Betting systems: how not to lose your money gambling

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1 Betting systems: how not to lose your money gambling G. Berkolaiko Department of Mathematics Texas A&M University 28 April 2007 / Mini Fair, Math Awareness Month 2007

2 Gambling and Games of Chance Simple games: flipping a coin (head / tail) rolling a die (6 sided) roulette (18 black, 18 red and 2 green) Player vs casino Player predicts outcome and agrees on the wager If prediction is correct, the player gets money, otherwise he pays. Examples: if head, player wins 1\$; Coin: if tail, player loses 1\$. if 5 or above, win 5\$; Die: if 4 or below, lose 3\$.

3 Gambling and Games of Chance Simple games: flipping a coin (head / tail) rolling a die (6 sided) roulette (18 black, 18 red and 2 green) Player vs casino Player predicts outcome and agrees on the wager If prediction is correct, the player gets money, otherwise he pays. Examples: if head, player wins 1\$; Coin: if tail, player loses 1\$. if 5 or above, win 5\$; Die: if 4 or below, lose 3\$.

4 Gambling and Games of Chance Simple games: flipping a coin (head / tail) rolling a die (6 sided) roulette (18 black, 18 red and 2 green) Player vs casino Player predicts outcome and agrees on the wager If prediction is correct, the player gets money, otherwise he pays. Examples: if head, player wins 1\$; Coin: if tail, player loses 1\$. if 5 or above, win 5\$; Die: if 4 or below, lose 3\$.

5 Gambling and Games of Chance Simple games: flipping a coin (head / tail) rolling a die (6 sided) roulette (18 black, 18 red and 2 green) Player vs casino Player predicts outcome and agrees on the wager If prediction is correct, the player gets money, otherwise he pays. Examples: if head, player wins 1\$; Coin: if tail, player loses 1\$. if 5 or above, win 5\$; Die: if 4 or below, lose 3\$.

6 Gambling and Games of Chance Simple games: flipping a coin (head / tail) rolling a die (6 sided) roulette (18 black, 18 red and 2 green) Player vs casino Player predicts outcome and agrees on the wager If prediction is correct, the player gets money, otherwise he pays. Examples: if head, player wins 1\$; Coin: if tail, player loses 1\$. if 5 or above, win 5\$; Die: if 4 or below, lose 3\$.

7 Gambling and Games of Chance Simple games: flipping a coin (head / tail) rolling a die (6 sided) roulette (18 black, 18 red and 2 green) Player vs casino Player predicts outcome and agrees on the wager If prediction is correct, the player gets money, otherwise he pays. Examples: if head, player wins 1\$; Coin: if tail, player loses 1\$. if 5 or above, win 5\$; Die: if 4 or below, lose 3\$.

8 Gambling and Games of Chance Simple games: flipping a coin (head / tail) rolling a die (6 sided) roulette (18 black, 18 red and 2 green) Player vs casino Player predicts outcome and agrees on the wager If prediction is correct, the player gets money, otherwise he pays. Examples: if head, player wins 1\$; Coin: if tail, player loses 1\$. if 5 or above, win 5\$; Die: if 4 or below, lose 3\$.

9 Gambling and Games of Chance Simple games: flipping a coin (head / tail) rolling a die (6 sided) roulette (18 black, 18 red and 2 green) Player vs casino Player predicts outcome and agrees on the wager If prediction is correct, the player gets money, otherwise he pays. Examples: if head, player wins 1\$; Coin: if tail, player loses 1\$. if 5 or above, win 5\$; Die: if 4 or below, lose 3\$.

10 Gambling and Games of Chance Simple games: flipping a coin (head / tail) rolling a die (6 sided) roulette (18 black, 18 red and 2 green) Player vs casino Player predicts outcome and agrees on the wager If prediction is correct, the player gets money, otherwise he pays. Examples: if head, player wins 1\$; Coin: if tail, player loses 1\$. if 5 or above, win 5\$; Die: if 4 or below, lose 3\$.

11 Gambling and Games of Chance Simple games: flipping a coin (head / tail) rolling a die (6 sided) roulette (18 black, 18 red and 2 green) Player vs casino Player predicts outcome and agrees on the wager If prediction is correct, the player gets money, otherwise he pays. Examples: if head, player wins 1\$; Coin: if tail, player loses 1\$. if 5 or above, win 5\$; Die: if 4 or below, lose 3\$.

12 Fair Game Simple Gambling Examples: Coin tossing with wager 1\$ Roulette red-black, wager 1\$ Die: 5 or above win 2\$, 4 or below lose 1\$ Die: 5 or above win 5\$, 4 or below lose 3\$ sum 8 or above win 20\$, 2 dice:? sum 7 or below lose 15\$

13 Fair Game Simple Gambling Examples: Coin tossing with wager 1\$ fair Roulette red-black, wager 1\$ Die: 5 or above win 2\$, 4 or below lose 1\$ Die: 5 or above win 5\$, 4 or below lose 3\$ sum 8 or above win 20\$, 2 dice:? sum 7 or below lose 15\$

14 Fair Game Simple Gambling Examples: Coin tossing with wager 1\$ fair Roulette red-black, wager 1\$ Die: 5 or above win 2\$, 4 or below lose 1\$ Die: 5 or above win 5\$, 4 or below lose 3\$ sum 8 or above win 20\$, 2 dice:? sum 7 or below lose 15\$

15 Fair Game Simple Gambling Examples: Coin tossing with wager 1\$ fair Roulette red-black, wager 1\$ unfair to player or subfair Die: 5 or above win 2\$, 4 or below lose 1\$ Die: 5 or above win 5\$, 4 or below lose 3\$ sum 8 or above win 20\$, 2 dice:? sum 7 or below lose 15\$

