Topic: Are bitcoins casinos really pointless? - page 2. (Read 8489 times)

That's just the effect of variance, though.  Martingale play increases variance.  However, the classic martingale still leaves the punter ahead only one bet per cycle (or else flat broke).  I don't see how this breaks the house one bet at a time.

Other martingale-related strategies like the so-called "reverse martingale" (doubling a roughly even money bet every time the punter wins rather than losing) might seriously increase the house risk of ruin, especially if the house allowed an unlimited range of bets, but why would the house allow that?

Similarly, it is possible to make martingaling considerably more difficult by only allowing bets in certain ranges.  For example, a house spreading blackjack might allow bets on one table from $100-500, bets on another table from $2000-10000, etc. but not allow easy doubling because those ranges aren't allowed.

I still believe the OP is misusing the phrase "house edge," since the house edge remains constant.

Martingaling increases the odds that the player will come out ahead (generally by a small amount) in any given session, but only at the cost of the occasional enormous loss.  I'd be interested in seeing a simulation that the classic martingale, if allowed, greatly increases the house risk of ruin, but it seems the house would have to allow an unrealistic range of bets for this to happen.

(Other tactics, such as the "reverse martingale," would I believe increase the house risk of ruin with a less absurd range of potential bets, but I'm just guessing on that.  I guess I have never been particularly concerned with the house's risk of ruin, since I'm usually focused on my own.)

Excellent post!

I imagine what SRoulette is talking about is the "actual" house edge, ie your first martingale example "reduced" the house edge to 1.45%.

Here's a very simple simulation of martingale betting vs. flat betting:


and here's some sample output:


Notice that the flat betting has numbers much closer to 0.02 due to the lesser variance, but both the flat betting and the martingale betting give house edge numbers with a mean of 0.02.  If we were to run for more than a million plays each, the numbers would get ever closer to 0.02.

Bah, I seem to me leaving out words and typing the wrong word quite a bit today.  I don't think I slept enough last night, I'm just not paying attention to what I'm doing.  You're right, I'll fix it in my post.

I don't think our disagreement is one of terminology.  Even after you rephrased it, I still think you're wrong.

A house with 2% house edge where a single player bets any way they like can expect 2% earnings for the entire sum of all bets.

Unless perhaps you're using a weird definition of expect?


I think you meant to say you agree with dooglus and darkmule.  SRoulette is the one claiming that you can change the house edge by carefully sizing your bets.

That's nonsense. It's like saying "Big Tits" means a lot to the US demographic but far less to the Asian demographic. ORLY?!

I'd tend to agree with dooglus and darkmule.  I'd need some pretty significant convincing to believe that the edge can be affected by modifying the size of your bet.  It would be very interesting to see what sort of simulation you are running.

Ive just dropped Code Monkey an email to see if he can tidy up the simulator for release, the one he has provided for me hooks into our main game engine in order to run simulations on any/all of our games, unfortunately this means it does not work as a stand alone application.


Martingaling does in effect reduce the house earnings dramatically which can be argued is reducing the house percentage (forgive my poor terminology). Perhaps a better way to state this is:

A house with 2% house edge where a single player bet for 1'000'000 rounds motecarlo style can expect ~2% earnings for the entire sum of all bets.
A house with 2% house edge where a single player bet for 1'000'000 rounds martingale style can expect ~0.05-0.01% earnings for the entire sum of all bets.

The bigger the range of bets, the further the houses expected earn is reduced until eventually you are leaving your business vulnerable to going bust.

That is an odd contention.  Are you sure you aren't talking about risk of ruin?  The house edge on any particular bet should remain constant no matter what betting strategy a punter employs.

I still fail to appreciate it.

There's no betting strategy that changes the house edge.

I'd like to see your simulation code if that's possible.

This is something we discussed with dooglus but he failed to appreciate, There is a tipping point with the house edge and bet range offered where martingale systems will start to work often enough to put the house at serious risk of going bust. The house edge is not a guaranteed earn and martingaling has the effect of reducing the house edge significantly (when the simulation data is averaged out of 10'000'000 rounds).


We initially used simulations to calculate what bets we can afford to run, now we use a combination of our simulation data and automatic maximum bets.
It is a configurable setting for each of our games (which Ive been ordered not to touch), each game we can afford to payout 100 successive maximum wins on maximum bets (codemonkey adjusts this setting manually for specific games to allow higher bets). This in our opinion is the only safe way to operate, if your casino cannot withstand an epic lucky streak as described you could be looking @ critical failure.

A house that's publicly listed has the significant advantage of both extra buffer (five digits in BTC for S.DICE for instance) and the ability to either borrow against the stock or outright sell it in a pinch. This arrangement really takes most of the volatility risk out of the business.

