Topic: Just-Dice.com : Invest in 1% House Edge Dice Game - page 51. (Read 435457 times)

Over the lifetime of the site so far, taking 0.1% of every bet would have netted me something like 4 times more than taking 10% of profits, due to the investors doing so badly.

That doesn't mean anything about which of the two systems would get me the most going forwards of course.

My thought on it is that its not really a difference to the actual system when you take 3 months or so. Its the same fee for you. For the investors its not changing much, for the gamblers nothing. So i think the only big changes are for you and you should decide. I think...

Like I said, I think that's the simplest and best way to go if we're going to switch to a model where I get a percentage of bets rather than of profits.

I don't think it's particularly useful to run a trial.  It's clear enough that in weeks where the site keeps more than 1% of the total wagered, I do better taking 10% of profits, and when the site keeps less than 1% of the total wagered, I di better taking 0.1% of the total wagered...

It strikes me that implementation could be a problem, only because of all the investors whose aren't at peak profit, and so who are due some commission-free profits.

a) I guess the simplest way to fix that is to just refund them any excess they've paid so far.  So the guy who invested 100 BTC, got up to 140 BTC, paid 4 BTC commission, then saw his investment shrink to 130 BTC is 10 BTC below his peak charged profit, has over-paid by 1 BTC, and gets a 1 BTC credit to his balance when we switch to the new system.

Is that fair?  There are lots of investors who pulled out after large losses to nakowa and never came back.  They would get a nice windfall from this change, at a relatively large cost to myself.  What about the guy who invested 100 BTC, got up to 140 BTC then lost to nakowa down to 80 BTC?  He's at a net loss.  Does he get all of his commission refunded?

b) At the other extreme we can just say that overpaid commission is lost, and we're switching to a per-bet charge from now on.  I doubt that's acceptable to anyone (especially to the guy who paid 10 BTC or something for the old mechs account with a view to saving 20 BTC in commission over the coming months or years)

c) There are probably schemes between these two.  I'm thinking of charging 0.1% per bet, then refunding investors who have overpaid commission at the end of each week/day/hour until they have no longer overpaid.

Also worth considering are the pros and cons of switching, assuming we can find a fair way of handling investors who already paid too much commission.

pros:

* If I know I'm getting 0.1% of every bet, I can more easily offer referral schemes.  I can tell people they'll get 0.05% of all volume they refer to me for instance and know that I won't be running at a loss, even if the site has a bad run.

* Under the current system if the site has a few losing weeks in a row, some investors could get worried that since I'm not earning any commission I might be tempted to acquire an income by cheating the investors.  Switching guarantees me a more stable income from the site and removes any such temptation.

cons:

* It could be seen that since my income no longer depends on whether the site wins or loses, I have no incentive to make sure the players aren't somehow cheating.

* When the site has a losing week, the investors not only lose coins to the players, but also to me, making their losses even worse for the week.

Anything else?

No, we are voting with our investments all the time. No need for dooglus to waste his time on this, he has more urgent things to do for the site like bringing up a good API

Sebastian: I meant it just to give investors a feel of how their profit evolves in real time under the new commission scheme. Just ease the transition.

Doog: Should you ask the investors to vote on this?

For what do you need a counter? The house edge is 1% so 1% profit in average for investors. Then 0.1% of each bet is exactly 10% of each bet. Thats exactly adding a fee on the theoretical profitline. And this line is known. So you could even calculate the fee back to the start of JD now.

Yes Doog... you have picked up on my point exactly. I think your idea of taking 0.1% of wagered amount from the investors as each bet is placed is a GREAT idea. Is there any way you can setup a trial run with a counter on the website so we can track investor profits the way they are as opposed to this newly proposed scheme?

I think we're getting somewhere! Thank you very much for taking the time to read my posts.

Didnt notice that. I only remember a statement from you where you wrote that you bought it because you wanted to help him and you have an advantage from it. I would have bought it when i would have seen it early enough too...


That would mean fees to pay when investors make a loss and judging from zipmasters text thats what he wants to avoid because he thinks its harder to grow back to the previous level that way. But its simply not possible to solve what zipmaster wants to solve. There is always a fee and regardless of how you calculate it it will be unfair on times.

At the end i dont see why zipmaster is hanging so much on the fee since its only 10% of the PROFIT anyway.

