error propagation tree isn't going to favour the simulation for simple scenarios.

MCM is great for when doing usual error propagation is infeasible. It is sloppy when the error propagation could be done with a one or two analytic formula. Simulation isn't appropriate for problems that are easy analytically. For example, in practice, most of the examples in the article are not suitable problems for breaking out MCM (and although the author probably knows that, maybe not everyone on HN does). The Pi one might be a standard application, but even there Pi in particular is not a great choice for a showcase because Pi has some very nice analytic approximations.

Re: Monte Carlo methods – Why it's a bad idea to go to the casino

#63

Post by OscarCunningham »

spaceflunky wrote: post #60

It's (relatively) easy to show the math on why casino games are impossible to win, but what about sports betting? Does the house always have the advantage? Perhaps it's slightly better for the gamer? FWIW I was looking a betting website recently [0] and they were offering DOUBLE your initial deposit for signing-up, up to $1000. So to reiterate, they are willing to give up to $1000 for FREE just for creating an accoun…

>Does the house always have the advantage?

The mathematics doesn't really matter because if you find a systematic way of winning then they just ban you.

Re: Monte Carlo methods – Why it's a bad idea to go to the casino

#64

Post by dang »

arsenide wrote: post #37

I work on Monte Carlo simulations professionally for casino slot games. I wish that more depth was presented here: what percentage of the time do you get favorable vs unfavorable outcomes with each strategy? For further depth, use different types of players (with different exiting conditions). Perhaps I should write such a blog post at some time..

That post would probably be of interest to a lot of HN readers. If you want, we can look over a draft if you send it to hn@ycombinator.com. Sometimes we can make suggestions that improve an article's appeal to this crowd.

Same offer goes for anyone else who's putting a lot of work into a post they hope will interest HN.

Re: Monte Carlo methods – Why it's a bad idea to go to the casino

#65

Post by bredren »

noego wrote: post #51
55555 wrote: post #11

It's more complicated (worse) than this. That the house has a small edge only tells a small part of the story. When people go to vegas for a weekend, they might have a number in their head they are willing to gamble. If they dont, then that number is their bank account balance. Then they start flipping coins, and often they keep doing this until they go bust. They rarely cash out when up but they always lose when the…

You hit the nail on the head. If you simply play the pass-line and free-odds on craps, the house edge is extremely small. And yet, most people lose far more than predicted by the odds. The problem is exactly as you stated - people don't have a defined exit-strategy, and their implicit exit-strategy is to keep playing till they lose everything. Which is guaranteed to happen 100% of the time even if the house-edge was…

In my 20s I’d just drop a $20 into a slot machine per day and play max bet, usually $3. If anything won it was a lot more than $20 and I felt like a winner. My rule was to spend the winnings immediately, and I still have a dkny vest I bought in MGM grand with my “winnings.”

I think gambling can be fun if you limit yourself and don’t take it seriously. Trouble is Vegas is good at making you feel special. And they serve free booze.

Re: Monte Carlo methods – Why it's a bad idea to go to the casino

#66

Post by listenallyall »

spaceflunky wrote: post #60

It's (relatively) easy to show the math on why casino games are impossible to win, but what about sports betting? Does the house always have the advantage? Perhaps it's slightly better for the gamer? FWIW I was looking a betting website recently [0] and they were offering DOUBLE your initial deposit for signing-up, up to $1000. So to reiterate, they are willing to give up to $1000 for FREE just for creating an accoun…

>> just for creating an account

No, for creating an account, funding it AND making a significant amount of wagers. The details vary by site, but there are always restrictions in the fine print -- either you only "earn" the bonus a few percent at a time, or you aren't allowed to withdraw until you've made enough bets, or some similar restriction. I'd guess that some or all of the "free" $1000 is inaccessible until you've made a 10x rollover, or $10,000 in wagers.

Re: Monte Carlo methods – Why it's a bad idea to go to the casino

#67

Post by arsenide »

dang wrote: post #64
arsenide wrote: post #37

I work on Monte Carlo simulations professionally for casino slot games. I wish that more depth was presented here: what percentage of the time do you get favorable vs unfavorable outcomes with each strategy? For further depth, use different types of players (with different exiting conditions). Perhaps I should write such a blog post at some time..

That post would probably be of interest to a lot of HN readers. If you want, we can look over a draft if you send it to hn@ycombinator.com. Sometimes we can make suggestions that improve an article's appeal to this crowd. Same offer goes for anyone else who's putting a lot of work into a post they hope will interest HN.

Thanks dang. I may very well take you up on this offer.

Re: Monte Carlo methods – Why it's a bad idea to go to the casino

#69

Post by mongol »

TBurette wrote: post #50

A while ago I wrote a similar interactive article to prove that the martingale betting technique at the roulette doesn't work : [1]. The martingale is when you bet 1, double the bet each time you lose, start again at 1 when you win. The aim was to create a single page anybody could link to that proves without a doubt the abysmal odds of making money off the roulette with the martingale technique. Instead of pre-writt…

Theoretically I learned it works, but only if you have unlimited funds.

Re: Monte Carlo methods – Why it's a bad idea to go to the casino

#70

Post by assface »

55555 wrote: post #11

It's more complicated (worse) than this. That the house has a small edge only tells a small part of the story. When people go to vegas for a weekend, they might have a number in their head they are willing to gamble. If they dont, then that number is their bank account balance. Then they start flipping coins, and often they keep doing this until they go bust. They rarely cash out when up but they always lose when the…

> You can only spend so much money on drugs and sex.

Speak for yourself.

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