10% refund question

[Jimbo]

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So despite all your protest to the contrary, a 10% rebate is a +EV offer.


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And despite all your calculations the only thing I can agree with is that getting 10% of your losses back makes it less -EV but never +EV. After all if you end up losing money on your session you still lost. How can losing ever be +EV without a jackpot?

Jimbo

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So I offer to flip a coin with you, and if you lose you pay me $95, and if you win, I'll pay you $100. If you lose, you lost $95. Does that mean it wasn't a +EV situation?

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Your example bears no comparison to the 10% rebate on your losses offer. What would be close though still not the same is this: We must each pay the house 50 cents everytime we flip the coins. If we flip a coin 100 times for $100 per flip and then stop our session if I am behind, let us say 4 flips, which would equal $400 in losses you will give me back $40 and I will have $410 less than when I started. If I am ahead suppose the same number of flips I just keep the $400 I already won minus the $50 in commissions so I have $350 more than when I started.

The house will have a 1% edge everytime we flip the coins. All my example does is to take out the variance in BJ but the 1% HA stays similar to BJ.

An even better example is that you are flipping the coins with the house paying a 1% commission for every flip. If after 100 flips you won 50 and lost 50 you would be even except for the HA of 1%. You will have $100 less than when you started so the house gives you back 10% of your commission after the session ends. You have a net loss of $90 instead of $100 but you still lost. Now suppose you won 51 flips and only lost 49 flips. In this case you win $200 in flips but still paid $100 in commissions with no rebate since you won the session.

Jimbo