Project 6: Casino and Lottery Games

Calculate the expected winnings for the following casino-style and lottery games by calculating weighted averages. If the expected winnings is greater than the admission price, then the game favors the player, which is not going to happen at any casino that hopes to make money. Round answers to the nearest penny.

Part 1
  1. Roulette (single number bet).

    The player predicts which of 38 roulette numbers will be randomly chosen by the roulette wheel. If the player is correct, the player keeps the amount bet and wins 35 times the bet amount (which has the effect of giving back the player an amount 36 times the amount bet).

    Calculate the expected payout when the bet amount is $1:
    EventProbability PayoutProbability
    × Payout
    Player Wins / ×$= $
    Player Loses / ×$= $
    Expected winnings: $
    Expected winnings after subtracting initial bet: $

  2. Roulette (color bet).

    The player predicts which color (red or black) will be randomly chosen by the roulette wheel. If the player is correct, the player keeps the amount bet and also wins an amount equal to the bet (which has the effect of giving double the amount bet back to the player). On a roulette wheel, 18 of the 38 spaces are red and 18 of the 38 spaces are black. The other two spaces are green, the zero and the double zero.

    Calculate the expected payout when the bet amount is $1:
    EventProbability PayoutProbability
    × Payout
    Player Wins / ×$= $
    Player Loses / ×$= $
    Expected winnings: $
    Expected winnings after subtracting initial bet: $

  3. Pick 3 Lottery – Straight.

    The player picks a three digit sequence (numbers from zero to nine). If the player’s numbers match the numbers randomly drawn, in the correct order, the player wins 500 times the amount bet. (The player does not also receive the initial bet back)

    Calculate the expected payout when the bet amount is $1:
    EventProbability PayoutProbability
    × Payout
    Player Wins / ×$= $
    Player Loses / ×$= $
    Expected winnings: $
    Expected winnings after subtracting initial bet: $

  4. Pick 3 Lottery – Boxed.

    The player picks a three different digits (numbers from zero to nine). If the player’s numbers match the numbers randomly drawn, in any order, the player wins 80 times the amount bet. (As before, the player does not also receive the initial bet back)

    Calculate the expected payout when the bet amount is $1:
    EventProbability PayoutProbability
    × Payout
    Player Wins / ×$= $
    Player Loses / ×$= $
    Expected winnings: $
    Expected winnings after subtracting initial bet: $

  5. Blackjack Insurance

    The player sees the blackjack dealer is showing an ace. By taking “insurance”, the player makes a separate bet not connected to the original blackjack bet. If the dealer’s hidden card has a value of ten (giving the dealer a total of 21), the player wins the “insurance” bet amount back, plus another 1.5 times the amount bet (which has the effect of giving the player 2.5 times the amount bet). Cards with the value of ten are the king, queen, jack, and, of course, ten. Assume that the cards already seen have no effect on the probabilities, so drawing each value (ace through king) is equally likely.

    Calculate the expected payout when the bet amount is $1:
    EventProbability PayoutProbability
    × Payout
    Player Wins / ×$= $
    Player Loses / ×$= $
    Expected winnings: $
    Expected winnings after subtracting initial bet: $

  6. Simplified Slot Machine

    Imagine a slot machine that simulates rolling three six-sided dice after a $1 token is inserted.

    Calculate the expected payout when the bet amount is $1:
    EventProbability PayoutProbability
    × Payout
    Three Sixes / ×$30= $
    Any other 3-of-a-kind / ×$10= $
    Exactly Two Sixes / ×$3= $
    Exactly One Six / ×$1= $
    Anything Else / ×$0= $
    Does this number really matter?↗ Expected winnings: $
    Expected winnings after subtracting initial bet: $
Part 2 — Powerball (bonus problem) This problem requires some challenging concepts from chapter 5 to answer.

The player chooses five different “white” numbers from 1 to 69, and a “red” number from 1 to 26. The red number comes from a different (independent) drawing and may or may not match one of the white numbers.

From a $2 ticket, calculate the expected payout based on the following payout chart. The big jackpot can vary from drawing to drawing, assume a value of $50 million for this calculation.
EventProbability PayoutProbability
× Payout
Match 5 whites and red / ×$50 million= $
Match 5 whites, not red / ×$1 million= $
Match 4 whites and red / ×$50,000= $
Match 4 whites, not red / ×$100= $
Match 3 whites and red / ×$100= $
Match 3 whites, not red / ×$7= $
Match 2 whites and red / ×$7= $
Match 1 white and red / ×$4= $
Match red, but no white / ×$4= $
Expected winnings: $
Expected winnings after subtracting initial bet: $

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 Neil Simonetti

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