Re: The FLip Flop Game

From: Kory Heath <kory.heath.domain.name.hidden>
Date: Mon, 11 Oct 2004 03:52:39 -0400

At 12:20 AM 10/11/2004, Norman Samish wrote:
>For example, if there are 3 players then the long-term odds are that each
>game costs each player 25 cents. If there are 5 players, the average cost
>goes down to 6.3 cents per game. If there are 7 players, they make on the
>average 3.1 cents per game. If there are 9 players they make about 9 cents
>per game.
>
>It isn't clear to me why this should be so.

The issue is in the payout structure you suggest, which is that if you win
you get $2, and if you lose, you pay $1. This is not an even-money
proposition. If your chances of winning are exactly 1/3, then for every
three times you play you will (on average) pay $1 twice and win $2 once,
which is break-even. Therefore, you have a positive expectation if your
winning chances are any greater than 1/3.

In three-player Flip-Flop, your winning chances are only 1/4, so the
three-player game is a bad bet even given this generous payout structure.
However, as you add players, your chances of winning tend towards 50% (but
never quite reach it). Very quickly, your winning chances will become
greater than 1/3, and the game will suddenly have a positive expectation
for you, and a negative one for the house.

If the casino wants to guarantee profits, it must adjust its payout
structure to an even-money proposition. In other words, losers pay $1, and
winners get $1. As you add more players, your winning chances improve, but
they're still always slightly less than 50%, so the game will always have a
negative expectation for the players.

As a side note, the common parlance in betting is that you pay a certain
amount up front (the "bet"), and then if you win you get a certain amount
back, while if you lose you get nothing. In this way of speaking, an
even-money proposition would be to bet $1 and get $2 back if you win. The
bet that you proposed was equivalent to betting $1 and getting $3 back when
you win, which is better than even-money.

-- Kory
Received on Mon Oct 11 2004 - 03:53:26 PDT