vpFREE2 Forums

S.C.O.R.E for video poker

#1

I don't think #3 applies. Surely, you want to be able to
play a +EV game as much as possible. But if you aren't able
to play to N0, I don't think that should be a reason to not
play. Would you bet on a coin flip with a 10% edge (pays -1
or +1.2 for heads or tails) if you could only make the bet a
few times? Would you play FPDW if you could only play 5,000
hands?

I don't think it should matter if you can get the rounds in
for a specific tax year, as long as you aren't putting
yourself in a situation where you're playing a huge variance
game (ie: 9/10 years you expect to lose $10,000 and 1/10
years you expect to win $120,000), since that's basically
the exact opposite from a loss-rebate.

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______________________________

"nightoftheiguana2000 wrote:

3. Do you think you have the time? You need to be able to
play over Nzero (variance/edge/edge) hands in the current
tax year. Nzero is the point where the edge equals one
standard deviation. Less than Nzero is clearly still short
term.

#2

Shagatola wrote: "I don't think #3 applies"

The primary issue is taxes. Gambling losses can not legally be carried forward or backward, so any losing year due to variance means an additional penalty in the corresponding winning years, which will be inflated by variance. You don't want to pay tax on variance, if you do it's an additional hit to EV and can easily wipe out the EV you thought you had.

But, you should keep in mind that EV is the long term average result, and is expressed in the long term. Nzero is an indication that you are entering the long term. At Nzero you have about an 84% chance of being a winner and about a 16% chance of still being a loser, that's even with an edge. If you don't have an edge the situation reverses: 84% chance of losing and only 16% chance of winning. It's a simple yet powerful concept, one that merits more than a casual glance in my opinion but as always you are free to define your own rules and ignore what the math says:

vpFREE Bank_NO http://www.west-point.org/users/usma1955/20228/V/Bank_NO.htm

vpFREE Bank_NO http://www.west-point.org/users/usma1955/20228/V/Bank_NO.htm Very early on, upon joining this board, iggy introduced a concept which he references in shorthand as "N0".

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#3

Shagatola wrote: "Would you bet on a coin flip with a 10% edge (pays -1
or +1.2 for heads or tails) if you could only make the bet a
few times?"

The variance is .5(-1-0.1)^2 + .5(1.2-0.1)^2 = 1.21

The N0 is 1.21/.1/.1= 121

If I could do it at least 121 times per tax year, I'd consider it. A few times would be out of the question, unless I knew I had other gambling winnings that I could offset it with. I wouldn't want to pay taxes on the variance. Even at N0 you still have a 16% chance of losing, meaning about 1 year in 6. With one coin flip you have a 50% chance of losing. With one coin flip per tax year you pay taxes on 1.2 in the good years when your true win is only 0.1 per tax year. Between one and N0 you can extrapolate.

Shagatola wrote: "Would you play FPDW if you could only play 5,000
hands?"

Per tax year and no offsetting gambling winnings? No. You'd be paying taxes on the deuces and royals you hit in the good years with no carry forward of the losses incurred in bad years. If you don't see how that impacts your true EV, well then go for it!

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#4

Shagatola asked: "Would you play FPDW if you could only play 5,000
hands?"

5000 hands of FPDW in isolation doesn't really interest me, you lose about 55% of the time. I really don't like losing, it makes me feel like a loser. Now, on the other hand, if I could play Nzero (variance/edge^2) hands, I still have about a 16% chance of losing, which sucks, but the 84% chance of winning makes me feel like a winner, at least I know the math is in my favor. Jazbo generated curves at 5000 hands that might be worth a look:

Video Poker Probability Distributions http://www.jazbo.com/videopoker/curves.html

http://www.jazbo.com/videopoker/curves.html

Video Poker Probability Distributions http://www.jazbo.com/videopoker/curves.html Video Poker Probability Distributions Copyright © 1999, Jazbo Enterprises Last changed 1/9/99

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#5

lulz "5000 hands of FPDW in isolation doesn't really interest me,
you lose about 55% of the time."

#6

Shagatola wrote: "I don't think #3 applies."

I now think I have to concede that point.

#3 should be: Do you think you can avoid taking a tax loss? This is important because a tax loss on gambling can not legally be carried forward or backward, meaning it results in a reduction in the edge you thought you had which means you're taking more bankroll risk than you thought you were, possibly even crossing over into actual bankroll loss. The concept of Nzero is one way to address this issue, another would be Dunbar's risk analyzer. It can become very complex.

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