16 Fair Game Simple Gambling Examples: Coin tossing with wager 1\$ fair Roulette red-black, wager 1\$ unfair to player or subfair Die: 5 or above win 2\$, 4 or below lose 1\$ Die: 5 or above win 5\$, 4 or below lose 3\$ sum 8 or above win 20\$, 2 dice:? sum 7 or below lose 15\$

17 Fair Game Simple Gambling Examples: Coin tossing with wager 1\$ fair Roulette red-black, wager 1\$ unfair to player or subfair Die: 5 or above win 2\$, 4 or below lose 1\$ fair Die: 5 or above win 5\$, 4 or below lose 3\$ sum 8 or above win 20\$, 2 dice:? sum 7 or below lose 15\$

18 Fair Game Simple Gambling Examples: Coin tossing with wager 1\$ fair Roulette red-black, wager 1\$ unfair to player or subfair Die: 5 or above win 2\$, 4 or below lose 1\$ fair Die: 5 or above win 5\$, 4 or below lose 3\$ sum 8 or above win 20\$, 2 dice:? sum 7 or below lose 15\$

19 Fair Game Simple Gambling Examples: Coin tossing with wager 1\$ fair Roulette red-black, wager 1\$ unfair to player or subfair Die: 5 or above win 2\$, 4 or below lose 1\$ fair Die: 5 or above win 5\$, 4 or below lose 3\$ subfair sum 8 or above win 20\$, 2 dice:? sum 7 or below lose 15\$

20 Fair Game Simple Gambling Examples: Coin tossing with wager 1\$ fair Roulette red-black, wager 1\$ unfair to player or subfair Die: 5 or above win 2\$, 4 or below lose 1\$ fair Die: 5 or above win 5\$, 4 or below lose 3\$ subfair sum 8 or above win 20\$, 2 dice:? sum 7 or below lose 15\$

21 Average: Definition Simple Gambling average = sum of (probability payment). payment = { positive if a win, negative if a loss. probability = # favourable combinations # all combinations

22 Average: Definition Simple Gambling average = sum of (probability payment). payment = { positive if a win, negative if a loss. probability = # favourable combinations # all combinations

23 Average: Definition Simple Gambling average = sum of (probability payment). payment = { positive if a win, negative if a loss. probability = # favourable combinations # all combinations

24 Average: Examples Simple Gambling Coin tossing head probability = 1/2. tail probability = 1/2. average = ( 1) 1 2 = 0 Roulette #total = = 38. #favourable = 18. average = ( 1) = 2 38 < 0 2 dice: #total combinations = 36. #combinations with sum 8 or larger = 15. #combinations with sum 7 or smaller = 21. average = ( 15) = < 0

25 Average: Examples Simple Gambling Coin tossing head probability = 1/2. tail probability = 1/2. average = ( 1) 1 2 = 0 Roulette #total = = 38. #favourable = 18. average = ( 1) = 2 38 < 0 2 dice: #total combinations = 36. #combinations with sum 8 or larger = 15. #combinations with sum 7 or smaller = 21. average = ( 15) = < 0

26 Average: Examples Simple Gambling Coin tossing head probability = 1/2. tail probability = 1/2. average = ( 1) 1 2 = 0 Roulette #total = = 38. #favourable = 18. average = ( 1) = 2 38 < 0 2 dice: #total combinations = 36. #combinations with sum 8 or larger = 15. #combinations with sum 7 or smaller = 21. average = ( 15) = < 0

27 Average: Examples Simple Gambling Coin tossing head probability = 1/2. tail probability = 1/2. average = ( 1) 1 2 = 0 Roulette #total = = 38. #favourable = 18. average = ( 1) = 2 38 < 0 2 dice: #total combinations = 36. #combinations with sum 8 or larger = 15. #combinations with sum 7 or smaller = 21. average = ( 15) = < 0

28 Average: Examples Simple Gambling Coin tossing head probability = 1/2. tail probability = 1/2. average = ( 1) 1 2 = 0 fair! Roulette #total = = 38. #favourable = 18. average = ( 1) = 2 38 < 0 2 dice: #total combinations = 36. #combinations with sum 8 or larger = 15. #combinations with sum 7 or smaller = 21. average = ( 15) = < 0

29 Average: Examples Simple Gambling Coin tossing head probability = 1/2. tail probability = 1/2. average = ( 1) 1 2 = 0 fair! Roulette #total = = 38. #favourable = 18. average = ( 1) = 2 38 < 0 2 dice: #total combinations = 36. #combinations with sum 8 or larger = 15. #combinations with sum 7 or smaller = 21. average = ( 15) = < 0

30 Average: Examples Simple Gambling Coin tossing head probability = 1/2. tail probability = 1/2. average = ( 1) 1 2 = 0 fair! Roulette #total = = 38. #favourable = 18. average = ( 1) = 2 38 < 0 2 dice: #total combinations = 36. #combinations with sum 8 or larger = 15. #combinations with sum 7 or smaller = 21. average = ( 15) = < 0

31 Average: Examples Simple Gambling Coin tossing head probability = 1/2. tail probability = 1/2. average = ( 1) 1 2 = 0 fair! Roulette #total = = 38. #favourable = 18. average = ( 1) = 2 38 < 0 2 dice: #total combinations = 36. #combinations with sum 8 or larger = 15. #combinations with sum 7 or smaller = 21. average = ( 15) = < 0

32 Average: Examples Simple Gambling Coin tossing head probability = 1/2. tail probability = 1/2. average = ( 1) 1 2 = 0 fair! Roulette #total = = 38. #favourable = 18. average = ( 1) = 2 38 < 0 2 dice: #total combinations = 36. #combinations with sum 8 or larger = 15. #combinations with sum 7 or smaller = 21. average = ( 15) = < 0

