Post on 03-Aug-2015
transcript
Gambling, Expected Value & Complaining About Poker Bad Beats
@jeff_steinke
@jeff_steinke
Casinos
@jeff_steinke
I ♥ Casinos
@jeff_steinke
I ♥ Casinosthings you don’t want your finance & operations guy saying!
@jeff_steinke
I ♥ Casinosthings you don’t want your finance & operations guy saying
?
@jeff_steinke
To be sure, this is NOT what I mean
@jeff_steinke
BUT FIRST,WHY LISTEN TO ME?
@jeff_steinke
The idea that excellence at performing a complex task requires a critical minimum level of practice surfaces again and again in studies of expertise. In fact, researches have settled on what they believe is the magic number for true expertise: 10,000 hours.
- malcolm gladwell, Outliers
“
1. 10k Hours
@jeff_steinke
1. 10k Hours
Nearly 40 casinos,
…across 12 states,
…and 5 countries.
@jeff_steinke
1. 10k Hours
Podcasts (300+ ep, 3hrs ea) 1,000 hrs
Books, Blogs, Forums (1.5/day)
800 hrs
Playing - Live (12 yrs, 25-30/yr, 6hrs/ea)
2,000 hrs
Online (2004-2011, 100/yr) 2,000 hrs
Watching 500 hrs
…well, getting there
@jeff_steinke
2. William Huevelmann
DNA• Accountant• Blackjack Player• Card Counter
…me in a few years?
@jeff_steinke
I’ve got a ways to go…
@jeff_steinke
WIZARD OF ODDS
@jeff_steinke
Jeff Walks Into a Casino…
…I care about three things:1. House Edge2. Variance3. Hands per Hour
@jeff_steinke
1. House Edge
@jeff_steinke
2. Variance
@jeff_steinke
3. Hands/hr
@jeff_steinke
Why I Play Pai Gow Poker
• House Edge = 1.5%– Lower than most games • e.g. Roulette is 3-5%
– Although it’s higher than Blackjack (<1%)
• Variance = .75– One of the lowest in the casino– Slots variance is 8.74!
http://wizardofodds.com/gambling/house-edge/
@jeff_steinke
Why I Play Pai Gow Poker
@jeff_steinke
Math, Math, Math
How much will I lose – yes, I WILL lose – playing $5/hand Pai Gow for an hour?
1.5% * $5 * 34 hands/hr = $2.55
@jeff_steinke
Is this worth $2.55/hr to me?
…what’s the catch?
@jeff_steinke
*Also
• Ask for help!• The easier the game, the worse the
EV• Keep your wits• Don’t tilt
…If the last 10 roulette rolls were red, what are the odds the next roll is black?
@jeff_steinke
Jeff Walks Up To a Poker Table…
@jeff_steinke
Let’s Play Some +EV Poker
A situation…
How can we use what we’ve learned so far to make our decision?
@jeff_steinke
Let’s Play Some +EV Poker
First, how can we win our hand?
FLUSH
@jeff_steinke
Let’s Play Some +EV Poker
And how many diamonds are left in the deck?
9
@jeff_steinke
Let’s Play Some +EV Poker
So, what’s the probability we hit our FLUSH?
9/46 = ~19%
@jeff_steinke
Let’s Play Some +EV Poker
Second:
1. What will it cost us
AND
2. What can we win?
$150 to win $600
@jeff_steinke
Let’s Play Some +EV Poker
That means we’re getting 4:1 odds (600:150).
OR that we MUST win 1 out of 5 times, AT LEAST 20% of the time to profit $$.
@jeff_steinke
Let’s Play Some +EV Poker
What should we do?
Since we only win 19% of the time but need to win at least 20%, we should FOLD**.
This is a –EV play, losing $7.50 each time(pW)(pot size) – (pL)(bet size) = .19($600)-.81(150) = -7.50
@jeff_steinke
**Advanced Topics
Ok, so maybe we shouldn’t always fold:
• Direct vs Implied odds
• Putting opponents on a hand
• Don’t let opponents draw for cheap
@jeff_steinke
WIZARD OF OPS
@jeff_steinke
Jeff Walks Into the Office…
Brett asks, “What’s our cash flow going to be in September?”
Jeff responds, “Well, what’s in our pipeline?”
@jeff_steinke
Jeff Walks Into the Office…
• Sold a THD project for $100k• Havertys project for $100k that we
think we’ll win• InGame is “about” to get funding and
wants to start another $100k phase
@jeff_steinke
Jeff Walks Into the Office…
What’s our cash flow going to be in September?
• THD = $100k * 100% = $100k• Havertys = $100k * 50% = $50k• InGame = $100k * 10% = $10k
So, our EV is $160,000
@jeff_steinke
WIZARD OF ADDS
@jeff_steinke
WEBER!!!
The silver bullet marketing machine has found a guaranteed way to get new customers
Do we follow Weber’s advice and start buying these adds?
@jeff_steinke
Catching On Yet?
Same two questions:
1. What’ll it cost us?
2. What’ll we make?
@jeff_steinke
EV in the SaaS World
What does our silver bullet cost?
• $5,000/mo• 80,000 impressions• .1% convert
Our CAC = $5000 / (80k*.001) = $62.50
@jeff_steinke
EV in the SaaS World
How much will we make?
• Monthly Churn = 5%
Customer Lifetime = 1 / .05 = 20 months
@jeff_steinke
EV in the SaaS World
How much will we make?
• MRR = $12
Our LTV = 20mo. * $12/mo = $240
@jeff_steinke
Do We Make This Bet?
Is LTV > CAC?
It’ll cost $62.50 for each new customer, but we’ll make $240 in revenue,
Netting $177.50, which is +EV!
Gambling, Expected Value & Complaining About Poker Bad Beats
@jeff_steinke