The Baccarat Betting System

I've been approached by a gentleman by the name of Dave to help him sell a Baccarat Betting System that he devised. Dave says that he was able to make a ton of money using this Baccarat Betting System, and that he'd let me keep 50% of the profits by promoting it to my subscribers.

My answer to him is that I cannot promote any kind of product to my subscribers until I am fully convinced about its efficacy.

While Dave initially didn't want to reveal to me how his system works, he eventually caved in. I stood firm on my grounds that before I recommend any of my loyal subscribers toward any kind of system, I must first understand how it works, analyze it to my liking, and become convinced that the system is worthwhile for them to use.

Below is my conversation with Dave, along with his eventual description of how his Baccarat Betting System works:

Essentially, Dave's Baccarat Betting System is as follows:

Pick in advance a series of 4 decisions. There are 16 possible choices of 4 combinations of player and banker.

pppp, pbbb, ppbb, pppb, bbbb, bbbp, bbpp, bppp, pbpb, bpbp, pbbp, bppb, pbpp, bpbb, bbpb, ppbp

So you pick one and let's say it's pppp and it comes player, you just made one unit, now you pick another sequence. Let's say you pick bbbp and it comes player, well you lost the first bet so you double it and bet the 2nd in the sequence which is banker. Let's say it comes banker now you made your money back plus a unit profit.  So the martingale money management sequence is 1,2,4,8. If you lose the first you then bet 2 units and if you lose that you bet 4 units etc. If you lose all 4 you star over with a new bet selection sequence. And when you win you start over with a new bet selection sequence.

Very high chance you will be able to win one in four bets and the only way to lose is if the dealer deals the exact opposite of the sequence of 4 that you picked.

What do you think? Does Dave's Baccarat Betting System work?

Unfortunately, This system does not yield positive expected value. My explanation is below.

For losses:
The probability of losing 1 game is 50%. Therefore, the probability to lose a 4-game sequence is .54=6.25%.
Losing a 4-game sequence equates to a loss of 15 units.
Therefore, you're risking a 6.25% chance to lose 15 units on each 4-game sequence.

For wins:
The probability of winning at least 1 game in a 4-game sequence is 1-.0625=93.75%
Winning at sequence equates to a win of 1 unit.
Therefore, you're risking a 93.75% chance to win 1 unit on each 4-game sequence.

Expected value calculation:
6.25% chance to lose 15 units = .0625 * -15 = -.9375
93.75% chance to win 1 unit = .9375 * 1 = .9375
Expected value is -.9375 + .9375 = 0.

Essentially, zero expected value. Plus, the house is also taking a commission, and therefore, the system produces negative expected value over time.

My conclusion is that the system is not profitable.

Part of the problem with this system is owed to its untenable reliance on a limited Martingale betting strategy. The truth is, there really is no reason to double up one's staking sizes in a sequential baccarat game series because the games' outcomes are independent of one another.

In sports betting, progressive staking sizes in bankroll management can increase one's expected win value because research shows that when certain teams win or lose a game under certain conditions, there is a statistically significant effect on the outcome of their next game. For instance, when a sports team loses one or two consecutive games under specific situations, there is an observed correlating effect on the outcome of their next immediate game. Therefore, a limited Martingale progressive betting strategy in such a betting system in sports is viable under certain conditions.

But just because the strategy is effectual in sports, it doesn't mean that a similar tactic is efficaciously transferable to casino games because a game of chance such as baccarat is expected to produce outcomes that are independent of one another. For example, the outcome of one game in baccarat will have no bearing on the outcome of the next game. Therefore, it is flawed to raise the stakes on one bet over another when the win probability from one game to the next has not changed. Changes to staking sizes do not increase expected win value in baccarat games because the game's outcomes are uncorrelated, whether or not wagers are made sequentially.

Simply put: The only time when raising the amount of your stake would increase your expected win value is if you have good reason to believe that the win probability of the game that you're playing or betting on now is somehow higher than the last.

To finalize my point, I created a program that simulated 165,232 games of baccarat, resulting in 41,308 4-game sequences for Dave's system

Out of these 41,308 4-game sequences:

- There were 2,605 sequences that resulted in Loss-Loss-Loss-Loss, thus netting a loss of 39,075 units since each loss constitutes a loss of 15 units.

- There were 38,703 sequences that resulted in another result other than Loss-Loss-Loss-Loss thus netting a win of 38,703 units since each win constitutes a win of 1 unit.

Therefore, out of 41,308 4-game sequences of baccarat that I simulated from my program, you'd have won 38,703 units and lost 39,075 units, resulting in a total loss of 372 units, in addition to all the banker commissions.

Click here to download a PDF file named baccarat_simulation.pdf to see the results of what playing 41,308 4-game sequences of baccarat yielded in my test. This file is 1,425 pages long.

Final verdict: This Baccarat Betting System unfortunately does not work. Dave relented and expressed his gratitude on my explanation. I thought I would share this finding with you as well.