Saturday, April 18, 2009

Math orders the universe, so you can be sure it won't wait outside while you are betting the farm in a casino.

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On the face of it, it's tough to argue with the mathematical rationale that "proves" that the house advantage at casino games of chance cannot be beaten in the long run.

So most people don't bother to try.

The logic goes pretty much like this: Even if you bet Banker all the way at baccarat, winning more often than you lose, the 5% commission on all wins will see to it that your are in the hole at the end of the day.

That's because each time you win, you are paid a little less than even money, but every losing bet is 100% in the toilet.

Here is an example of what you can expect in, say, three years of playing baccarat for five hours a day, five days a week:

Total rounds excl. ties 315,049
Average bet value ABV $527
Banker edge 1.36%

Total action $166,047,465
Total wins $83,588,338
Total losses ($82,459,127)
Gross win $1,129,211
Commission on all wins $4,179,417
Net outcome, a LOSS of ($3,050,206)


This is not good news!

What happened in the scenario above was that bet values were in effect randomly selected, and the "Banker edge" was simply not enough to offset the 5.0% gouge.

Winning more often than you lose is a rare privilege in a casino, especially after sitting through more than 315,000 wagers!

But if the so-called "5%" commission at baccarat is going to leave you with a whopping liability that's almost 4x your total win, what's the point?

Now let's try the same scenario with target betting applied at every step to ensure that (sing along with me) you win more when you win than you lose when you lose.

Total rounds excl. ties 315,049
Average bet value ABV $527
Banker edge 1.36% (4.46%)

Total action $166,047,465
Total wins $86,837,610
Total losses ($79,426,415)
Gross win $7,411,195
Commission on all wins $4,341,881
Net outcome, a WIN of $3,069,315

AWB/ALB 109.33% vs. W/L +1.36%


There is nothing magical or mysterious about the results achieved in the second scenario. It's just math.

Note the two numbers after Banker edge, above. The first is the actual value (AV) derived from dividing the difference between the greater number of wins and the lesser number of losses by the total number of outcomes. The second is (money won minus money lost) divided by (overall action).

Now check out the AWB/ALB percentage (for average winning bet divided by average losing bet). That is target betting's sole objective.

The bottom line was a healthy positive number in the second scenario because although the total bets won (as opposed to the total money won) was the same in both examples, target betting won far more chips than haphazard wagering did, and lost fewer.

What we see here is discipline (a PLAN!) at work. And I think we can agree that winning is better than losing.

I revisited the baccarat data and plugged in the missing requirement that all potential EOS bets be boosted by 5% to cover commission due on a turnaround win.

Here's how it looks:-

(Click on the image to enlarge it)

I am still inclined to recommend that betting Player only and avoiding commission is the best way to apply target betting to baccarat if you really must stray from the blackjack tables.

But the effectiveness of the 5% "skim" makes a compelling case for flexibility, and it is certainly true that the more options you permit yourself in a casino, the more likely you are to win while maintaining a low profile.

Field bets at craps can be lucrative, even-money bets at roulette too. Even 3-card poker can boost your bankroll, if you ignore Pair-plus and halve your LTD before making a potential EOS bet (ante the first half and bet the rest if you have a hand worth backing).

But whenever a series starts to get serious you should back away from a high-HA game and take your chips and your LTD/NB numbers to a friendlier game: blackjack or baccarat.

An important reminder: The only person likely to make money out of this blog is you, Dear Reader. There's nothing to buy, ever, and your soul is safe (from me, at least). Test my ideas and use them or don't. It's up to you.
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