33 Average: Examples Simple Gambling Coin tossing head probability = 1/2. tail probability = 1/2. average = ( 1) 1 2 = 0 fair! Roulette #total = = 38. #favourable = 18. average = ( 1) = 2 38 < 0 subfair! 2 dice: #total combinations = 36. #combinations with sum 8 or larger = 15. #combinations with sum 7 or smaller = 21. average = ( 15) = < 0

34 Average: Examples Simple Gambling Coin tossing head probability = 1/2. tail probability = 1/2. average = ( 1) 1 2 = 0 fair! Roulette #total = = 38. #favourable = 18. average = ( 1) = 2 38 < 0 subfair! 2 dice: #total combinations = 36. #combinations with sum 8 or larger = 15. #combinations with sum 7 or smaller = 21. average = ( 15) = < 0

35 Average: Examples Simple Gambling Coin tossing head probability = 1/2. tail probability = 1/2. average = ( 1) 1 2 = 0 fair! Roulette #total = = 38. #favourable = 18. average = ( 1) = 2 38 < 0 subfair! 2 dice: #total combinations = 36. #combinations with sum 8 or larger = 15. #combinations with sum 7 or smaller = 21. average = ( 15) = < 0

36 Average: Examples Simple Gambling Coin tossing head probability = 1/2. tail probability = 1/2. average = ( 1) 1 2 = 0 fair! Roulette #total = = 38. #favourable = 18. average = ( 1) = 2 38 < 0 subfair! 2 dice: #total combinations = 36. #combinations with sum 8 or larger = 15. #combinations with sum 7 or smaller = 21. average = ( 15) = < 0

37 Average: Examples Simple Gambling Coin tossing head probability = 1/2. tail probability = 1/2. average = ( 1) 1 2 = 0 fair! Roulette #total = = 38. #favourable = 18. average = ( 1) = 2 38 < 0 subfair! 2 dice: #total combinations = 36. #combinations with sum 8 or larger = 15. #combinations with sum 7 or smaller = 21. average = ( 15) = < 0

38 Average: Examples Simple Gambling Coin tossing head probability = 1/2. tail probability = 1/2. average = ( 1) 1 2 = 0 fair! Roulette #total = = 38. #favourable = 18. average = ( 1) = 2 38 < 0 subfair! 2 dice: #total combinations = 36. #combinations with sum 8 or larger = 15. #combinations with sum 7 or smaller = 21. average = ( 15) = < 0

39 Average: Examples Simple Gambling Coin tossing head probability = 1/2. tail probability = 1/2. average = ( 1) 1 2 = 0 fair! Roulette #total = = 38. #favourable = 18. average = ( 1) = 2 38 < 0 subfair! 2 dice: #total combinations = 36. #combinations with sum 8 or larger = 15. #combinations with sum 7 or smaller = 21. average = ( 15) = < 0 subfair!

40 Another type of average Previous average was the average winning in one round. Another important average is average capital after round N: Example: you had 10\$ and played a round of coin tossing. if you won (probability 1/2), you have 11\$. if you lost (probability 1/2), you have 9\$. on average you have = 10 dollars. Example: you had 10\$ and played a round of roulette. on average you have = = dollars. You had 10\$ and played roulette. What is you average capital after round 19?

41 Another type of average Previous average was the average winning in one round. Another important average is average capital after round N: Example: you had 10\$ and played a round of coin tossing. if you won (probability 1/2), you have 11\$. if you lost (probability 1/2), you have 9\$. on average you have = 10 dollars. Example: you had 10\$ and played a round of roulette. on average you have = = dollars. You had 10\$ and played roulette. What is you average capital after round 19?

42 Another type of average Previous average was the average winning in one round. Another important average is average capital after round N: Example: you had 10\$ and played a round of coin tossing. if you won (probability 1/2), you have 11\$. if you lost (probability 1/2), you have 9\$. on average you have = 10 dollars. Example: you had 10\$ and played a round of roulette. on average you have = = dollars. You had 10\$ and played roulette. What is you average capital after round 19?

43 Another type of average Previous average was the average winning in one round. Another important average is average capital after round N: Example: you had 10\$ and played a round of coin tossing. if you won (probability 1/2), you have 11\$. if you lost (probability 1/2), you have 9\$. on average you have = 10 dollars. Example: you had 10\$ and played a round of roulette. on average you have = = dollars. You had 10\$ and played roulette. What is you average capital after round 19?

44 Another type of average Previous average was the average winning in one round. Another important average is average capital after round N: Example: you had 10\$ and played a round of coin tossing. if you won (probability 1/2), you have 11\$. if you lost (probability 1/2), you have 9\$. on average you have = 10 dollars. Example: you had 10\$ and played a round of roulette. on average you have = = dollars. You had 10\$ and played roulette. What is you average capital after round 19?

45 Another type of average Previous average was the average winning in one round. Another important average is average capital after round N: Example: you had 10\$ and played a round of coin tossing. if you won (probability 1/2), you have 11\$. if you lost (probability 1/2), you have 9\$. on average you have = 10 dollars. Example: you had 10\$ and played a round of roulette. on average you have = = dollars. You had 10\$ and played roulette. What is you average capital after round 19?

46 Another type of average Previous average was the average winning in one round. Another important average is average capital after round N: Example: you had 10\$ and played a round of coin tossing. if you won (probability 1/2), you have 11\$. if you lost (probability 1/2), you have 9\$. on average you have = 10 dollars. Example: you had 10\$ and played a round of roulette. on average you have = = dollars. You had 10\$ and played roulette. What is you average capital after round 19?

47 Another type of average Previous average was the average winning in one round. Another important average is average capital after round N: Example: you had 10\$ and played a round of coin tossing. if you won (probability 1/2), you have 11\$. if you lost (probability 1/2), you have 9\$. on average you have = 10 dollars. Example: you had 10\$ and played a round of roulette. on average you have = = dollars. You had 10\$ and played roulette. What is you average capital after round 19?

