cmayhem2001 wrote: "Don't forget, you could get hit by a bus on your way out of the casino... this could severely effect bankroll growth."
Yes, very funny. Of course the difference is there's not much you can do about the chances of getting run over by a bus while there are things you can do to reduce gambling risk. Four areas were identified:
1. Variance
The solution to the variance problem is to know in advance what you're dealing with. Don't just make the assumption you will never run bad, most likely you will, certainly the more you play the greater your odds that you will have a bad run. Use Dunbar's Risk Analyzer. Or use 3 x betsize x sqrt(variance x hands) but don't count results whose cycle time is greater than the hand size sample you're looking at in your EV and variance calculations (i.e. discount the long shots).
2. Play errors
The solution is to keep records and use Bayesian analysis to determine your true EV in the casino environment, keeping in mind it will vary from machine to machine and casino to casino. Frank Kneeland was working on some software to do this but I think he gave up. Don't just assume that machines with the same paytable are alike, they most likely are not, your true EV will vary from machine to machine. Be wary of machines with spotlights on them, these are hard on the eyes and can cause errors you're not even aware of, sometimes polarized glasses or sticky notes help, but often the machine is unplayable, find another. Be wary of machines placed in loud locations, sometimes earplugs or noise cancelling headphones work, but often the machines are unplayable, find another. Intense lights and noise overload the brain and cause errors in judgement, this is well known and is even considered torture under some circumstances.
3. Overbetting bankroll
The main solution is the Kelly system, in a nutshell: If a betsize is more than your current bankroll times the total EV divided by the variance, don't do it, instead spend your time scouting for plays that fit your current bankroll or participate in the many casino "no play required" promotions.
4. Taxes
The solution is to look at taxes in advance, instead of as an afterthought when they are due. Read the books on gambling and taxes before you even bother with the books on just gambling. If you're starting from scratch, you need to play at least N0 hands (variance/edge/edge) in the current tax year to have a reasonable chance of avoiding the carry forward loss penalty. If you already have a win for the current tax year, you have a buffer, but if you currently are at a loss and the loss is only due to variance, you are looking at a potential tax problem.
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