Reimbursement Formula
The Reimbursement Formula is straightforward when it comes to what it wants to achieve: gambling companies making zero profit per bet. That takes out the incentive to focus on the most frequent bettors, thus allowing the industry to charge flat fees instead.
General Mathematical Formula
Reimbursement = Ticket Value - Average Payout
Where Average Payout is the total amount that the gambling company disburses as winnings divided by the total number of individuals who played the gamble. Winning tickets are not reimbursed.
Please see examples below.
Lottery Formula
No more rollouts. You win, or you get your money back.
You pay £10, you get £9 back.
Let's assume the lottery prize pool for 6/59 is £1 million and there can only be one winner (so, no match 5's, etc.). For simplicity, 1 million people each buy a £10 ticket. The draw is made and somebody got the lucky 6. The average payout is £1, since the prize pool divided by the number of people who played the lottery is £1 million / 1 million. All of the 999,999 players get £9 back for this draw and one player gets the £1 million.
The other cost that the players will incur will be the monthly lottery pass, that is, the pass that allows one to enter any lottery venue in the country, which may cost around £10 per month. Daily/ weekly passes are not allowed.
Sports Bet Formula
It is designed so that it does not influence how odds are calculated, thus maintaining the thrill of the game.
Sports-betting Categories
Sports-betting will have a new pricing dynamic. Clearly, it is harder to estimate the odds for a League 2 match in Argentina, than it is for a Premier League derby. Therefore, a player will have to buy different subscriptions for the two sets of events. Nevertheless, a casual bettor would spend no more than £50 per month on those subscriptions.
The reimbursement is still calculated per bet placed.
Calculated Steps
As opposed to the lottery, the bettor cannot estimate in advance how much they will be reimbursed. The betting firm, once the results are known, has to calculate the total pot as well as the payouts, and provide the average payout figure at the time of the reimbursement.
Regardless, the principle is the same. The sports betting firm will make zero profit directly from the bets, and only charge bettors for sports category subscriptions.
Slot Machine Formula
The Slot Machine Reimbursement Formula takes out the house's edge. Casinos relied on the law of large numbers to ensure that the house always wins. Since every spin is essentially a bet, zero profit per bet means no edge for the house.
We want casinos to be truly in the entertainment and hospitality industries. As such, their revenue model will focus on entrance fees and ancillary services.
Reimbursement = Spin Fee - Win Value X Prob. of Winning
It is true that a series of big wins might bankrupt the casino, which is the opposite of what happens today. But "unlucky" casinos should be few and far between, according to the same law of large numbers.
Poker Formula
The Poker Reimbursement Formula takes out the house's rake and ensures that players have something to win even when they go all-in.
- How do reimbursements work?
- We have player 1 who bet £11k and won £27k. Player 2 bet £11k. Player 3 bet £3k. Players 4 and 5 bet £1k.
- The average pot is £27k/ 5 = £5.4k. So, players 3,4, and 5 get nothing back. This ensures that people budget in the loss for early withdrawals.
- Player 2 gets £11k - £5.4k = £5.6k back. They still lost more money than Player 3, but they got the majority of it back.
- Player 1 gets £27k - £5.6k = £21.4k, with a profit of £10.4k. Compared to other gambles, poker is a money transfer between individuals, so the casino only facilitates the game and is not liable for anyone's losses. However, the winner is, in order to preserve the right to win for everyone at the table.
- Finally, no reimbursements take place in-game. That is, the casino keeps the winner's due reimbursements when the winner claims their proceeds. Those who lost still have to inform their local authorities and collect their reimbursement the following day.