Side bet against a habitual roulette player
Question
Mr. Brown always stakes $1 on number 13 at American roulette (38 equally likely pockets; a winning number returns the stake plus 35 times the stake, otherwise the stake is lost). Hoping to put him off, his friend offers a $20 even-money wager, each time, that Brown will be down after 36 spins. What is Brown's overall expected result per 36 spins, counting both the roulette and the side bet?
Short answer
He gains about $2.79 per 36 spins. One hit in 36 spins leaves Brown exactly even, so he is behind only if he never hits: . The side bet is worth to him, while the roulette costs ; the net is roughly .
Adapted from OpenQuant; question and answer rewritten by SelfMadeQuant.com.
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Open the worked solutionLessons behind this question
- Sample Spaces, Events, and the Probability Axioms
- Gambler's Ruin and First Passage Times
- Simple Random Walks — Symmetric and Asymmetric
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