Best online casino : 5 minutes to understand Expected Value

We all know that gambling if you just play by luck, one day you will lose all your capital, but there are so many ways to teach you how to improve your opportunities to win on the internet, if I want to have fun and simply spend my leisure time, isn’t there any other way? In fact, you have a method to win, but you need to spend a little time to understand what the expectations are first, after learning you can be more rational, more aware of the operation of the casino, gambling will no longer be a terrible and unprofitable thing. You don’t need to read any books to learn, as long as you have a little basic knowledge of mathematics, believe me, you will learn after this little best online casino lesson. Let’s get start!

Best online casino : 5 minutes to understand Expected Value

Basic Information about expected value

Abbreviations:”EV”, It can also be described as the long-term effect value. It is the average of all possible outcomes, but in calculating the average, a higher percentage of outcomes have a higher probability. The expected value also represents the long-term average that can be calculated if a player bets repeatedly many times, this is not just an intuition. Mathematicians say that this statement can be proved by using the basic rules of probability, and he also shares the same concept with the well-known law of large numbers.

The law of large numbers is repeat the implementation for many times, the average of the final result will be closest to the expected value.The law of large numbers also explains why gambling is addictive for individuals, for casinos, it is a business. Because running a casino is not gambling at all, the average amount of money won by a large number of gamblers will be very close to the expected value.The casino operator has worked out the expectations in advance and knows what the revenue will be over the long term, so there is no need to fill the dice with lead or make fake cards to guarantee a profit.

The relationship between the law of large numbers and casinos

Casinos can stay in business as long as they provide inexpensive entertainment and cheap transportation to keep customers coming in, as long as the bets are high enough, the law of large numbers will guarantee a profitable casino.Insurance companies also operate much like casinos.They believe that people who buy insurance will not die, of course some people do die, but the insurance companies know the percentage and rely on the law of large numbers to predict the average amount that must be paid out.

However, it is not guaranteed to make money by relying on the law of large numbers companies, for example, insurance companies in Taiwan set up a set of “confirmed case claims” insurance contract to claim the patients. The covid-19 began to spread around the world at the end, the number of confirmed cases climbing, which exceeded the insurance companies uphold the law of large numbers , and let the beginning of the sale of this insurance company eventually stopped selling this product, because the profit has been lower than the cost of expenditure.

Best online casino : 5 minutes to understand Expected Value-2

Best online casino : What number is a large number?

The law of large numbers is when the number of trials more and more, the actual average results of many trials will be closer and closer to the expected value. However, the law of large numbers does not say that how many times the trial is needed to ensure that the average result will be close to the desired value exactly.

Experts say it actually depends on the variability of the results, the greater the variation in results, the more trials are needed to ensure that the average result is close to the desired value. But games of chance can also keep a gambler interested, even if it keeps him in the casino for hours, because the outcome is unpredictable.Gambling with high variability in outcomes, such as state lotteries that can accumulate large winnings.

Back to the point, can I make money by expected value?

Of course you can earn money by using expected value, assuming the casino has a positive number expectation of winnings, and you play at the casino enough times, you can win on expectation.However, most gamblers know nothing about expected value and believe that gambling is supposed to lose most of the money and hold negative number of the law of large numbers, relatively, you will also lose a lot of money due to the negative law of large numbers.

But players also need to have a perception about casinos are inherently more unfair to gamblers because they can rely on a large number of gamblers to apply the law of large numbers, but the amount lost by gamblers is not shared by gamblers equally. Some people win a lot of money, some people lose a lot, these uncontrollable factors affect the positive and negative values of the law of large numbers.

Is there no guaranteed winning gambling method?

Many gamblers often follow a certain betting way when then was playing. One of ways to bet is that the amount a player bets each time is based on the results of previous bets, for example, when playing roulette, players can double every bet until they win, or until he loses it all.

When it comes to slot machines nowadays, as a game of chance, slot machines have all kinds of dazzling winning results, and these results are determined by random digital generators.Since the beginning of slot machine’s invented, gamblers are still looking for a ways to consistently win at slots, but applying the Kelly formula, over the long term, random number generators will ensure that casinos keep a fixed 5% profit in the slots.

How can I use the knowledge mentioned above?

With a basic knowledge of the law of large numbers and casino operations, then we can understand the impact of Kelly’s formula on gamblers’ bets.Most gamblers who play well in the casino know how to allocate their capital, this is not a matter of distributing the principal according to gambler’s own intentions, they use Kelly’s formula to figure out how much they should bet on a single bet.

Let’s look at the Kelly formula:
f* = the ratio of the capital to be bet
p = probability of winning
q = the probability of losing
b = odds, equal to the expected profit ÷ possible loss
the formula is f* =(bp-q)/ b, the numer of bp-q above the formula represents the percentage of win, it also called “expected value” in mathematics.

It does not matter if you can not understand the formulas above. Let’s do a practical exercise. Suppose you have $100 in capital to play a coin toss game with odds of 2:1, If the coin comes up heads, you get $2, and if it comes up tails, you get $1. Back to Kelly’s formula, p and q represent the heads and tails, which means that the probability of both p and q is 0.5.

Then, odds = expected value ÷ possible loss. We talk about the odds is 2 first, so, $2 profit ÷ $1 gain or loss, then we can get the f ,of Kelly’s formula.After we get the result that f = 25%, this 25% is the best way for a gambler to allocate every single bet when considering maximizing returns.

Today, we have talked a lot about information of gambling and casino’s operation, after practicing Kelly’s formula, we believe that you will never bet blindly again, you will allocate your every single bet wizely. Wish you the best of luck in keeping up with the game, also wish you have a way to make steady profits that suits you best.

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