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FMMonty
08-12-2005, 11:53 AM
If an online casino offered this deal would it still be profitable?

Over a one month period, you take the entire profit/loss of each player.

If the player is in profit you, you give them an extra 10% of their profit and deposit it to their accounts at the end of the month.

If the player has lost money, you give them 25% of their loss back and credit this back to their account at the end of the month.

Would the online casino still be profitable? What is the risk? Can anyone do the math behind this?

Any thoughts on this would be greatly appreciated

poker-penguin
08-12-2005, 12:40 PM
A lot of casinos do 10% of losses back. The profitability of the rest of your deal would very much depend on what other bonuses etc you offered.

SheetWise
08-12-2005, 01:37 PM
It would depend a lot on how long/often they played, and what the house expectation was on the game.
For example, consider two players who each place opposing \$100 wagers outside on a roulette wheel -- and that is their only bet. 18 out of 19 times one player will end up with \$200 and the other player with \$0. 1 out of 19 times the house will win \$200 giving them an expectation of \$10.53 for the single trial.

Given your example -

One Player loses \$100
One Player wins \$89.47
House wins \$10.53

Then -

House pays loser \$25
House pays winner \$8.95
House Net = (23.72)

pzhon
08-12-2005, 02:10 PM
This is a lot like a sticky bonus. Set a stop loss and a target win, and play until you hit one or the other.

/images/graemlins/diamond.gif If the player makes a few large bets, the casino loses money.
/images/graemlins/diamond.gif If the player makes a lot of small bets, the casino will still come out ahead.

The bet size doesn't matter much, but if you have a low balance and plan to make a lot of large bets, you will often bust out rapidly, which superficially sounds bad but changes you from the second situation (-EV) to the first situation (+EV).

AaronBrown
08-12-2005, 07:04 PM
My guess is there are two provisions to guarantee a house edge: you must make some minimum number of bets and you cannot withdraw the bonus payment in cash, it must be rebet.

For example, suppose you must make ten bets on roulette. If you make ten \$10 bet, there's a 31% chance you'll make money. If you do, your average win is \$31. The bonus is worth an extra \$3.10 in that case. The 69% of the time you lose, you lose an average of \$22. The 25% rebate is worth \$5.50. Your overall expectation is negative \$0.50, even after adding in the bonus. Plus you have an average of about \$5 that must be rebet, there's another \$0.25 for the house.

That assumes you make the minimum bets. If you do more, and almost everyone does, you'll lose more. Very little money deposited to on-line casinos is ever taken out. Look at their financial statements.