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[Heihojin writes]

<< I'm a Poker player, personally. I'm not a recreational player; I'm a tough low-limit player who is moving up the limits and who ha aspirations of playing professionally. >>

Hi all,
It's good to find Fools who are interested in gambling - it's a pet topic of mine.

If we're going to discuss gambling, then I think we ought to separate it into two important categories: +EV and -EV gambling.

"Wait - you didn't tell us what 'EV' is."

Oops, sorry - my bad. EV is "Expected Value". It's a statistical measure of how much you expect to win (or lose) in the long run of some probabilistic event (such as cards, dice, blackjack, etc).

If you are playing a game in which you have positive expected value (+EV), over the long haul you can expect to win money at the game, though of course you may lose in the short run. Conversely, if you're playing a game with negative expected value (-EV) then eventually you will lose money. It is as certain as death and taxes (though not the "death tax").

So, those of us that play +EV games are looking to actually make money. Those that play -EV games are in it for recreation with the *hope* of making a few dollars in the short term. Or perhaps hitting some sort of jackpot.

"What games are +EV and what games are -EV?"

Excellent question. Essentially all casino games (with the exceptions mentioned below) are -EV games. I mean, who do you think pays for the pretty lights and the free drinks, the volcanoes and Venetian canals? Games such as craps, blackjack (big asterisk here - more on that in a bit), roulette, day-trading, Caribbean Stud, slot machines, video poker (small asterisk) are all -EV.

Furthermore, no money management or betting system will beat a -EV game in the long run. You can tell me about the betting system that your brother-in-law's cousin has - it doesn't work. Fundamentally when you make a bet that has a certain -EV, you are losing money.

Here's a real world example: the casino game of craps has a house edge (a marketing term for -EV) of about 1%. Actually, not too bad by casino standards. Every time you make a pass-line bet at the craps table, you are statistically losing about 1% of that bet. You make a $100 bet, the casino gets $1. Of course, on any given event, you will win $100 or lose $100, but in the long run, the casino will win about 1% of the total bets you make on the pass line. And you can money-manage and betting-system your brains out - the casino still gets about 1% of your total bets (again, in the long run).

For some people, that's just fine - the drinks and pretty lights and chance of actually winning something during a given weekend are worth it.

"OK, what are +EV games?"

Poker (not video poker), played well. Blackjack if you count cards correctly and bet according to the count. Some video poker machines actually have +EV with perfect play. Sports betting if you're very very good at it (few people are).

I know a fair amount about the first two. In fact, I've written a book about poker called "Winning Low Limit Hold'em" about a version of poker called Texas Hold'em.

When you get into +EV gambling, you really don't think of it as "gambling" any more than a good Fool thinks of investing in CSCO or SUNW as "gambling". You're investing. Over the short term, your bankroll (investment fund) may go down, but in the long run, you'll profit.

A +EV gambler doesn't go to Vegas (or wherever) and think, "Well, I will play until I've lost $X, and then I'll be done." No, we go and play for X hours, and know that statistically in those X hours we will win $Y. We also must have a large enough bankroll to cover the downturns. There's actually a fair amount of theory devoted to how big one's bankroll must be to play certain games with a low chance of going busted.

Note that if you're playing a -EV game, *no* bankroll, not even Bill Gates', is big enough, because in infinite time, your bankroll will go to $0.

Goodness - I've gone on long enough. However, I'll check in here on occasion and see if I can add anything to the discussion.

Stay well, Fools.

Regards, Lee

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