February 02, 2009

Risk-Free Roulette

I've found the key to being debt free. And all it requires is a gracious man with a deep bankroll.

Let's say you have $50,000 of student loan debt. Boy, wouldn't it be nice to get out from under it.

So, how about Warren Buffett or Bill Gates starting a non-for-profit debt removal company? Here's the business model. They play high-stakes roulette, and put $50,000 on red. If they win, the debt's canceled and they get their money back. If they lose, they put $100,000 on red. If they win, the debt's canceled and they get their money back. If they lose, they put $200,000 on red, and so on.

With near 50/50 odds, they will likely win within two rounds. But, even if they don't, the likelihood of losing 7 times in a row is under 1%. And they're not even close to their bankroll limit by then.

The reason why everyone doesn't do this? Because they don't have the bankroll to keep doubling up, and there's a risk of losing EVERYTHING. With these guys, the risk is literally infinitesimal.

Shall we play?


Anonymous said...

I don't think you can say the chances of rolling red 7 times in a row is less than 1%. Having rolled red last time doesn't change my chances this time so isn't every spin mutually exclusive with 50/50 odds? $10 or $100,000,000 you could sit there all day playing red and most likley you'll come out even. And who's paying my loans? Bill Gates with his winnings when he doubles up? If he's always paying out his winnings and no one is covering his losses, he has a 100% chance of losing all his money.

Eric Olsen said...

1/2^7 = 0.7%

It's 50/50 odds each spin, but the odds of a 7 spin losing streak is less than one percent. Bill Gates is paying out your loan when he eventually doubles up, because with a never-ending bankroll, his odds of losing are infintesimal.

Anonymous said...

I see, so you are assuming he sits down, doubles up until he wins and then walks away. Wouldn't it be great if everyone did that? But there is always the chance of doubling up again isnt there? And think of how much you'd have if that happened! I bet if you could convince everyone who visited a casino to walk away the minute they were "up", you could bankrupt that casino in under a week.

Eric Olsen said...

a reason this system is not taking advantage of more is because most tables have a max. limit. So, if you start with a $500 bet, if you lose 5 times in a row while doubling up, you could be over the table limit, and lose your chance to win it all back.

i am working on a smaller-stake system right now.

Anonymous said...

Yes, but if they could pay 3000 people $20 to all go to $10,000 max tables with their money, start at $50 and walk away once they'd doubled, they'd make a lot of money.

Eric Olsen said...

exactly. i have 3 computer programmers working on it right now...seriously.

i'm playing around with a couple other factors too. bailing out after 7 losses in a row, and just taking the hit. (because of my personal limited bankroll) and doing slightly more than doubling up every time, so i can make enough during the other rounds to make up for the 1 every 100 bailouts.

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