48 Another type of average Previous average was the average winning in one round. Another important average is average capital after round N: Example: you had 10\$ and played a round of coin tossing. if you won (probability 1/2), you have 11\$. if you lost (probability 1/2), you have 9\$. on average you have = 10 dollars. Example: you had 10\$ and played a round of roulette. on average you have = = dollars. You had 10\$ and played roulette. What is you average capital after round 19?

49 Another type of average Previous average was the average winning in one round. Another important average is average capital after round N: Example: you had 10\$ and played a round of coin tossing. if you won (probability 1/2), you have 11\$. if you lost (probability 1/2), you have 9\$. on average you have = 10 dollars. Example: you had 10\$ and played a round of roulette. on average you have = = dollars. You had 10\$ and played roulette. What is you average capital after round 19?

50 Another type of average Previous average was the average winning in one round. Another important average is average capital after round N: Example: you had 10\$ and played a round of coin tossing. if you won (probability 1/2), you have 11\$. if you lost (probability 1/2), you have 9\$. on average you have = 10 dollars. Example: you had 10\$ and played a round of roulette. on average you have = = dollars. You had 10\$ and played roulette. What is you average capital after round 19?

51 Another type of average Previous average was the average winning in one round. Another important average is average capital after round N: Example: you had 10\$ and played a round of coin tossing. if you won (probability 1/2), you have 11\$. if you lost (probability 1/2), you have 9\$. on average you have = 10 dollars. Example: you had 10\$ and played a round of roulette. on average you have = = dollars. You had 10\$ and played roulette. What is you average capital after round 19? 9\$.

52 : The Problem Initially you have n dollars. You play a game with a wager of 1\$ in each round. In each round, the probability to win is p. p = 1/2 is fair, p < 1/2 is subfair. You stop when you get to m dollars or lose all your money. What is the probability to win the day? Looking from the other angle, what is the probability of you financial ruin?

53 : The Problem Initially you have n dollars. You play a game with a wager of 1\$ in each round. In each round, the probability to win is p. p = 1/2 is fair, p < 1/2 is subfair. You stop when you get to m dollars or lose all your money. What is the probability to win the day? Looking from the other angle, what is the probability of you financial ruin?

54 : The Problem Initially you have n dollars. You play a game with a wager of 1\$ in each round. In each round, the probability to win is p. p = 1/2 is fair, p < 1/2 is subfair. You stop when you get to m dollars or lose all your money. What is the probability to win the day? Looking from the other angle, what is the probability of you financial ruin?

55 : The Problem Initially you have n dollars. You play a game with a wager of 1\$ in each round. In each round, the probability to win is p. p = 1/2 is fair, p < 1/2 is subfair. You stop when you get to m dollars or lose all your money. What is the probability to win the day? Looking from the other angle, what is the probability of you financial ruin?

56 : The Problem Initially you have n dollars. You play a game with a wager of 1\$ in each round. In each round, the probability to win is p. p = 1/2 is fair, p < 1/2 is subfair. You stop when you get to m dollars or lose all your money. What is the probability to win the day? Looking from the other angle, what is the probability of you financial ruin?

57 : The Problem Initially you have n dollars. You play a game with a wager of 1\$ in each round. In each round, the probability to win is p. p = 1/2 is fair, p < 1/2 is subfair. You stop when you get to m dollars or lose all your money. What is the probability to win the day? Looking from the other angle, what is the probability of you financial ruin?

58 : The Problem Initially you have n dollars. You play a game with a wager of 1\$ in each round. In each round, the probability to win is p. p = 1/2 is fair, p < 1/2 is subfair. You stop when you get to m dollars or lose all your money. What is the probability to win the day? Looking from the other angle, what is the probability of you financial ruin?

59 : The Formula Probability theory grew out of this problem. And it provides the answer: P(n m) = { ρ n 1 ρ m 1 if ρ 1, n m if ρ = 1, where ρ = 1 p p.

60 : The Formula Probability theory grew out of this problem. And it provides the answer: P(n m) = { ρ n 1 ρ m 1 if ρ 1, n m if ρ = 1, where ρ = 1 p p.

61 : Examples You start with 900\$, your goal is 1000\$, Tossing a coin, probability of success is 0.9. Playing roulette, P = You start with 100\$, and must raise 20,000\$ by dawn, Tossing a coin, probability to get the money is Playing roulette, it is \$

62 : Examples You start with 900\$, your goal is 1000\$, Tossing a coin, probability of success is 0.9. Playing roulette, P = You start with 100\$, and must raise 20,000\$ by dawn, Tossing a coin, probability to get the money is Playing roulette, it is \$

63 : Examples You start with 900\$, your goal is 1000\$, Tossing a coin, probability of success is 0.9. Playing roulette, P = You start with 100\$, and must raise 20,000\$ by dawn, Tossing a coin, probability to get the money is Playing roulette, it is \$

64 : Examples You start with 900\$, your goal is 1000\$, Tossing a coin, probability of success is 0.9. Playing roulette, P = You start with 100\$, and must raise 20,000\$ by dawn, Tossing a coin, probability to get the money is Playing roulette, it is \$

65 : Examples You start with 900\$, your goal is 1000\$, Tossing a coin, probability of success is 0.9. Playing roulette, P = You start with 100\$, and must raise 20,000\$ by dawn, Tossing a coin, probability to get the money is Playing roulette, it is \$

66 : Examples You start with 900\$, your goal is 1000\$, Tossing a coin, probability of success is 0.9. Playing roulette, P = You start with 100\$, and must raise 20,000\$ by dawn, Tossing a coin, probability to get the money is Playing roulette, it is \$

67 : Examples You start with 900\$, your goal is 1000\$, Tossing a coin, probability of success is 0.9. Playing roulette, P = You start with 100\$, and must raise 20,000\$ by dawn, Tossing a coin, probability to get the money is Playing roulette, it is \$ 911 zeros!!!

