BitBet is quite the lulzmine

Consider the "Bitcoin at $420 on or before 4/20" bet which recently closed.

When this bet started (early on April 10th) people were pretty excited about Bitcoin "exploding", "going to a new level" etc scl. Reality soon diverged from their expectations, as you'd expect. Early enthusiasm - odds actually were ever so slightlyⁱ in favour of Bitcoin breaching 420 - soon melted away, and by the end the odds were 10:1 against.

Let's now review the comments users left during all this excitement.

BitReefer
Yah mon. Bitcoin gonna be blazin on 420

CryptoJoint
BTC is smokin hot right now. Value will be pretty high on 4/20.

Anonymous
Shit shit, I'm going to party so hard on 4/20 after winning this bet.

Anonymous
FREE BTC LOL

Totally. Moving on.

Anonymous
I wonder if the 26BTC better realizes he'll lose money on the win.

The only 26 bet is of course

15-04-13 04:46 No 42`222 26.00000000 1Bm8f 27.28887849 182y8

Turns out he didn't lose money on the win. Moving on.

Anonymous
Now everyone below 7214 is gonna lose money. If the weighted 'no' reaches 9'978'000, and no one throws money away on a 'yes' bet, every better will come-out behind. I should go buy BITBET stock.

Anonymous
Stop betting, you won't make your btc back!

The buying BitBet stock is a great idea, of course, but otherwise this is all a little bizzare. Out of a total of 81 bets, exactly 4 made less than what they bet. To wit : a 0.23 BTC bet made 0.22982524, a 0.15 BTC bet made 0.14972581 BTC, a 0.0002 BTC bet made 0.00019919 and finally a 1 BTC bet made 0.99499186 BTC. This comes to a total of 1.3747421 BTC returned on a total of 1.3802 BTC bet, so the loss is 0.0054579 BTC (0.39%). The 1.3802 bets are just under 1% of the total bets made.

LOL_Dick
Its the dumbasses of the world that make the rest of us wealthy...

Rational Better
Actually, it's the dumbasses that make us all poor. As the payback cutoff window is narrowed by people making sure-loss bets, the number of actual winners is reduced. Some crazy bastard lost two whole BTCs just to knock three other people out the payback window.

This is even more bizzare. How would people making sure-loss bets reduce the number of actual winners ? The winners don't get their winnings exactly out of thin air, do they ?!

Anonymous

Well, here's the lesson: Don't bother betting if the wager accepts new entrants until the last minute. Only bets which close before certainty has been reached can prevent fools from crowding-out winners. FYI, fully 70% of the "yes" betters will lose money on the win.

You didn't think it can get any more bizzare, did you ? Well... of course it can. This is after all Bitcoin.

For one, Yes didn't win. For the other, had Yes won the odds were so greatly against it that the winnings would have been in the 10x range. What sort of nonsense is this 70% ?! Anyone's guess. Apparently everyone on the Internet has a percentage or two at the ready for any circumstance.

Anonymous
Yes, and this is a stupid method of calculating things. The winning side should never lose money period, not sure why bitbet implemented such stupid calculation. Just take a 2% fee from the losing side, instead of taking 1% fee from both side. How dumb is that.

It's fair and therefore stupid. Internet logic.

Anonymous
The simple truth is, the only way it can work is if all the winners are repaid, in total, before the winnings are split. Then the remaining amount (Pool less winner's bets)should be apportioned according to the weighting scheme. If a winner can lose money, if discourages betting. ARE YOU LISTENING BITBET?!? Like this: The A pool bets one way, the B pool bets the other. Suppose A wins. Each better in A receives 100% of their bet back. The remaining amount (which is equal to B's pool) then has 1% subtracted as fees for BITBET. The remaining amount (Total less A less 1% of B) is then distributed to the A pool betters. Then there's a tremendous incentive to place and create bets, which equals greater fees for BITBET.

Yes, we're listening. This shit's better than Comedy Central.

GreenspanNakamoto
This is the best way the bets can work. If you were guaranteed to get back 100% of your winning bet no matter your bet weight, then people would come in and dump 1000 BTC near closing. Though their bet would be weighted poorly, the mass of the bet would make up for it. This way people are discouraged from making a stupid bet twice. After one stupid bet like this, they will learn.

This is the idea, pretty much.

Anonymous
obviously bitbet takes 1% from all returning money because its works out better for them taking 2% from the losing bets wouldnt be close to this in most cases

I'm not sure this judgement is correct. Short odds win most of the time but long odds probably win often enough to bring the figure somewhere in range. Just a guess on my part, I've not run the numbers (mostly because I don't think we have enough bets to get usable results yet).

The reason for the fee structure however is not some arcane income optimisation. The reason for the fee structure is much more stolid and unclever than that : BitBet provides a service, for which service it charges a fee. Both sides, the winners as well as the losers have taken advantage of the service BitBet provides. Consequently both sides are billed for said service. No restaurant charges only the patrons that got food poisoning from eating there, for instance, giving everyone else a free meal.

Sure, people are used to marketing gimmickry to the point that they expect it by now and act strangely when offered a square deal, pining instead for "loser only" fees, line betting and all the rest of the scammy nonsense robbing them blind irl. This is quite irrelevant as far as we're concerned : they'll just have to get re-used to normalcy and come to sanity, much like Plato's cave dwellers will have to get used to the light of day.

Anonymous
With a 1% fee on bets, BITBET will make 1.41 BTC on this bet. If BITBET took 15% of the losing side, they'd make just over 1.5 BTC off this bet, and every winner would get, at least, 100% payback. In fact, 15% of the losing side (as a fee) is a better arrangement for everyone involved. The winners will, like I am, gripe about losing money. The losers don't expect anything back. If I were the BITBET owner, I'd take a fee from the losing side, such that the fee always exceeds 1% of the total pot size. More money = better.

Anonymous
The proportional payout is a great idea, but allowing late-comers to reduce early-entrants winnings to less than the 1% fee discourages early better too. Everyone below 78'' will bet less than 100% of their bet back. That's silly. If all fees were taken from the losing pool before the winnings were proportionately distributed, every winner would get >100% back, and BITBET could make more than it will now in fees.

Nonsense.

1. 1.09 BTC on YES to 0.96 BTC on NO. [↩]