Quote from: PacoMartin on June 18, 2014, 12:22:16 PM

Quote from: Timetwister on June 18, 2014, 08:15:32 AM

I want him to come back because I don't care about variance but I do about profit.

20,651 average BTC wagered per day previous (June 20, 2013 - Feb 17,2014)
2,386 average BTC wagered per day last 4 months (Feb 18, 2014 - Jun 17, 2014)

In the last 120 days the total amount wagered is 18.43% of the amount wagered in a single day on Sep 29,2013.

So we've established that Nakowa didn't actually go about 302BTC profit per bet, but that he liked the idea of raising his bets to a profit of 1% of Bank.

So am I correct in understanding that if it was your website you would favor raising the max profit back to 1% in order to attract someone like Nakowa again (or Nakowa himself). You would like the possibility of cashing in big as an investor vs another big loss.

There was a pretty lengthy debate a after max winning was reduced to 0.25% of bankroll (i.e. quarter Kelly) and they increased up to 0.5% (half Kelly). It seems that some do want it back at full Kelly, but there wasn't a clear way of how to implement it in a way that everyone thought was fair. Some wanted two pools: one pool for small bets less half kelly and and another pool for bets greater than half kelly. This way people that only wanted to risk 1/2 Kelly would only do that, while others would be free to risk more. Doog thought such a set up was unfair to the people who wanted to invest more. They were taking the increase in risk/variance for the site while everyone was benefiting. The counter was that this system would basically limit losses to what a person was comfortable with per bet. people in the 0.5% pool would never loose more than 0.5% per bet.

Example of system:
Player A invests 100BTC in 0.5% pool
Player B invests 100BTC in 1% pool
Total pool is 200BTC
The max winning is thus 1.5 BTC (0.5% of 100BTC+1% of 100 BTC)
The total amount of BTC invested by people ok with 1/2 Kelly (0.5%) = 200 BTC
Total amount of BTC invested by people ok with full Kelly (1%) = 100 BTC

The first 1BTC (0.5%) of losses and winnings is shared amongst everyone that is OK with half Kelly (200 BTC). The second 0.5% of losses and winnings are assigned to those that are OK with full Kelly.

gains/losses per person is:

Player_Total = player_sum_of_amount_invested_in_either_pool
House_Total = total invested in all pools by all players
Payout_HK = the loss or winnings of a single bet capped at half Kelly
Player_FK = player amount invested in full kelly pool
House_FK = total invested in full Kelly pool by all players
Payout_FK = the loss or winnings of a single bet that is in excess of half Kelly but less than full kelly

Player_Totall/House_Total*Payout_HK + Player_FK/House_FK*Payout_FK

Case 1:
Someone bets wins/loses 1BTC (so it is entirely 1/2 kelly). Losses/gains are assigned as follows:
Player A: 100/200*1 BTC= 0.5 BTC
Player B: 100/200*1BTC=0.5 BTC

Case 2:
Someone bets wins/loses 1.5BTC (maximum allowed). Losses/gains are assigned as follows:
Player A: 100/200*1 BTC= 0.5 BTC
Player B: 100/200*1BTC + 100/100*0.5BTC=1 BTC

The alternative was to have and "adjustable" risk factor - either as two separate pools (half kelly and full kelly) where earnings/winnings are assigned proportionally. It was pointed out that that would be identical to having house edge be 1% for everyone, but everyone have an adjustable slider as to what they wanted their "kelly" to be, and thus invest accordingly. Since that was identical to the original situation that led to high variance, it too didn't get much traction

Example:
Same investments as above, but there is only one pool
Player A effectively contributed 50 BTC to the pool
Player B contributed 100 BTC to the pool
Total pool size = 150BTC
Max winnings/losses = 1.5 BTC (same as above)

Case 1:
Someone bets wins/loses 1BTC (so it is entirely 1/2 kelly). Losses/gains are assigned as follows:
Player A: 50/150*1 BTC= 0.33 BTC
Player B: 100/150*1BTC=0.67 BTC

Case 2:
Someone bets wins/loses 1.5BTC (maximum allowed). Losses/gains are assigned as follows:
Player A: 50/150*1.5 BTC= 0.5 BTC
Player B: 100/150*1.5BTC=1.0 BTC

As you can see, max bet sizes end up the same, but the player that chooses 1/2 kelly earns more money in the first system (which is where nearly EVERY bet occurs on just dice) than they do in the second. That's why it appears unfair: maximum jackpot increases which benefits everyone and increases site traffic and potentially profits for the people that did not "do the work" in order to increase traffic. The counter argument to that is that it actually does help those that assume more risk: they still get the exact same return as they currently do at the current site, and they get to take advantage (and attract) play by whales that the lower kelly players do not get to do.