If there is anything I've learned in about 12 years of doing gaming math professionally, along with another 20+ years of doing it 'unprofessionally', is that the math is completely misunderstood by most. This goes for virtually every aspect of it.
Read MoreWhat does the word volatility mean to you? You might think of a person that is volatile, meaning they might be a bit hot tempered or prone to make rash decisions. Maybe you'd think of a chemical that is volatile meaning that it might explode at any moment. Basically, volatile doesn't tend to conjure up something positive. When it comes to gambling, volatility means something a bit different, although there are some similarities. In gambling, volatility means about the same as it does with stock investing. You better expect some big ups and downs. This isn't necessarily a negative, but you do have to be prepared for it.
Read MoreLast week I discussed the importance of net win vs. expected value when looking at wagers of different sizes. The term expected value was originally used mostly to describe video poker hands. Since the wager size is the same from hand to hand and the payouts are all essentially odds based - meaning they pay a certain amount for each unit wagered as opposed to a fixed dollar amount, using the expected value works fine. But, in a game like blackjack where the Player has the option to double down, we need to look at net win (or loss) and not expected value. We lower our win frequency (which lowers the expected value) when we double down, but we still do so because in the end we win more money, which is the real goal.
Read MoreThe premier consulting firm that has been demystifying casino gaming math for more than two generations.
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