I think your suggestion, that you get fees on the fly for each bet, so you earn on the theoretical profitline, is ok. Its no big difference for investors. Though of course that should be valid for the weekly fee only. When people divest then the fee should be calculated according to the profit. With this system you even could get daily payouts without problems. Though i hear already zipmaster that he wants the fee monthly... For me its ok.

I really dont think that you are responsible for investors losses or that you should feel responsible. There is no reason to feel guilty having run JD with the mathematically proven Optimum values for investors. Something i would like to see though would be the investors setting their own risk level and the standard risk level is low. It would mean they have even more chance to set to their needs. And no one than the investor can be blamed for what he did then even more. But in no way you are responsible or in debt for investors risks because you used the optimum. It was up to everyone to take that risk and losing is part of it. At the end you or the other investors would pay for it and i dont think thats how investments should work... it works for banks this way but that should be stopped too...

zipmaster: yet again I find myself without time to give you the response you deserve, but I'm sad to say I'm starting to see it your way, I think.

I think you're wrong that investors are -EV for all bets under 90% chance, as you can clearly see if you imagine every bet was 50%, with roughly half of them winning and half losing.  Investors would make a profit in the long run, of around 1% of the amount wagered, and would pay just 10% of that profit to me.  That still leaves it +EV.

If, on the other hand, you're looking at the short term, then perhaps you have a point.  In the extreme situation where I do a commission run every hour, or even after every bet, then every investor is charged commission at the peak of their random (but +EV) walk, and so it likely at any given point in time to have paid more than 10% of their current profit in commission (since most of the time they won't be at peak profit).

Is that your point?  That whenever an investor is at 10% of their peak (commission processed) profit, they're actually at a loss, because the commission offsets the profit?

If so, then some kind of flat rate (proportional to amount wagered on-site, not amount won) commission structure does seem fairer to investors, even if it does result in them bearing 100% of the variance.

Did I get your point now?

I think the only way it makes sense is to rake 0.1% of every bet from the bankroll, not from the players.

That way instead of getting 10% of profits, I get 10% of expected profits, paid by the investors in real time.

It leaves the edge exactly the same for the players, leaves the investors expecting to pay 10% of their profits, but gives me a much more steady income.  I no longer have good weeks and bad weeks.  All the variance is shifted to the investors rather than me taking 10% of it upon myself.

I don't mind either way.  I don't feel the need to win when the investors are losing, and don't mind that some weeks my commission is very close to zero, because the good weeks make up for that.  But if people think it's fairer for me to take 0.1% of every bet rather than 10% of new profits, I'm happy to do so.

We'd have to find a way to make this work with the fact that some investors have over-paid commission already in that they're still making up coins they lost to nakowa.  Maybe a weekly rebate until they're back where they should be or some such.

That's not true.  I bid on it, but I was outbid by BayAreaCoins.  He pretty quickly sold it on for something like twice what he paid for it, too.

The account is now earning commission-free profits for its new owner.

I'll address this one first, since it's easy...

What if someone becomes 80% of the bankroll and never divests?  He keeps making more and more profit, and I never get to see any of it.  I need to take commission regularly because otherwise I'm incentivising people to avoid paying commission by never divesting.  Maybe one day a big whale comes and wipes out their profits, in which case I get nothing.  Or maybe that never happens, they stay invested forever and I still get nothing.

Electerium:

I already suggested raking bets by charging either 0.01-0.1% of the winnings or a flat fee of 10uBTC for all winnings above 1mBTC. What this means is that if the gambler loses, the investors pay the fee. This effectively modifies the house edge by 0.1-0.01% in case of the variable fee and and by MUCH less than that in case of the flat fee.
Dust bets could be rendered immune to the fee raking.

Of course Doog would stop taking commision on the winnings.

I've explained the importance of this in terms of investor risk. Taking commissions as it is being done now exposes the investors to unnecessary downside variance in the short term. This asymmetric variance exposure is meaningless as long as the investor plans to keep his coins invested over a long timescale.

Currently, the 1% house edge has been earning the site ~2000 BTC per month. If today a whale loses 2000 coins in a betting session, that constitutes an unlikely event that you, as an investor, expect to find compensated over the course of time (i.e. another whale wins around 2000 BTC in another session).

