A $28 bet could win you 142K. You're offered 42K. What do you do?

[Enfuego]

I gotta hedge something.

Let us know what you do and what we need to root for

EN FUEGO!

It is a hypothetical situation. Not my personal situation. I wish.

 

[Murphy8276]

48k for 3 years???
wow

Wilbur wants in on some of this shit!

-murph

 

[clowncar]

Let it ride.

The only time it might be correct to take the smaller amount of money is if you think there will be an issue in actually collecting the larger amount of money or if your life situation has an immediate need for the smaller (but large) amount of money.

But from a pure gambling math perspective, you let it ride.

 

[Bruins4Life]

I cash out, 48k would fix me for 3 years easily

Gave yourself an extra 6k. Nice.

 

[StraightXRS]

now imagine this 147k is from 5dimes......

 

[niltes]

one must also consider tax consequences, the 142 k is
much less assuming full tax liability on the winnings.
a hedge may or may not be as easily taxable depending
on how it is structured and documented.

 

[HalfDaySober]

Bet $28 on the other side

 

[festeringZit]

Let it ride.

The only time it might be correct to take the smaller amount of money is if you think there will be an issue in actually collecting the larger amount of money or if your life situation has an immediate need for the smaller (but large) amount of money.

But from a pure gambling math perspective, you let it ride.

Stating what is "correct" without considering the variance is ridiculous.

Consider this scenario:

You have 1% chance of winning a million dollars vs. 100% chance of $950,000

The first one has higher EV, but virtually everyone in here would take the second one, and it has
nothing to do with my "immediate needs."

 

[barman]

i cash out, 48k would fix my weed budget for 3 years easily

fify

 

[TomGshotput]

Stating what is "correct" without considering the variance is ridiculous.

Consider this scenario:

You have 1% chance of winning a million dollars vs. 100% chance of $950,000

The first one has higher EV, but virtually everyone in here would take the second one, and it has
nothing to do with my "immediate needs."

The first one has an EV of $10,000; the second one has an EV of $950,000

 

[pocketrockets]

fify

weed budget is around $1920 a year...

 

[festeringZit]

The first one has an EV of $10,000; the second one has an EV of $950,000

Meant to say 1% chance at 100 million

 

[PatsFan1283]

The spirit of the question is really just "Would you take 42k or a 50/50 chance at 142k"

He put it in sports betting context because it is a sports betting website but that obviously opens up the question to answers like hedging, selling equity in the bet, etc

Unless you are in need a cash infusion then the 50/50 chance is better for most people.

A better question would be something like "Would you take 500k or a 50% chance at 2 million?" then the answers would vary more based on preference, lifestyle, goals etc