Betting Ping-Pong: Boon or Bane

By PM Daniel Cecilio
PAGCOR Hyatt Manila
July, 2010

Background

Wagering on both the Player and the Banker betting propositions with two equally sized
bets on the same deal in the game Baccarat (or its other variants like Super 6) has been
called in local casino jargon as betting Ping-Pong. More formally, this form of wagering is
called Cancellation of Bets or Balanced Betting.

Bettors typically playing in the VIP areas engage in this form of wagering when they don’t
have any feel of where to bet on a particular deal but need to keep the game going.

Believing that this brings some form of a disadvantage for the casino, this form of betting
is frowned upon and discouraged by most gaming executives at Pagcor. A verbal
instruction (no written memorandum whatsoever can be found as of this writing) coming
from senior management is believed to have initiated this policy against Ping-Pong
betting.

While implementing this policy, most floor executives and front line managers of Pagcor-
run casinos often get into squabbles with VIP players engaging in this form of betting.
Sometimes, in order to just accommodate and avoid getting into squabbles with them,
front line managers go to the extent of requesting bodyguards or financiers to sit beside
these players to make it look like that the bets wagered as Ping-Pong are owned
separately.

Creating a Disadvantage?

The impression that balanced betting creates a disadvantage for the casino helped foster
the continued implementation of the policy against this form of betting. However,
nobody at Pagcor offered a logical explanation how this creates a disadvantage.

In order to understand the effect of balanced betting to casino revenues, the expected
value of the particular wager relative to casino revenues should be looked into.

Expected Value

Expectation, or expected value, represents how much money a player can expect to win
or lose in the long run on a particular wager. If the player’s expectation is negative, as is
typical for most bets made in a casino, the player can expect to lose money over the long
haul. Note that a player’s negative expectation is equivalent to the casino’s positive
expectation, and vice versa.

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Expected value is a function of both the probabilities of winning and losing the bet, as
well as the amount won or lost. The following formula is used to calculate the expected
value of a wager.

EV = Σ (Net Payi x Pi)

Here is an example of calculating the expected value of a wager in the game double-zero
roulette. A winning wager on a single number is paid 35 to 1. If a P20 bet on the number
17 is made, the net payoffs are +P700 (if it wins) and –P20 (if it loses). These payoffs have
probabilities 1/38 and 37/38, respectively. The expected value is:

EV = [(+P700) x (1/38)] + [(-P20) x (37/38)] = -P1.05

This means a player can expect to lose P1.05 for every P20 wagered on the number 17, in
the long run. Put another way, the casino can expect to win P1.05 for every P20 wagered
on the number 17. Clearly, the particular number on which the wager is placed makes no
difference and the expected value is -P1.05 for a P20 wager on any single number. The
expectation calculation for a P200 bet on red, which pays even money, is:

EV = [(+P200) x (18/38)] + [(-P200) x (20/38)] = -P10.53

Expected Value for Baccarat Wagers

In determining the expected value for wagers in the game baccarat, the following
probabilities are taken into consideration. Please take note that the casino’s point of
view will be taken in the following computations:

Baccarat Probabilities
Player Banker Tie
0.4462466 0.4585974 0.0951560

Expected Value for a Player bet of P10,000:

Expected Value for a Banker bet of P10,000*:

*The casino pays 95% for winning banker wagers, hence the P9,500 payout.

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Expected Value for Balanced Betting

Now, if the same amount of bet is wagered on both the Player and Banker on the same
deal, that is, P10,000 on Player and P10,000 on Banker (Balanced Betting), the following
expected value can be derived:

EV = [(10,000 - 10,000) x (0.4462466)] + [(10,000 - 9,500) x (0.4585974)] = 229.30

Please take note that Tie was ignored in the equation since its product will have a result
of zero: [(0) x (0.0951560)] = 0.

As can be observed from the computation of the expected value above, the impression
that balanced betting creates a disadvantage is fallacious. Furthermore, contrary to
common belief, accepting balanced betting is more advantageous and profitable than
accepting flat bets of the same amount on either the player or banker proposition in the
long run.

Effect of Balanced Betting on Rolling or Dead Chips

Rolling or Dead Chip Program is a marketing tool that aims to increase premium play by
providing a discount on the casino’s house advantage. Depending on the applicable
rolling rate, the casino’s effective house advantage for the game Baccarat is computed as
follows:

Effective House Advantage

Given that non-negotiable chips (NNC) are used as wagers for Baccarat and the maximum
rolling rate of 1.35% is applied, the effective values for P10,000 NNC wagers on Player,
Banker, and balanced betting are computed as follows:

Expected Value for a Player bet of P10,000 NNC:

Expected Value for a Banker bet of P10,000 NNC:

Expected Value for NNC Balanced Betting:

N.B: The casino collects only P9,865 of the losing P10,000 NNC bet since 1.35% or P135 is returned back to the customer
in the form of the discount. Ties are ignored in the equations.

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Conclusion

Through the computations shown above, the notion that Balanced Betting creates a
disadvantage does not seem to hold any ground. Rather than create a disadvantage for
the casino, what it actually does is to approximately double the inherent casino
advantage realized from an equally sized bet wagered on one side of the game Baccarat.

Having shown the mathematics associated with balanced betting, the local casino policy
against this form of wagering should be given a second thought. It would be better if this
policy is lifted at the soonest possible time. This will save its front line supervisors and
managers from having to go into squabbles with its players just because of a wrong
notion.