If you get taxed after such an unlikely event, your investment can only be profitable if you keep your coins invested for enough time such that the 1% profit edge can make up that 10% tax you paid as a result of an unlikely profit.
Under this example, an investor would have to either:

a) take out their investment and wait for site profit to fall back towards its expected 1% trend
OR
b) make sure they keep their coins invested at least another 3-4 days to make sure that the house can make back those 200 BTC that he lost in tax

An option i suggested which would avoid the raking of fees and at the same time maintain the commission scheme is for Doog to charge commission once every two weeks or once a month by taking 10% of house profits as calculated by a moving average (15 day average). This would allow Doog to take commissions from a truer investor profit. To disincentivize divesting he could keep on charging 10% of overall profits for any investor who chooses to divest before the fee has been applied. Or, better yet, give part of this "divestment tax" to the investors that keep their investment intact for the long term.

This would ensure that investors do not accidentally get taxed over a statistically unlikely upswing while at the same time incentivizing a more uniform bankroll. At the moment bankroll oscillates by 10% due to people pulling out and investing back in trying to play the upswings and downswings in the site profit. This puts the constant investors at risk of exposure to downswings due to the site bankroll dropping after an unlikely win.

Furthermore, the 10% bankroll divest that generally happens after an unlikely upswing burdens the patient investor even more by making his cut of the bankroll larger during an eventual downswing. It must also be said that this often works to the advantage of the patient investor also. Ultimately though, due to Doog's rough commission cut and the poor incentive for a stable bankroll, the downside variance (and the overall variance also) for stable investors is exaggerated in the short to medium term.

It would be interesting to know how often people invest/divest. These problems are very important for the site to discuss because they should push Doog to publish site statistics more often.

I have attempted to request detailed data for the betting statistics whose plots he posted here a couple days ago but haven't received anything due to him being busy. I have asked him in the past about profit and wagered data and he was kind enough to both supply it for me and make the raw data available directly on JD.

@DOOG: the raw.dat file should be further expanded to include bankroll over time and histogram data of bet sizes. This shouldn't be too much information and would allow for a more detailed analysis of the underlying stochastics driving the site's and, more importantly, the investor profits.

*facepalm* Sure... JD is short before extinction because players go bankrupt fast. I dont know what data you have but i guess you guess.

No way should you rake bets, unless you completely remove or reduce the house edge.


As someone who is extremely familiar with casino rake, I can tell you that one of the worst things you can do is to let your fish go broke too fast.

If you begin raking bets and keep a 1% edge, thats exactly what you're doing. In the short term, the site makes more money, but the fish go broke more quickly and thus reducing the total volume of bets executed in the long term. Inherently that will increase variance as fish execute less bets relative to their bankroll. Consequently there will be less people able to bet long term because their effective bankrolls have decreased.



Does anyone want to gamble in an empty casino?



IF you want to start raking bets, then doog should remove himself from taking commission on the site's winnings.

The problem is that the casino and gambling bitcoin dice industry is completely built around the house edge IIRC. to buck this trend could cost you customers, certainly if they believe that they are executing bets with an EV that's more negative than your competitor because of the rake.

So if you start raking bets you better reduce the house edge.


does zipmaster support that?

Sebastian, I don't get your example. Make the full EV calculation.

Your too fixated on the fact that doog takes his cut when the profit is positive. The profit can become positive on a super unlikely upswing. After such an unlikely upswing, an equivalent downswing is just as likely. Which would lead invstors to lose more than they would have lost if they maintained full profit.

I forgot. But its profit. investment 1000btc
week 1 +10 btc -1btc for doog, wallet 1009btc
week 2 -9btc 0btc for doog, wallet 1000btc
week 3 +10btc 0btc for doog, wallet 1010btc
week 4 +10btc -1btc for doog, wallet 1019btc

doog has 2btc fee and the investor 1019btc. I dont see that its a problem.

Yes, an account with high losses from a player was sold recently... these losses can be used for investments too and doog wouldnt earn fees for a long time. doog bought the account himself because no one wanted it... i would have taken it when i had seen it early enough.

Yes, but does that affect your calculations? (I know how to calculate what it is worth, I'm interested in second order affects)

The value of a feeless account is worth 10% of the maximum feeless amount.
In the case of 1BTC it would be 0.1BTC. If you were to buy a feeless account at less than that 10% then you would technically profit as compared to a brand new JD account.

There is the auction section of this forum. One such account was just recently sold.