68 : Definition : Definition and Examples Can Help? Assume in each round, possible win = possible loss. Assume you can bet any amount, if you have the money. Before each round you decide how much you will bet, based only on the outcomes of the previous rounds. Simple examples: Straight Play: bet 1\$ every round. Chicken Play: bet 1\$ every round until the first loss, then stop. In probability theory, the random variable capital after round N is called martingale (if the game is fair) and supermartingale (if the game is subfair). Before being adopted as a mathematical term, martingale was used to refer to a particular betting system.

69 : Definition : Definition and Examples Can Help? Assume in each round, possible win = possible loss. Assume you can bet any amount, if you have the money. Before each round you decide how much you will bet, based only on the outcomes of the previous rounds. Simple examples: Straight Play: bet 1\$ every round. Chicken Play: bet 1\$ every round until the first loss, then stop. In probability theory, the random variable capital after round N is called martingale (if the game is fair) and supermartingale (if the game is subfair). Before being adopted as a mathematical term, martingale was used to refer to a particular betting system.

70 : Definition : Definition and Examples Can Help? Assume in each round, possible win = possible loss. Assume you can bet any amount, if you have the money. Before each round you decide how much you will bet, based only on the outcomes of the previous rounds. Simple examples: Straight Play: bet 1\$ every round. Chicken Play: bet 1\$ every round until the first loss, then stop. In probability theory, the random variable capital after round N is called martingale (if the game is fair) and supermartingale (if the game is subfair). Before being adopted as a mathematical term, martingale was used to refer to a particular betting system.

71 : Definition : Definition and Examples Can Help? Assume in each round, possible win = possible loss. Assume you can bet any amount, if you have the money. Before each round you decide how much you will bet, based only on the outcomes of the previous rounds. Simple examples: Straight Play: bet 1\$ every round. Chicken Play: bet 1\$ every round until the first loss, then stop. In probability theory, the random variable capital after round N is called martingale (if the game is fair) and supermartingale (if the game is subfair). Before being adopted as a mathematical term, martingale was used to refer to a particular betting system.

72 : Definition : Definition and Examples Can Help? Assume in each round, possible win = possible loss. Assume you can bet any amount, if you have the money. Before each round you decide how much you will bet, based only on the outcomes of the previous rounds. Simple examples: Straight Play: bet 1\$ every round. Chicken Play: bet 1\$ every round until the first loss, then stop. In probability theory, the random variable capital after round N is called martingale (if the game is fair) and supermartingale (if the game is subfair). Before being adopted as a mathematical term, martingale was used to refer to a particular betting system.

73 : Definition : Definition and Examples Can Help? Assume in each round, possible win = possible loss. Assume you can bet any amount, if you have the money. Before each round you decide how much you will bet, based only on the outcomes of the previous rounds. Simple examples: Straight Play: bet 1\$ every round. Chicken Play: bet 1\$ every round until the first loss, then stop. In probability theory, the random variable capital after round N is called martingale (if the game is fair) and supermartingale (if the game is subfair). Before being adopted as a mathematical term, martingale was used to refer to a particular betting system.

74 : Definition : Definition and Examples Can Help? Assume in each round, possible win = possible loss. Assume you can bet any amount, if you have the money. Before each round you decide how much you will bet, based only on the outcomes of the previous rounds. Simple examples: Straight Play: bet 1\$ every round. Chicken Play: bet 1\$ every round until the first loss, then stop. In probability theory, the random variable capital after round N is called martingale (if the game is fair) and supermartingale (if the game is subfair). Before being adopted as a mathematical term, martingale was used to refer to a particular betting system.

75 : Definition : Definition and Examples Can Help? Assume in each round, possible win = possible loss. Assume you can bet any amount, if you have the money. Before each round you decide how much you will bet, based only on the outcomes of the previous rounds. Simple examples: Straight Play: bet 1\$ every round. Chicken Play: bet 1\$ every round until the first loss, then stop. In probability theory, the random variable capital after round N is called martingale (if the game is fair) and supermartingale (if the game is subfair). Before being adopted as a mathematical term, martingale was used to refer to a particular betting system.

76 : Definition and Examples Can Help? The Matringale: An Example of a Betting System Algorithm: 1 Bet 1\$. 2 If you lost, bet 2\$. 3 If lost again, bet 4\$. 4 And so forth, doubling the stake each round until you win. 5 If you win, go to stage 1. Analysis: Suppose you lost 3 times in a row and then won. Your total win (loss) is In general, when a losing streak is followed by a win, the win pays for the losses and brings you 1\$ on top. Benefit: you can never lose!

77 : Definition and Examples Can Help? The Matringale: An Example of a Betting System Algorithm: 1 Bet 1\$. 2 If you lost, bet 2\$. 3 If lost again, bet 4\$. 4 And so forth, doubling the stake each round until you win. 5 If you win, go to stage 1. Analysis: Suppose you lost 3 times in a row and then won. Your total win (loss) is In general, when a losing streak is followed by a win, the win pays for the losses and brings you 1\$ on top. Benefit: you can never lose!

78 : Definition and Examples Can Help? The Matringale: An Example of a Betting System Algorithm: 1 Bet 1\$. 2 If you lost, bet 2\$. 3 If lost again, bet 4\$. 4 And so forth, doubling the stake each round until you win. 5 If you win, go to stage 1. Analysis: Suppose you lost 3 times in a row and then won. Your total win (loss) is In general, when a losing streak is followed by a win, the win pays for the losses and brings you 1\$ on top. Benefit: you can never lose!

