Topic: Moneypot just took a huge loss? - page 4. (Read 7643 times)

very admirable your efforts to explain, to prove or to find the best KC %age for the plinko game. I would expect this effort from the ex owner or new owner of MP

you are saying that risking 40% of the BR would be optimal but half = 20% would also be acceptable? did I get this right?

what about those 83% or 99% KC risk for the plinko game?

I tried to read and understand things again, but still can't seem to.

Can someone summarize why the bet went through? Was the bet supposed to go through?


https://www.moneypot.com/bets/18530298 shows <1% house edge. But risking tens of bitcoins at 1% edge is crazy, so I assumed it shouldn't have gone through
Edit: unless the max bet plinkopot shows is wrong, and the amount taken as trying to win is much lower than the max payout on the line.

I modified the simulation to it's running the 121x "red" plinkopot line:


and generated some plots of the average log bankroll growth against percentage of bankroll risked.

It takes a lot of rolls to get a good smooth curve, presumably because of the high variance of the 121x payout.

First attempt:



Second attempt:



Both show that risking somewhere around 40% of the bankroll per game is optimal, but that risking half that isn't anywhere near half as bad.

your view as an investor is very interesting and understandable. we need a poll where investors are asked if they would take this kind of risk to get wiped out in one bet. I for myself know what option I would choose

lets take Ryan's comment

IMO those big investors who are comfortable with this kind of risk are gamblers and not investors

I need to read back because I think I remember that a poster wrote that no one knew about this high plinko risk and even not the MP coder. and if this is correct how could Ryan ask any investor if he will accept a 99% BR wipe out risk if he was not aware of this plinko risk?

Oh man , that is quite a news actually, I was almost certain to invest some amount there in moneypot, after watching for so many days. But meh, if someone can win so big on plinkopot, I will think thrice before investing anything now.

Because it maximises the expected growth of the logarithm of their bankroll.


And they never do. The only time you risk 100% of your bankroll on a single event is if the house edge is 100% - and in that case the player is guaranteed to lose.


Then there are lots of places leaving money on the table.


If somebody wants to bet with a 99% house edge against them on a dice game, MP will happily risk 99% of its bankroll on that bet.

An example of such a bet: you roll a number in the range 0.00 to 99.99. If it's less than 5.00 you double your money. Otherwise you lose.

You have a 1 in 20 chance of doubling your money, and a 19 in 20 chance of losing it.

Those are horrible odds for the player, and great odds for the house. The house has a 90% house edge.

What percentage of your bankroll would you risk taking such a bet, if you were the house?

The correct "Kelly" amount is to risk 90% of your bankroll, since the house edge is 90%. (RTP = 5 * 2 = 10%)

I ran a simulation, having the house risk different percentages of its bankroll from 0% to 99% while the player max-bets against them 1000 times in a row. Here's a chart of the average of the log of the house bankroll for each percentage risked:



Notice how the house does best when it risks 90% of its bankroll per bet? That's the point.

Edit: I re-ran the simulation, but for a 1% house edge bet. The variance is a lot higher, due to the smaller house edge, but the basic features of the curve are clear enough: risking 1% is optimal. risking 2% gives you a zero expected growth of log(bankroll), and higher than 2% risk is actually bad for business:

yes the player could make 99,999 losing bets in a row but as it is a bet of 1 in ~30k he could still win the outer with his first few bets or even more than once in his first few bets. why should a casino take such a high and risky gamble? IMO a casino should never take such a high risk gamble with a possibility to get wiped out in one bet. as I posted before I don't know any land based or online casino beside MP that is taking such a dangerous risk.
to me it looks like that this high risk KC handling is only for plinko or does MP have other games with such high risk payouts? maybe the previous MP owner could answer this question.

What you're missing is that on the other hand the same guy could make 99,999 losing bets in a row and never hit the 121x payout.

It's a gamble, and nobody is saying the investors always win.

By using the Kelly criterion the house is optimising the expected returns for the investors. That doesn't mean the investors won't be making a loss at times.

There's nothing strange with it, as it has been explained by ranlo that there is no evidence of foul play and the bet was a legit bet. As has been stated in the FAQ as well that investing is an extremely risky action so potential investor needs to make sure that he can afford to invest since there are huge risks involved

That's True,by considering he recent high rollers winning hundreds of bitcoins while playing against the house is kind strage and particularly when it happens at a publicly funded/invested site or any other gambling platform.

