There is one more flaw in Thomason's logic that needs to be exposed. It's a bit subtle, but here it is. He says that the results of your overall play can be partitioned into sets of winning streaks and losing streaks. That part is true. If you look at any pattern of wins and losses, you can separate it into streaks of 1, 2, ..., n wins and losses. I showed above that, for blackjack, his assertion that the numbers of each kind of streak will be roughly equal is grossly false. For blackjack, you will see more losing streaks than winning streaks and the losing streaks will be longer.
But what if the game is not blackjack? What if the game is coin toss? Each bet is made on the toss of a fair coin. In that case, the probabilities of the losing and winning streaks would in fact be exactly equal. You would expect to experience the same number and length of each kind of streak. His theory is that, if you bet more after a win, then your average bet while winning will be higher than your average bet while losing. If the length and frequencies of both kinds of streaks are equal, then you should come out ahead. How can this be? We all know that the house edge on coin toss is zero and
most of us know that no betting progression can overcome the house edge.
The flaw in his model is that, when playing the progression, not every win comes on an increased bet and not every increased bet results in a win. In reality, every (positive) progression begins with a small bet, which may win and every progression ends with a loss, which may be on an increased bet. The logician then says to the mathematician that you can safely ignore the results of the first and last bet in the progression, because the longer winning streaks will overcome the effect of those bets. But you can't. For it is in these results that the expected balance is achieved.
Let's look at the possible progression sequences and their individual contributions to the overall result. The overall expected result is the sum of every possible progression result. Thomason talks about positive progressions (i.e. betting more after a win). Here is a chart I made using a spreadsheet for the case where we start with a 1 unit bet, bet 2 units after a win, and return to 1 unit after a loss. The progression of length 1 is a single loss, the progression of length 2 is a win followed by a loss, length of 3 is 2 wins followed by a loss and so on.
In the chart we can see that:
- A progression of length 1 (a single loss) results in a loss of 1 unit and occurs 50% of the time. A progression of length 2 (WL) also loses 1 unit (due to the win of a small bet combined with the loss of an increased bet) and occurs 25% of the time. So right out of the gate this progression loses 1 unit 75% of the time.
- Starting at length of 3 (WWL) the progression starts to make money but only 1 unit (due to the win of the initial small bet and the loss of an increased bet) and this does not make up for the losses of the shorter sequences. Also, the progression of length 3 only occurs 12.5% of the time.
- As the sequences get longer the amount won increases, but the frequency decreases by an amount such that the bigger wins do not occur frequently enough to bring us into profit.
- I have included sequences up to a fairly ridiculous length of 37 (36 wins followed by a loss) to show that at that point, the net return is very close to zero. You can add as many lines as you want and the net return will get closer and closer to zero, but will not quite get there. The full result would include all sequences of length to infinity and the full return converges to zero at infinity.
- In this example, we start with a bet of 1 unit, bet 2 units after each win and begin a new progression with 1 unit after a loss. However, whatever you set your bets to for each stage of the progression, the net result will converge to zero, as expected.
I can provide the spreadsheet for anyone who is interested.
Code:
P Win P Loss Base Bet After Win After Loss
50% 50% 1 2 1
Progression
Length Probability Result Return Net
-------------------------------------------------------------------------
1 50.0000000000% -1 -0.5000000000 -0.5000000000
2 25.0000000000% -1 -0.2500000000 -0.7500000000
3 12.5000000000% 1 0.1250000000 -0.6250000000
4 6.2500000000% 3 0.1875000000 -0.4375000000
5 3.1250000000% 5 0.1562500000 -0.2812500000
6 1.5625000000% 7 0.1093750000 -0.1718750000
7 0.7812500000% 9 0.0703125000 -0.1015625000
8 0.3906250000% 11 0.0429687500 -0.0585937500
9 0.1953125000% 13 0.0253906250 -0.0332031250
10 0.0976562500% 15 0.0146484375 -0.0185546875
11 0.0488281250% 17 0.0083007813 -0.0102539063
12 0.0244140625% 19 0.0046386719 -0.0056152344
13 0.0122070313% 21 0.0025634766 -0.0030517578
14 0.0061035156% 23 0.0014038086 -0.0016479492
15 0.0030517578% 25 0.0007629395 -0.0008850098
16 0.0015258789% 27 0.0004119873 -0.0004730225
17 0.0007629395% 29 0.0002212524 -0.0002517700
18 0.0003814697% 31 0.0001182556 -0.0001335144
19 0.0001907349% 33 0.0000629425 -0.0000705719
20 0.0000953674% 35 0.0000333786 -0.0000371933
21 0.0000476837% 37 0.0000176430 -0.0000195503
22 0.0000238419% 39 0.0000092983 -0.0000102520
23 0.0000119209% 41 0.0000048876 -0.0000053644
24 0.0000059605% 43 0.0000025630 -0.0000028014
25 0.0000029802% 45 0.0000013411 -0.0000014603
26 0.0000014901% 47 0.0000007004 -0.0000007600
27 0.0000007451% 49 0.0000003651 -0.0000003949
28 0.0000003725% 51 0.0000001900 -0.0000002049
29 0.0000001863% 53 0.0000000987 -0.0000001062
30 0.0000000931% 55 0.0000000512 -0.0000000549
31 0.0000000466% 57 0.0000000265 -0.0000000284
32 0.0000000233% 59 0.0000000137 -0.0000000147
33 0.0000000116% 61 0.0000000071 -0.0000000076
34 0.0000000058% 63 0.0000000037 -0.0000000039
35 0.0000000029% 65 0.0000000019 -0.0000000020
36 0.0000000015% 67 0.0000000010 -0.0000000010
37 0.0000000007% 69 0.0000000005 -0.0000000005