The Martingale betting system

Originally, martingale referred to a class of betting strategies popular in 18th century France. The simplest of these strategies was designed for a game in which the gambler wins his stake if a coin comes up heads and loses it if the coin comes up tails. The strategy had the gambler double his bet after every loss, so that the first win would recover all previous losses plus win a profit equal to the original stake.

Since a gambler with infinite wealth will with probability 1 eventually flip heads, the Martingale betting strategy was seen as a sure thing by those who practised it. Unfortunately, none of these practitioners in fact possessed infinite wealth, and the exponential growth of the bets would eventually bankrupt those foolish enough to use the Martingale.

Moreover, it has become impossible to implement in modern casinos, due to the betting limit at the tables. Because the betting limits reduce the casino's short term variance, the martingale system itself does not pose a threat to the casino, and many will encourage its use, knowing that they have the house advantage no matter when or how much is wagered. Suppose that someone applies the martingale betting system at an American roulette table, with 0 and 00 values; on average, a bet on either red or black will win 18 times out of 38. If the player's initial bankroll is $150 and the betting unit is $10, he can afford 4 losing bets in a row (of $10, $20, $40, and $80) before he runs out of money. If any of these 4 bets wins he wins $10 and wins back any past losses. The chance of losing 4 bets in a row (and therefore losing the complete $150) is (20/38)4 = 7.67%.

The remaining 92.3% of the time, the player will win $10. We will call this one round (playing until you have lost 4 times or until you win, whichever comes first). If you play repeated rounds with this strategy then your average earnings will be (0.923•$10) - (0.0767•$150) = -$2.275 per round. Therefore, you lose an average of $2.275 each round. However, if the gambler possesses an infinite amount of money, the expected return is (18/38)*b per roll (where b is the initial bet). With an initial bet of $10, the expected return is thus $4.736 per roll. As with any betting system, it is possible to have variance from the expected negative return by temporarily avoiding the inevitable losing streak.

Furthermore, a straight string of losses is the only sequence of outcomes that results in a loss of money, so even when a player has lost the majority of their bets, they can still be ahead over-all, since they always win 1 unit when a bet wins, regardless of how many previous losses. Example Your next bet is $10. If you lose: Your next bet is $20. If you lose: Your next bet is $40. If you lose: Your next bet is $80. If you lose: Your next bet is $160. If you lose: Your next bet is $320. If you lose:

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