Well for instance, when I ran MP I personally put 100 BTC in the bankroll. Had the casino lost 90% of it's bankroll, I would've re-evaluated the risk and put another 100 BTC in  (and repeat). Alternatively, I could've say put 500 BTC in the bankroll and operated at a 0.2x kelly for instance.

(For me the former is much better, especially in in the case of a hack or exploit or what not. And I wanted to hold as little of other peoples money as possible, so by making it stupidly risky, that kind of helped. Most of the big investors I talked to were comfortable with the idea of risking 99% of the money they put in)


And while I'm not an investor in the current MP, if I did, I would much prefer it operating at a 1x kelly then something conservative. I think my biggest risk (as an investor) would be a hack, exploit or inside job. So minimizing the amount of money I physically deposit is ideal.

lets see what I am still missing here. I don't know any land based or online casino that would take the risk to lose 90%+ of his Bank Roll with one bet and actually risking to close down their casino. I am also not aware that they use KC. why would MP allow this kind of risk?

Sure, there's nothing stopping that happening. You can be the poor sucker who invests before someone wins 99% of the bankroll, and then get diluted and never get your money back.

Bankrolling is a high-risk investment, treat it as such. Sometimes it seems low risk, because there's not much action happening, but it's just an illusion. (And that's even before you take into consideration the counter-party risks and what not).

the problem I see with this bet is that even the chance is 1 in ~30k the user can win it in his first bet before the 29,999 losing bets. or what do I miss here?

Of course it does. For instance, on BaB in the last 6 hours, we've had someone (Alexy) win as much as the MP whale, and it's a total non-issue because of (our current high) volume. (In the same time period, another guy lost 10 BTC, and another couple people lost a bitcoin each) and in the course of the week the casino is still significantly up. As an investor, you wouldn't even be breaking as sweat. But with low volume site, if the whale doesn't come back (a reason i never delay withdrawals ) it's a possibility the investors will never even make their money back

Well, then I won't use kelly.

I don't seem to understand the kelly either.

I think you may have missed the part of the thread, where it was demonstrated how and why it should have gone through. There was no mistake


That's not a 1x kelly, though. What MP uses, is a 1x kelly.

So a bet that should have had a 30%+ house edge (which is certain to make most gambler's think twice) goes through at 0.92% HE? Isn't that considered negligence? Over months of running no one checked if max bet is in force for plinko?



I'd just take the highest multiplier as the trying to win amount. So the max-bet would be say on a 100BTC bankroll, and a 100x max multiplier on 1x kelly would be 0.01BTC.
Edit: On a red (usually) line the player would be trying to hit the highest multiplier which should the trying-to-win amount,



Bitvest has only allowed the max bet that it states as limit against each line. The bet in question was around 0.008BTC that fell into a x1111 payout. The investor cannot claim not to know the risks.

TS is correct. It's hard to argue against you when you only say "No" and fail to back it up with any kind of argument about why increased volume wouldn't lead to decreased variance.


You seem to be misunderstanding. During the ~29,999 losing bets the bankroll grows by a factor of more than 100, so when the lucky bet wins 99% of it the bankroll is still bigger than at the start.

The current setting optimises the rate of growth of the logarithm of the bankroll, and so is set 'correctly', especially given the terms set out in the FAQ about allowing full-kelly bets.

I expect the people running the site will overreact to this lucky win and reduce the maximum bet. In doing so they will be reducing their expected profit, and also their variance. I did the same at Just-Dice - it's hard not to overreact in the face of suffering a big loss like this.

Yep, the bet is unprecedented. It was a risk of almost half a bitcoin on a very, very long shot. But it worked for him so all the more power to him, .

An official announcement will be posted soon, but the verdict is that he's seriously lucky and it was real (BTW, he has been paid already). A lot of time was spent verifying everything and there's no sign of foul play. His bet was recreated in an even more risky fashion (i.e., apparently he didn't do a max. bet) and worked as expected.

@Dooglus and Ryan, I want to thank you both for your time here as well. Your math skills are way beyond most peoples', and far beyond mine (as you can see by my misunderstandings within this thread). It was a very interesting event, to say the least!

And this situation will absolutely be bringing changes to the risk algorithm soon, .