From: breid@pyrhard2.eng.pyramid.com (Bill Reid)
Newsgroups: rec.gambling
Subject: Re: Betting both sides to get Comps
Date: 14 Aug 92 00:52:26 GMT
Organization: Pyramid Technology Corporation, Mountain View

Two viewpoints, both wrong! 

In one article Michael Hall writes:
and 
In another article Steven R Jacobs writes:

>I think it's not correct to say that variance does not alter the
>casino's expected earnings.  Variance does not alter the expected
>casino percentage win per bet, but it does alter the action
>the casino receives. [by inducing people to gamble] 

Correct.  Variance is used by the casinos to offer the requisite 
"gambling thrills" to the "less intelligent" gamblers.  Given the 
large bankroll size, crushing advantage, and large number of 
non-correlated decisions taking place, casinos can easily lay high odds 
on games, let the suckers take the odds, and never break a sweat. 

>When the casino comps you for a hotel room that you would have paid
>$100 for, it's not costing the casino $100, because they own the hotel
>too after all.  I don't know how much it costs them, but suppose
>it's $25.  At blackjack, they kick back 0.25% of your action in
>comps, figuring on making 0.5% off basic strategists (on a shoe or Northern
>Nevada single deck) and 1% or more off the average player.  If you play $25
>a hand for four hours, that's about
> 0.25%($comp/action)*($25 action/hand)*(100 hands/hour)*(4 hours)= $25 comp.

>Presto, you get a $100 hotel room, but maybe you played basic
>strategy and so you really only paid $50 on average for it.  You're
>happy, because you got a $100 hotel room for the price of $50 of expected
>value loss, and the casino is happy, because they got $50 for the price of
>$25 in comps.  The point is, negative expected value gambling (even betting
>red and black on roulette, parish the thought) *can* be a good deal to
>everyone, and no one has to get "screwed".  Everyone can gain utility
>from the transaction, renewing our faith the capitalist system :-)

Except that the $50 the casino won cost them considerably more than 
the $25 they used as a "promotional giveaway".  They also had to pay 
the dealer, keep the lights on, feed the tigers, etc.  This casino just 
paid roughly $300 to take in $25 in revenues.  As a budding capitalist, 
you should not confuse the "hold" with profit (or earnings) - it is 
the gross sales (or revenues) from which costs have to be deducted to 
compute profit or loss. 

On the other side, the gambler has had to put up a "deposit" of 
1000s of $ just to insure himself of getting the great deal of 
"paying" $50 for a $100 room.  He may actually give up hundreds in the 
session, which will not accumulate interest for him until he returns 
next year to even the score (assuming he gets "lucky"). 
The losses for both sides would be 
even more apparent in the case of pass line $25 bettor being comped.  
So the "comp hustler" is a loser as well - everybody is a big fat 
loser, which confirms my basic understanding of the capitalist system 
(a cruel hoax, a negative-sum game dudded up with Martingale-style 
patches and astounding innumeracy).  
 
>>Yup, but that is a two edged sword.  Variance also increase the risk to
>>the casino (and before anyone says "what risk, the casino has a huge
>>bankroll", I'll say "then why do casinos sometimes go broke?").  If the
>>games had zero variance, the casino wouldn't _need_ a huge bankroll.
>>
Casinos go broke for the same reasons that any other business goes broke: 
costs exceed revenues.  No casino (in recent memory) has gone broke 
due to "variance" or insufficient bankroll, and certainly no large 
casino ever will.  Rather, the costs of the comps, lights, dealers, 
hungry tigers, volcanoes, sexy waitress outfits, junket operators, etc., 
do not cover the revenues (e.v*action)  
generated by expending the cost items.  (there is actually one "cost" 
above all others that has closed down most failed casinos, and that is 
being ripped off from the inside and outside).