Some friends and I recently made a trip to Foxwoods, where most of us only have any interest in poker. A friend of mine, who has a bit of the gambling bug, also likes blackjack on occasion when someone else is willing to play. So after putting up a nice win, he goes off for some blackjack with a buddy from school while I tag along just to hang out, having more than filled my poker itch for the evening.
I don't know if Foxwoods spreads anything lower than $15 blackjack. If they ever do, they didn't that night. So my friend throws down $1400 or so, his buddy pulls out about $300, and all of a sudden the table is by far livelier than it had been before they arrived. We're also getting served like clockwork, so despite the watery drinks, we're getting a lot of alcohol.
A few notes: My friend is smarter than I am, and a better poker player by far, and way more knowledgeable about gambling in general. I have no interest whatsoever in house games, and while I know that there is a perfect strategy to blackjack, I don't know what it is. I was starting to wonder a little about my friend's judgment after several $300+ bets, many of which he won at first. That's great he got away with those, I thought, but isn't betting more than the minimum a bad idea in terms of keeping your loss a small one? Again, I know nothing about blackjack, so maybe with a buyin of $1400 you can do that kind of thing.
Then he lost several large bets, and it seemed to me that the frequency of him betting big increased. I was starting to wonder if inebriation and tilt were making the decisions for him, and I tried to get some of the rest of our group to start a $2/$4 donkfest in the poker room. He wasn't interested, and he said that he would be there for a while rather than take his stack as it lay (I think a slightly stuck at that point, but his chips were all over the place, so I couldn't tell).
So I return to the poker room and mention this to some of our other friends. Yes, they say, he's being dumb. But just let him blow it off if necessary, and that'll learn him. In the back of my mind, I wondered if the only thing that would stop his play really would be blowing everything he had brought to the table. Then I thought, nah, he couldn't be that out of control. About 20-30 minutes later he and his buddy appear in the poker room, busted. Or as he put it, "Down $40," I suppose because that's how he calculated his expected loss, or maybe it was just an "f- you, don't remind me" I don't know. I hear later he actually busted for something closer to $2,000 total at blackjack. After making his last several bets about $1,000 each.
I'm tired, he's tired, and we retire to the hotel room while his friend from school goes back to play blackjack for, as it would turn out, the next ten hours. Now I wonder what to do, because I don't want act like his daddy telling him what to do and what not to, but I also despise people who are too intellectually and/or morally weak to ever say what's on their minds. So I said what was on my mind, not in a "You shouldn't have done that" way but in a "This boggles my mind" kind of way. He says that the house edge was only .05%, so his expected loss was near nothing, and if he hadn't been coolered in all of his last few hands, he'd be even. And poker/gambling money is his to play with, as he and his wife are certainly not hard up for cash. His attitude was that he could afford to lose it if he wanted, and while I didn't mean to tell him how to spend his money, I'm familiar enough with his wife and financial situation in general for that statement to surprise the heck out of me.
I thought, based on a comment from another of our friends, that as inebriation levels went down, guilt levels would start to rise. So I gave it to the morning.
On the long drive back, he did mention that his total expected loss from each $1,000 bet was only $5. I said I didn't think that was a very accurate way of looking at it, and he was adamant that there was no other way of looking at it. And it's not like he's a compulsive gambler who can't stop, like his friend who played all night. Well, fine. I couldn't argue with him about the math because I don't know the game, but it sounded to me an awful lot like an intellectualization.
Then again, I wonder if I was starting to become like those rock-brained idiots who are either unable or unwilling to view poker as different from roullette. I would be insulted and annoyed if some caring ignoramus ran over to me after I lost my stack in an all-in flip and said "It's time to stop. I don't think you should play anymore." That's touching, but unless I was making bad decisions or playing money I couldn't afford to lose, such advice is little more than asinine. I didn't want to be giving the same asinine advice myself, but I did have concerns about drunkenness and tilt, and as I mentioned, I believe him if he says he can afford to lose his poker wins at blackjack (and a lot more), but it certainly surprised me.
So blackjack experts: You tell me; what's the best way to look at this? Can you really say that $5 is the expected loss on a $1,000 bet? Or is that positioning the right numbers in the wrong way? I'm not here to bludgeon "holier than thou" principles into anyone--I just want to understand the truth of the matter, even if I was completely wrong to ever stick my nose in.
If your buddy plays with perfect basic strategy, then yes, the house edge goes down to about 0.5%. So a $5 expect loss for every $1000 is correct. However, Blackjack is a game of high variance, and it seems as though your buddy is betting 20%+ of his starting bankroll on some bets, which greatly increases his risk of ruin.
Quote: However, Blackjack is a game of high variance, and it seems as though your buddy is betting 20%+ of his starting bankroll on some bets, which greatly increases his risk of ruin.
A "starting bankroll" in blackjack doesn't really have a lot of meaning since you can play out of pocket -- but you're certainly right if he meant to limit his bankroll to $2,000. To be somewhat certain of being able to continue play to "expectation", about 100 top bets would give you some comfort. If he considers a $5 loss per $1000 entertainment fees, he's still paying $40-$50 an hour playing $100 a hand on a full table.
It's not a terrible play for someone who wants to take a quick shot and get some real action -- because you almost always do.
Quote: Can you really say that $5 is the expected loss on a $1,000 bet?
If he knows how to play, he's right that the edge is small (let's not nit this up by arguing about precise numbers or assumptions or the effect of different rules, it's still small and $5 is a reasonable claim). His risk of "ruin" is high but so is his chance of robusto.
However, it does sound like he's betting really big and drinking a lot, which is a terrible combination. I suspect he is not playing well and is betting more than is healthy, and I would be concerned this will escalate.
It depends what kind of game he was playing (i.e. single deck or shoe, favourable or unfavourable rules). While there are some games where you can get it, 0.05% is an extremely low house edge to claim. The house edge of my local game is over 0.6%, so over $1,000 worth of betting he would lose more like $60 in that game.
The claim that it's all about EV is wrong. I would not bet my life savings on a bet which was +$1 in expectation. It can be rational to pass up EV if your risk of ruin is too high. Risk of ruin is a function of two things - bet size and bet frequency. $1,000 could represent quite a lot of money to your friend - for instance, if his net wealth were $10,000 - but if he only makes the bet once, he is right that it's all about EV, since his risk of ruin is still zero. If he proposes to bet $1,000 50 times though, that's a different thing entirely. So it depends whether $1,000 is a lot to your friend and whether he does this sort of thing very often.
Quote: It depends what kind of game he was playing (i.e. single deck or shoe, favourable or unfavourable rules). While there are some games where you can get it, 0.05% is an extremely low house edge to claim. The house edge of my local game is over 0.6%, so over $1,000 worth of betting he would lose more like $60 in that game.
$5 expected loss on a $1000 bet means a house edge of 0.5%, not 0.05%. An expected loss of $60 would mean a house edge of 6.0%.