79 : Definition and Examples Can Help? The Matringale: An Example of a Betting System Algorithm: 1 Bet 1\$. 2 If you lost, bet 2\$. 3 If lost again, bet 4\$. 4 And so forth, doubling the stake each round until you win. 5 If you win, go to stage 1. Analysis: Suppose you lost 3 times in a row and then won. Your total win (loss) is In general, when a losing streak is followed by a win, the win pays for the losses and brings you 1\$ on top. Benefit: you can never lose!

80 : Definition and Examples Can Help? The Matringale: An Example of a Betting System Algorithm: 1 Bet 1\$. 2 If you lost, bet 2\$. 3 If lost again, bet 4\$. 4 And so forth, doubling the stake each round until you win. 5 If you win, go to stage 1. Analysis: Suppose you lost 3 times in a row and then won. Your total win (loss) is In general, when a losing streak is followed by a win, the win pays for the losses and brings you 1\$ on top. Benefit: you can never lose!

81 : Definition and Examples Can Help? The Matringale: An Example of a Betting System Algorithm: 1 Bet 1\$. 2 If you lost, bet 2\$. 3 If lost again, bet 4\$. 4 And so forth, doubling the stake each round until you win. 5 If you win, go to stage 1. Analysis: Suppose you lost 3 times in a row and then won. Your total win (loss) is In general, when a losing streak is followed by a win, the win pays for the losses and brings you 1\$ on top. Benefit: you can never lose!

82 : Definition and Examples Can Help? The Matringale: An Example of a Betting System Algorithm: 1 Bet 1\$. 2 If you lost, bet 2\$. 3 If lost again, bet 4\$. 4 And so forth, doubling the stake each round until you win. 5 If you win, go to stage 1. Analysis: Suppose you lost 3 times in a row and then won. Your total win (loss) is In general, when a losing streak is followed by a win, the win pays for the losses and brings you 1\$ on top. Benefit: you can never lose!

83 : Definition and Examples Can Help? The Matringale: An Example of a Betting System Algorithm: 1 Bet 1\$. 2 If you lost, bet 2\$. 3 If lost again, bet 4\$. 4 And so forth, doubling the stake each round until you win. 5 If you win, go to stage 1. Analysis: Suppose you lost 3 times in a row and then won. Your total win (loss) is In general, when a losing streak is followed by a win, the win pays for the losses and brings you 1\$ on top. Benefit: you can never lose!

84 : Definition and Examples Can Help? The Matringale: An Example of a Betting System Algorithm: 1 Bet 1\$. 2 If you lost, bet 2\$. 3 If lost again, bet 4\$. 4 And so forth, doubling the stake each round until you win. 5 If you win, go to stage 1. Analysis: Suppose you lost 3 times in a row and then won. Your total win (loss) is = 1. In general, when a losing streak is followed by a win, the win pays for the losses and brings you 1\$ on top. Benefit: you can never lose!

85 : Definition and Examples Can Help? The Matringale: An Example of a Betting System Algorithm: 1 Bet 1\$. 2 If you lost, bet 2\$. 3 If lost again, bet 4\$. 4 And so forth, doubling the stake each round until you win. 5 If you win, go to stage 1. Analysis: Suppose you lost 3 times in a row and then won. Your total win (loss) is = 1. In general, when a losing streak is followed by a win, the win pays for the losses and brings you 1\$ on top. Benefit: you can never lose!

86 : Definition and Examples Can Help? The Matringale: An Example of a Betting System Algorithm: 1 Bet 1\$. 2 If you lost, bet 2\$. 3 If lost again, bet 4\$. 4 And so forth, doubling the stake each round until you win. 5 If you win, go to stage 1. Analysis: Suppose you lost 3 times in a row and then won. Your total win (loss) is = 1. In general, when a losing streak is followed by a win, the win pays for the losses and brings you 1\$ on top. Benefit: you can never lose!

87 : Definition and Examples Can Help? The Martingale: A Practitioner s Testimonial An excerpt from Casanova s diary, Venice, 1754: Playing the martingale, and doubling my stakes continuously, I won every day during the remainder of the carnival. [..] I congratulated myself upon having increased the treasure of my dear mistress [..] Alas, several days later, I still played on the martingale, but with such bad luck that I was soon left without a sequin. As I shared my property with my mistress, [..] at her request I sold all her diamonds, losing what I got for them; she had now only five hundred sequins by her. There was no more talk of her escaping from the convent, for we had nothing to live on!

88 : Definition and Examples Can Help? The Martingale: A Practitioner s Testimonial An excerpt from Casanova s diary, Venice, 1754: Playing the martingale, and doubling my stakes continuously, I won every day during the remainder of the carnival. [..] I congratulated myself upon having increased the treasure of my dear mistress [..] Alas, several days later, I still played on the martingale, but with such bad luck that I was soon left without a sequin. As I shared my property with my mistress, [..] at her request I sold all her diamonds, losing what I got for them; she had now only five hundred sequins by her. There was no more talk of her escaping from the convent, for we had nothing to live on!

89 : Definition and Examples Can Help? The Martingale: A Practitioner s Testimonial An excerpt from Casanova s diary, Venice, 1754: Playing the martingale, and doubling my stakes continuously, I won every day during the remainder of the carnival. [..] I congratulated myself upon having increased the treasure of my dear mistress [..] Alas, several days later, I still played on the martingale, but with such bad luck that I was soon left without a sequin. As I shared my property with my mistress, [..] at her request I sold all her diamonds, losing what I got for them; she had now only five hundred sequins by her. There was no more talk of her escaping from the convent, for we had nothing to live on!