Well, it's an interesting point. Volatility is dangerous to a house in inverse proportion to the house's bankroll. Since most Bitcoin casinos don't disclose their buffer size - how much they keep on reserve - there's a very real chance that houses will collapse if they let their volatility get too high. Players should accordingly be aware of the risk and not put too much coin into a casino on a long-term basis. By and large though, players don't do this with Bitcoin - which is one of the major drawbacks from a casino's standpoint to using the currency. Even solid, non-ponzi casinos will rake off profits at some point out of the expected hold on a player's deposit if it's been sitting there for 6 months or a year. But Bitcoin casinos don't tend to hold currency anywhere near that long - usually the turnover is within the same day. This means the casino has to be much more disciplined in maintaining its reserve - we keep 5x total player funds in Bitcoin or BTC-convertable coupons at all times. There have been several times in our history where if we hadn't done this, we would have had serious problems because of the high RTP of our games and the volatility that incurs.

The rule of thumb, though, is that as long as a casino has the funds to ride out losses it will come out ahead in the end. There are several other ways to limit volatility, including limiting bet sizes and deposit amount or frequency. Capping individual withdrawal amounts is another - although much shittier - way of doing the same thing.

Bottom line, no casino should be going into business offering a 99% RTP unless they have the funds to back that up. Look, a very quick sim on our system shows that if the house has a $10,000 bankroll and a 99% RTP, and is accepting bets of up to $100, they have at least a 5% chance of going bankrupt before they double their bankroll (assuming they leave the winnings in their float). We believe that the chance of bankruptcy should be 0.1% or lower; but this is because we obviously invested so much in the production of our site that it would be foolish to lose it over $10k. So players should judge for themselves whether the sites they're dealing with have anything to lose.

This is what I was thinking, they're exactly the opposite of pointless because they have the implicit ability to expose people that otherwise wouldn't have been involved to Bitcoin.

Not true actually. SatoshiDICE doesn't pay out 99% because the luck/volatility of doing so is highly likely to result in periodic ruin for the house. I've worked with a few brilliant statisticians to come to this conclusion. Even at the current 98.1% house edge, there is non-trivial risk to the house. If a competitor came out with a house edge at 99%, I would not match it, I'd just wait for the site to bankrupt itself.

I think this is probably true, considering the size of the captive American poker audience that can't play anywhere else. Which takes us to the - afore-unmentioned #1 reason why Bitcoin casinos aren't pointless - they are the ultimate Hail Mary pass for gamblers to get around a country's laws. Based on the number of failed hits we get from US players who can't get onto our site, versus hits from the entire rest of the world, we've estimated that if we opened to the US we'd be doing 6-7x as much business. We'd put Seals out of business in two months, max.

But if we did it, we wouldn't get to spend it on nice cars. We've already estimated that making that much money would barely cover the monthly legal bill when the federal government got interested. Also, it's hard to put a price on avoiding shower rape in federal prison. But hey, we're taking the long view. There's plenty of demand out there. IMHO Seals could do a much better job tapping into it. Buying Bitcoins to play without a proxy is nowhere near as complicated as the gymnastics US poker players are already going through to get some action.

I would bet that right now SealsWithClubs is #2 in the bitcoin gambling world, based on all metrics, behind Satoshi Dice.

I think that as a pure bitcoin poker play, we have taken the game beyond the "fun" level of sites and built it into something that is viable and extremely cool IMO, but obviously I'm horribly biased here

As a site pro and affiliate manager, I can say that the poker community response has been extremely encouraging.  By using bitcoin to lower the overhead, we now offer an active poker site with extremely low rake when compared to the traditional industry.  I think this cost savings and total elimination of all payment processor headaches has made us extremely competitive.

I am extremely excited to further this project in 2013, and consider it my main focus.

May as well weigh in with our 2c.

Provably fair is a good draw for the bitcoin demographic but it means far less to gambler demographic.

Bitcoin gambling is always going to be a race to the lowest house edge, the winner will be which ever company can afford to run the biggest risk. The only issue we do see with this is you end up with very generic boring games (pick a number, is yours higher/lower) as the bulk of bitcoiners are chasing the best earner and not the best entertainment.

While the barrier to entry for starting a bitcoin casino is extremely low odds or success are also low.
We may or may not profit from this it has been an extremely interesting project for us to develop.


That was our attraction as well and why we created Satoshi Roulette - in one action you win or lose.
No cash in or account signup and login necessary (I personally love paying instant roulette from my phone).


I think a large factor of satoshidice's success is being integrated into the most popular bitcoin wallet blockchain.info, which I feel has a negative impact on bitcoin gambling as a whole as it shields potential gamblers from ever looking further. I emailed them after seeing  they added BTCDice querying to see if they were interested in adding support for our games (specifically roulette) as our games work the same, but did not get a reply to any of my queries.
I was surprised blockchain.info added BTCDice and even more so that they kept them so long Given the multiple complaints BTCDice had: (lying about payout multipliers and house edge).
I always assumed blockchain.info owned or was partners with BTCDice and this is why they tolerated them for so long, it also could be that the 2nd game they added generated so many complaints they have become wary of adding any new games.

This is how a free market works, some people get the lucky breaks while others are simply ignored and languish regardless of their efforts and sincerity.



On our casino android betting works very well thanks to all our games using the bitcoin URI scheme.

no peer to peer action though.  I'd like to play against humans, not bots.

Is there a bitcoin casino with an android app? 

cuz that would not be pointless...  I'm sure I could get more people into bitcoin if that existed!