Suckout King
09-21-2006, 02:22 PM
In any gambling situation whether its poker, casinos or sports betting anyone trying to have a realistic chance of beating the house and making a profit has to take a reasonably well calculated approach to the process.
If you are looking at a wager where you will generally make 20£ 90% of the time and 10% of the time you will lose 100£ then this would have an expected value of 90%*20-10%*100=8£
Lets say you could wager 1000£ rather than 100 or even lets say 10,000 (your entire gambling bankroll). Clearly if you wagered 10,000 you would probably want to protect your bankroll with some sort of side bet. There would be a charge for this (lets say 1%) but your postion would be safe and you would have safe profits.
What i am really getting at is that although something might have an expected value of say 800£ the variance implied in the deal can greatly affect its worth. the 800 might be worth 750 or so but most of us would regard this as a much better deal particularly when you consider the potential profits that could be gained from the 10,000.
Now lets take a bonus offer of say make 4 bets of 50£ and get a free bet of 50£ against a make 1 free bet of 50£ and get a free bet of 50£ (but to release it you need to wager 150£ after before you can cash out)
EV wise these will be pretty much the same and your profit will clearly be determined by how good your bets are rather than anything else.
Someone seeking purely to exploit the bonus with no knowledge of betting might do cover betting on another site (lets say on the same bonus terms) assuming zero knowledge of sporting events they cover the bets so that for each event they are 100% covered. Lets say there is a 2% effective charge on their wagers (house edge).
If this is the case they will have 50£ in bonus wins less 8£ charges=42£. Not a huge profit but not too bad for what was proably about 1 hours work over 3 weeks. Still noone is going to be too excited by this. Here the EV is 42£ on about a 108 initial investment and it was risk free. The EV is equal to the true value assuming you have the ££ to be tied up and wouldnt otherwise be making profit from them.
If we didnt cover the outcomes so much and after the bets 50% of the time he would have his money back but no profit and 50% of the time he would get 84 this has the same EV but not the same true value neccisarily.
If we say true value is what a proposition is really worth to a person but the TV is a more mathimatical equivalent assuming someone is risk neutral. in reality they would probably take the 84 as the 84 would really be 85 as they would have fewer charges.
Someone who was risk neutral would probably rank these two as the same. Pro risk and they would take the chance at doubling up and risk adverse would take the safe money. Bankroll management clearly comes into play and a risky deal is worth more to someone with the bankroll to cope with it that it would be to someone with only 100£ or so in their account.
What the whole point of this article is based arround though is that despite the EV being the same simply in terms of the bonus rather than any betting that goes on the TV is not the same.
EV of each of the two promotions is say 22£ but the TV is different.
If you do not hedge the bets then the outcomes are quite different. With the bonus where you get 50£ free for a 50£ bet lets say you place two seperate bets and lose them both. You now have zero in the account and you have no need to make any further wagers connected with the bonus.
Worst case scenario you are down 50£ you are not going to do any more wagers here UNLESS you are choosing to use this site to hedge for the other bonus. If you are doing this you will need more ££ but the EV will be the same as it was before as will the true value and the TV.
lets take the other one where you have to make 4 bets to get a free bet. You could end up losing all 4 paid bets and the bonus bet to be -200£. Ok your expected value is the same but with the second one your loses are minimised. Even if you are hedging you could find more favorable terms to save you a couple of %% by hedging on a different site.
What makes TV particularly important is that you cannot always hedge bets 100% of the time EVEN if you wanted to.
This also shows why just using EV but the simple formula connected with it you will sometimes miss out on some posibilities that are actually worthwhile.
Lets say you are playing in a casino with a 500% deposit bonus on a max deposit of 30$. You have 180$ to wager with. It is a cashable bonus but required the deposit and the bonus to be wagered through 25 times on a game with a .96% house edge.
Your EV for this bonus is -30 as EV= bonus- Wager requirement * (1- house edge). The problem with this is that the true value is different many gamblers would be happy to put 30$ for chances of winning 30000$ etc or even 600 however remote. It terms of TV the TV is different as well. Say you have a 2% chance of leaving with 2000$ and a 10% chance of leaving with 60$ and all other times you bust out. If we take the total of these (2000*.02+60*.1) this is worth 46$ this bonus has a positive TV even though the EV on these simple calculations is negative.
What this also means is that a bonus that you have to play to get is worse than a bonus that you get automatically. You could lose 300$ trying to get the same playthough for a 100$ bonus that other sites give automatically. This is particularly relevant for Video Poker. Video poker is a game that even though the house edge is tiny if maximum strategy and a favourable pay table are employed however most times you play you will lose because much of the profits from a game are from hitting a royal flush which only happens about 1-40,000 hands. Also if you get less or more big hands than you would expect this can mean you will make or lose much more than the average value. To get a 50£ bonus (e.g. virgin casino) you could have to deposit and lose 300£ to make the playthrough if you had terrible luck. With a site where you got the bonus up front though you would be in a position to walk away with only a 50£ loss. In games like VP i would say that when you get the bonus up front the TV is arguably more than normal where as if you get the bonus after it is worth much less.
All i am getting at is you need to look beyond the ev which is really AVERAGE value in a lot of cases. The maths can get tough but normally you should get some sense of what a deal is really worth.