90 : Definition and Examples Can Help? The Martingale: A Practitioner s Testimonial An excerpt from Casanova s diary, Venice, 1754: Playing the martingale, and doubling my stakes continuously, I won every day during the remainder of the carnival. [..] I congratulated myself upon having increased the treasure of my dear mistress [..] Alas, several days later, I still played on the martingale, but with such bad luck that I was soon left without a sequin. As I shared my property with my mistress, [..] at her request I sold all her diamonds, losing what I got for them; she had now only five hundred sequins by her. There was no more talk of her escaping from the convent, for we had nothing to live on!

91 You Cannot Reverse the Odds : Definition and Examples Can Help? Problem: you need a lot of money if a losing streak is long. The martingale is a sure thing only with infinite capital! Theorem If the game is fair, your average capital remains constant regardless of the betting system. Theorem If the game is subfair, your average capital decreases after every round regardless of the betting system. If the game is subfair, you lose no matter how you bet.

92 You Cannot Reverse the Odds : Definition and Examples Can Help? Problem: you need a lot of money if a losing streak is long. The martingale is a sure thing only with infinite capital! Theorem If the game is fair, your average capital remains constant regardless of the betting system. Theorem If the game is subfair, your average capital decreases after every round regardless of the betting system. If the game is subfair, you lose no matter how you bet.

93 You Cannot Reverse the Odds : Definition and Examples Can Help? Problem: you need a lot of money if a losing streak is long. The martingale is a sure thing only with infinite capital! Theorem If the game is fair, your average capital remains constant regardless of the betting system. Theorem If the game is subfair, your average capital decreases after every round regardless of the betting system. If the game is subfair, you lose no matter how you bet.

94 You Cannot Reverse the Odds : Definition and Examples Can Help? Problem: you need a lot of money if a losing streak is long. The martingale is a sure thing only with infinite capital! Theorem If the game is fair, your average capital remains constant regardless of the betting system. Theorem If the game is subfair, your average capital decreases after every round regardless of the betting system. If the game is subfair, you lose no matter how you bet.

95 You Cannot Reverse the Odds : Definition and Examples Can Help? Problem: you need a lot of money if a losing streak is long. The martingale is a sure thing only with infinite capital! Theorem If the game is fair, your average capital remains constant regardless of the betting system. Theorem If the game is subfair, your average capital decreases after every round regardless of the betting system. If the game is subfair, you lose no matter how you bet.

96 : Definition and Examples Can Help? Example: with the Martingale Are betting systems completely worthless then? Remember example: you have 900\$, you want to reach 1000\$. Suppose the game is fair Using Straight Play, the probability to reach the target is 0.9. Using the Martingale, the probability remains the same, 0.9. Suppose you play roulette Using Straight Play, the probability is But with the Martingale, it is 0.783! This is much better than Straight Play! And not much worse than in a fair game.

97 : Definition and Examples Can Help? Example: with the Martingale Are betting systems completely worthless then? Remember example: you have 900\$, you want to reach 1000\$. Suppose the game is fair Using Straight Play, the probability to reach the target is 0.9. Using the Martingale, the probability remains the same, 0.9. Suppose you play roulette Using Straight Play, the probability is But with the Martingale, it is 0.783! This is much better than Straight Play! And not much worse than in a fair game.

98 : Definition and Examples Can Help? Example: with the Martingale Are betting systems completely worthless then? Remember example: you have 900\$, you want to reach 1000\$. Suppose the game is fair Using Straight Play, the probability to reach the target is 0.9. Using the Martingale, the probability remains the same, 0.9. Suppose you play roulette Using Straight Play, the probability is But with the Martingale, it is 0.783! This is much better than Straight Play! And not much worse than in a fair game.

99 : Definition and Examples Can Help? Example: with the Martingale Are betting systems completely worthless then? Remember example: you have 900\$, you want to reach 1000\$. Suppose the game is fair Using Straight Play, the probability to reach the target is 0.9. Using the Martingale, the probability remains the same, 0.9. Suppose you play roulette Using Straight Play, the probability is But with the Martingale, it is 0.783! This is much better than Straight Play! And not much worse than in a fair game.

100 : Definition and Examples Can Help? Example: with the Martingale Are betting systems completely worthless then? Remember example: you have 900\$, you want to reach 1000\$. Suppose the game is fair Using Straight Play, the probability to reach the target is 0.9. Using the Martingale, the probability remains the same, 0.9. Suppose you play roulette Using Straight Play, the probability is But with the Martingale, it is 0.783! This is much better than Straight Play! And not much worse than in a fair game.

101 : Definition and Examples Can Help? Example: with the Martingale Are betting systems completely worthless then? Remember example: you have 900\$, you want to reach 1000\$. Suppose the game is fair Using Straight Play, the probability to reach the target is 0.9. Using the Martingale, the probability remains the same, 0.9. Suppose you play roulette Using Straight Play, the probability is But with the Martingale, it is 0.783! This is much better than Straight Play! And not much worse than in a fair game.

102 : Definition and Examples Can Help? Example: with the Martingale Are betting systems completely worthless then? Remember example: you have 900\$, you want to reach 1000\$. Suppose the game is fair Using Straight Play, the probability to reach the target is 0.9. Using the Martingale, the probability remains the same, 0.9. Suppose you play roulette Using Straight Play, the probability is But with the Martingale, it is 0.783! This is much better than Straight Play! And not much worse than in a fair game.

103 : Definition and Examples Can Help? Example: with the Martingale Are betting systems completely worthless then? Remember example: you have 900\$, you want to reach 1000\$. Suppose the game is fair Using Straight Play, the probability to reach the target is 0.9. Using the Martingale, the probability remains the same, 0.9. Suppose you play roulette Using Straight Play, the probability is But with the Martingale, it is 0.783! This is much better than Straight Play! And not much worse than in a fair game.

