3. The idea of pot odds determines when i is statistically sound to call a bet,

Question

3. The idea of pot odds determines when i is statistically sound to call a bet, assuming you know the probability that you will win. Suppose there is a pot with p dollars currently in it and your opponent makes a bet of b dollars. The pot odds is defined as the risk-to- reward ratio. You have to pay b dollars for a chance at winning bp dollars, so this ratio is b/(b p). It is only statistically sound to call a bet when the probability that you wil win is greater than the pot odds. If this strategy could be applied at every bet, it would theoretically guarantee long term growth in your winnings, assuming you play a very large of an Suppose the pot currently has $100 in it. Given the current situation from the previous problems, determine whether or not it is statistically sound to call a) a bet of $200 b) a bet of $800

Explanation / Answer

pot odds= risk/reward=b/(b+p)

pot cost= p dollars and bet of b dollars

(a) p=$100

b=$ 200

pot odds = 200/300=2/3=0.67

let probability of wining =P(win) =S (as prob of wining is not given)

if S>0.67 ,then it will be statistically sound to call this bet.

(b) p=$100

b=$800

pot odds= 800/900=8/9=0.89

now if S>o.89 ,then it will be statistically sound to call the bet.

Comparing both the bets it will be better to statistically sound to call the bet in first case as the pot odds in first case is smaller than the pot odds in second case.

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