Setting Table Maximum Betting Limits

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To calculate the effect of any table maximum bet limit merely requires the multiplication of the limit by the numbers shown. Fixed expenses and fees can then be included to determine the net profit effect of providing the limit as a “poor”, not “worst” case scenario for the shareholders to evaluate. More extreme cases may also be demonstrated by altering the confidence interval to a 95% level (one chance in forty of the result or worse occurring) or a 98% confidence interval (one chance in one hundred of the result or worse occurring.) The determinant in which option to evaluate, is dependent on the shareholders’ risk-aversion, other income sources, capital reserves, long term strategic planning issues and the expected period of business.

Lower confidence limit = (N.E%)-(1.645. sqrt (N.V))
Win net of tax and comm. = (((N.E%)-(1.645. sqrt (N.V))).(1-T%)-(N.C%))
Net Profit = ((((N.E%)-(1.645. sqrt (N.V))).(1-T%)-(N.C%))-F).(1-M%).

From the calculation of the maximum loss point ( net of tax and commission ) it is possible to calculate, based on the maximum loss net of all costs which the company is prepared to accept, the maximum bet which could be offered.

From Table 1 ( for the specific example provided ) we have a maximum loss point of -129.1. If we consider the maximum the company is prepared to lose as a positive number then :

(129.1B + F).(1-M%) = Maximum Loss
therefore B = ((Max.loss/(1-M%))-F)/129.1

A more general formula for determining maximum bet size is :
B = ((Max.loss/(1-M%))-F)/(Maximum loss point prior to fixed expenses and fees)

Fixed costs would be determined based on annual costs and an evaluation of the period required to achieve the number of hands at the maximum loss point.

If, as an example, the maximum loss the company were prepared to accept was $10 million and fixed costs equalled $500,000, then the maximum bet calculated would be $85,695.

It is important to remember that “Maximum loss” actually represents a probability of one in twenty of this loss or greater occurring. More conservative numbers may be calculated by increasing the confidence limit.