104 : Definition and Examples Can Help? Example: with the Martingale Are betting systems completely worthless then? Remember example: you have 900\$, you want to reach 1000\$. Suppose the game is fair Using Straight Play, the probability to reach the target is 0.9. Using the Martingale, the probability remains the same, 0.9. Suppose you play roulette Using Straight Play, the probability is But with the Martingale, it is 0.783! This is much better than Straight Play! And not much worse than in a fair game.

105 : Definition and Examples Can Help? Example: with the Martingale Are betting systems completely worthless then? Remember example: you have 900\$, you want to reach 1000\$. Suppose the game is fair Using Straight Play, the probability to reach the target is 0.9. Using the Martingale, the probability remains the same, 0.9. Suppose you play roulette Using Straight Play, the probability is But with the Martingale, it is 0.783! This is much better than Straight Play! And not much worse than in a fair game.

106 Bold Play System Simple Gambling : Definition and Examples Can Help? If the game is subfair, every round we lose some (on average). To minimize losses minimize rounds! Algorithm (Bold Play): 1 Suppose you are within x dollar of your target. 2 If your can afford a bet of x, do it! 3 If your cannot afford, bet all you have got!

107 Bold Play System Simple Gambling : Definition and Examples Can Help? If the game is subfair, every round we lose some (on average). To minimize losses minimize rounds! Algorithm (Bold Play): 1 Suppose you are within x dollar of your target. 2 If your can afford a bet of x, do it! 3 If your cannot afford, bet all you have got!

108 Bold Play System Simple Gambling : Definition and Examples Can Help? If the game is subfair, every round we lose some (on average). To minimize losses minimize rounds! Algorithm (Bold Play): 1 Suppose you are within x dollar of your target. 2 If your can afford a bet of x, do it! 3 If your cannot afford, bet all you have got!

109 Bold Play System Simple Gambling : Definition and Examples Can Help? If the game is subfair, every round we lose some (on average). To minimize losses minimize rounds! Algorithm (Bold Play): 1 Suppose you are within x dollar of your target. 2 If your can afford a bet of x, do it! 3 If your cannot afford, bet all you have got!

110 Bold Play System Simple Gambling : Definition and Examples Can Help? If the game is subfair, every round we lose some (on average). To minimize losses minimize rounds! Algorithm (Bold Play): 1 Suppose you are within x dollar of your target. 2 If your can afford a bet of x, do it! 3 If your cannot afford, bet all you have got!

111 Bold Play System Simple Gambling : Definition and Examples Can Help? If the game is subfair, every round we lose some (on average). To minimize losses minimize rounds! Algorithm (Bold Play): 1 Suppose you are within x dollar of your target. 2 If your can afford a bet of x, do it! 3 If your cannot afford, bet all you have got!

112 Bold Play: How Does it Fare? : Definition and Examples Can Help? In roulette, going from 900\$ to 1000\$ will be sucessful with probability Better than Straight Play ( ) or Martingale (0.78) and not much worse than in a fair game (0.9). Raising 20,000\$ from 100\$ at roulette will succeed with probability Unlikely but infinitely better than with Straight Play and not much worse than chance in a fair game.

113 Bold Play: How Does it Fare? : Definition and Examples Can Help? In roulette, going from 900\$ to 1000\$ will be sucessful with probability Better than Straight Play ( ) or Martingale (0.78) and not much worse than in a fair game (0.9). Raising 20,000\$ from 100\$ at roulette will succeed with probability Unlikely but infinitely better than with Straight Play and not much worse than chance in a fair game.

114 Bold Play: How Does it Fare? : Definition and Examples Can Help? In roulette, going from 900\$ to 1000\$ will be sucessful with probability Better than Straight Play ( ) or Martingale (0.78) and not much worse than in a fair game (0.9). Raising 20,000\$ from 100\$ at roulette will succeed with probability Unlikely but infinitely better than with Straight Play and not much worse than chance in a fair game.

115 Bold Play: How Does it Fare? : Definition and Examples Can Help? In roulette, going from 900\$ to 1000\$ will be sucessful with probability Better than Straight Play ( ) or Martingale (0.78) and not much worse than in a fair game (0.9). Raising 20,000\$ from 100\$ at roulette will succeed with probability Unlikely but infinitely better than with Straight Play and not much worse than chance in a fair game.

116 Bold Play: How Does it Fare? : Definition and Examples Can Help? In roulette, going from 900\$ to 1000\$ will be sucessful with probability Better than Straight Play ( ) or Martingale (0.78) and not much worse than in a fair game (0.9). Raising 20,000\$ from 100\$ at roulette will succeed with probability Unlikely but infinitely better than with Straight Play and not much worse than chance in a fair game.

117 Bold Play: How Does it Fare? : Definition and Examples Can Help? In roulette, going from 900\$ to 1000\$ will be sucessful with probability Better than Straight Play ( ) or Martingale (0.78) and not much worse than in a fair game (0.9). Raising 20,000\$ from 100\$ at roulette will succeed with probability Unlikely but infinitely better than with Straight Play and not much worse than chance in a fair game.

118 Bold Play: How Does it Fare? : Definition and Examples Can Help? In roulette, going from 900\$ to 1000\$ will be sucessful with probability Better than Straight Play ( ) or Martingale (0.78) and not much worse than in a fair game (0.9). Raising 20,000\$ from 100\$ at roulette will succeed with probability Unlikely but infinitely better than with Straight Play and not much worse than chance in a fair game.

119 Bold Play: How Does it Fare? : Definition and Examples Can Help? In roulette, going from 900\$ to 1000\$ will be sucessful with probability Better than Straight Play ( ) or Martingale (0.78) and not much worse than in a fair game (0.9). Raising 20,000\$ from 100\$ at roulette will succeed with probability Unlikely but infinitely better than with Straight Play and not much worse than chance in a fair game.

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