[Toonces]

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Why does the Bellagio have 10 million in it's cage?

Every bet you can make there has a house edge. Couldn't they just use the losers to pay off the winners? Why the need for a 10 million dollar reserve?

Except for a few select individuals, $10,000 is the most you can bet. Why? Why won't they allow a 10 million dollar bet.


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The reason is that:
1. Gaming regulators require it, and
2. Bellagio investors politely request that the Risk of Ruin for their casino is 0%, not 1% or 5%.

Let's say that I have $300 in my coin-flipping bankroll. If some fool with $15,000 wanted to take me on in a coin-flipping contest where I got a 1% commission on each flip, I'd probably take the bet (assuming I was convinced that everything was legit and I was guaranteed to collect if I won). It is true that my risk of ruin would be very high (over 90%). But if I have sufficiently over a 2% chance of increasing by bankroll by 50x it is still a good bet. (In reality, I'm risk-averse enough that I would want to negotiate a greater house advantage and be sure that even if I lost my coin-flipping bankroll, that it wouldn't be a major blow to my overall bankroll).