I appreciate this is quite complex but i will try to rewrite this guide in an easier format when i get time.
If you are looking at a wager where you will generally make 20£ 90% of the time and 10% of the time you will lose 100£ then this would have an expected value of 90%*20-10%*100=8£
Lets say you could wager 1000£ rather than 100 or even lets say 10,000 (your entire gambling bankroll). Clearly if you wagered 10,000 you would probably want to protect your bankroll with some sort of side bet. There would be a charge for this (lets say 1%) but your postion would be safe and you would have safe profits.
What i am really getting at is that although something might have an expected value of say 800£ the variance implied in the deal can greatly affect its worth. the 800 might be worth 750 or so but most of us would regard this as a much better deal particularly when you consider the potential profits that could be gained from the 10,000.
Now lets take a bonus offer of say make 4 bets of 50£ and get a free bet of 50£ against a make 1 free bet of 50£ and get a free bet of 50£ (but to release it you need to wager 150£ after before you can cash out)
EV wise these will be pretty much the same and your profit will clearly be determined by how good your bets are rather than anything else.
Someone seeking purely to exploit the bonus with no knowledge of betting might do cover betting on another site (lets say on the same bonus terms) assuming zero knowledge of sporting events they cover the bets so that for each event they are 100% covered. Lets say there is a 2% effective charge on their wagers (house edge).
If this is the case they will have 50£ in bonus wins less 8£ charges=42£. Not a huge profit but not too bad for what was proably about 1 hours work over 3 weeks. Still noone is going to be too excited by this. Here the EV is 42£ on about a 108 initial investment and it was risk free. The EV is equal to the true value assuming you have the ££ to be tied up and wouldnt otherwise be making profit from them.
If we didnt cover the outcomes so much and after the bets 50% of the time he would have his money back but no profit and 50% of the time he would get 84 this has the same EV but not the same true value neccisarily.
If we say true value is what a proposition is really worth to a person but the TV is a more mathimatical equivalent assuming someone is risk neutral. in reality they would probably take the 84 as the 84 would really be 85 as they would have fewer charges.
Someone who was risk neutral would probably rank these two as the same. Pro risk and they would take the chance at doubling up and risk adverse would take the safe money. Bankroll management clearly comes into play and a risky deal is worth more to someone with the bankroll to cope with it that it would be to someone with only 100£ or so in their account.
What the whole point of this article is based arround though is that despite the EV being the same simply in terms of the bonus rather than any betting that goes on the TV is not the same.
EV of each of the two promotions is say 22£ but the TV is different.
If you do not hedge the bets then the outcomes are quite different. With the bonus where you get 50£ free for a 50£ bet lets say you place two seperate bets and lose them both. You now have zero in the account and you have no need to make any further wagers connected with the bonus.
Worst case scenario you are down 50£ you are not going to do any more wagers here UNLESS you are choosing to use this site to hedge for the other bonus. If you are doing this you will need more ££ but the EV will be the same as it was before as will the true value and the TV.
lets take the other one where you have to make 4 bets to get a free bet. You could end up losing all 4 paid bets and the bonus bet to be -200£. Ok your expected value is the same but with the second one your loses are minimised. Even if you are hedging you could find more favorable terms to save you a couple of %% by hedging on a different site.
What makes TV particularly important is that you cannot always hedge bets 100% of the time EVEN if you wanted to.
This also shows why just using EV but the simple formula connected with it you will sometimes miss out on some posibilities that are actually worthwhile.
Lets say you are playing in a casino with a 500% deposit bonus on a max deposit of 30$. You have 180$ to wager with. It is a cashable bonus but required the deposit and the bonus to be wagered through 25 times on a game with a .96% house edge.
Your EV for this bonus is -30 as EV= bonus- Wager requirement * (1- house edge). The problem with this is that the true value is different many gamblers would be happy to put 30$ for chances of winning 30000$ etc or even 600 however remote. It terms of TV the TV is different as well. Say you have a 2% chance of leaving with 2000$ and a 10% chance of leaving with 60$ and all other times you bust out. If we take the total of these (2000*.02+60*.1) this is worth 46$ this bonus has a positive TV even though the EV on these simple calculations is negative.
What this also means is that a bonus that you have to play to get is worse than a bonus that you get automatically. You could lose 300$ trying to get the same playthough for a 100$ bonus that other sites give automatically. This is particularly relevant for Video Poker. Video poker is a game that even though the house edge is tiny if maximum strategy and a favourable pay table are employed however most times you play you will lose because much of the profits from a game are from hitting a royal flush which only happens about 1-40,000 hands. Also if you get less or more big hands than you would expect this can mean you will make or lose much more than the average value. To get a 50£ bonus (e.g. virgin casino) you could have to deposit and lose 300£ to make the playthrough if you had terrible luck. With a site where you got the bonus up front though you would be in a position to walk away with only a 50£ loss. In games like VP i would say that when you get the bonus up front the TV is arguably more than normal where as if you get the bonus after it is worth much less.
All i am getting at is you need to look beyond the ev which is really AVERAGE value in a lot of cases. The maths can get tough but normally you should get some sense of what a deal is really worth.
I appreciate this is quite complex but i will try to rewrite this guide in an easier format when i get time.