Warning: Wall of Text Alert. TL;dr = I'd buy this service if I were a serious online poker player. In a heartbeat.

I conducted an unscientific experiment. I ran 7 simulations. The first 6 involved 1,000 units. These could be hands, sessions, weeks, a chunk of hands, whatever. I am not smart enough to figure out whether I am in the right ball park on this but I thought I was going in the right direction. The 7th simulation involved 10,000 units. I used heads-up situations to keep it simple.

I assumed:
--that the potential customer of insured play has a 5% edge over his typical opponent
--that 25% of the units are insured
--that the premium is 0.25%

I used random.org to obtain 1,000 (10,000 in the 7th simulation) numbers from 1 to 1,050 and placed those in column A. These represent hero results.

I did the same for column B, only the numbers ranged from 1 to 1,000. These represent villain results.

Column C is the profit subtotal of A-B. The sum of column C represents profit over the 1,000 or 10,000 hands/other appropriate unit of measure.

For Column D I inserted a random number from 1 to 4, where 1 represents an instance of insurance.

For Column E I said if D=1 then 23.75 (insured), otherwise whatever was in column C stands (not insured). I chose 23.75 because the average result in column A is 525.5 and the average result in column B is 500.5, and the difference there is 25, so that is hero's EV each hand/other unit of measure. 25 is 5% of 500, representing the 5% edge. If the edge is reduced to 4.75% because of the insurance fees, hero's EV each hand/other unit of measure is reduced from 25 to 23.75. So the insurance situations are supposed to impose an EV result, so that's what I did even though in practicality it will fluctuate more wildly. But as your poker account shoots up your insurance account plummets and vice versa, so that creates an equilibrium that just isn't there without this product, so I think it was fair of me to analyze it this way, but I'm a history major so don't think I'm trying to be some probability or math pooh bah cuz Im not.

Finally in column G I calculated it if you could get this insurance product for free (if they ran the business without charging any premiums).

So the link to the spreadsheet is here: https://docs.google.com/open?id=0B26...zU2ejRFalhKRVk

Here is the summary, and it's in spoiler because I put it in all caps because I didn't plan on posting it until after I was done, so if that bothers you don't hit spoiler.



I'm interested to hear people's theories on why the first 6 simulations always showed hero making more money without the insurance than with it. I think it's because in these simulations, our hero pretty much ran better even than his edge. In simulation 5 we get quite a disparity: $25K in profit is EV; hero gets $30.8K profit without insurance but only $19.2K with. I think this might be because hero ran bad in the non-all-in situations but more than made up for it by having his good hands hold way more than they should and bad hands suck out a lot. So in this case the insured hand feature can't save him in the non-all-in-before-river hands but robs him when he runs hotter than he should in the insurable situations. That's my theory. Open to yours. The simulation that ran the most hands (10,000 instead of only 1,000) is sheet 7. He ran hot (should have made $250,000 but made $296,185 instead). With insurance that bumps a bit up to $299,769.80. Just to get a sense of the impact of the fees, if the insurance had been free, it bumps it up only a bit more to $302,931. I don't think this extra 1% profit is the big selling point, although it is nice to see that it happened in this simulation. The real selling point is think of the graph that got him to the $296,185. It is probably a jagged set of mountains and valleys filled with heartache and dashed dreams and ecstatic surprises and having to drop down in BIs and worry. But with the insurance, not only does he finish slightly ahead of where he otherwise would, he gets there in a substantially smoother way for at least the part of luck that we can manipulate (through running it twice or insurance). I thought...well if hero has rungood (finishes substantially above $250K, then insurance is going to rob him of that, because it would make him whole if he ran way below his EV of $250K). However, his good luck came in the sense of being set up on the good side of more cooler situations than normal, or whatever example you want to give, more AA vs KK where he holds the AA for example, and in those AIPR (all ins pre river) he ran slightly BELOW EV which would explain why he made like $3 or $4K more with the insurance than without. So on the flip side, this product can't save you from having more situations than is fair where you run KK into AA; all it can do is make sure you suck out on the AA your fair share of the time by spreading your fair distribution of suckouts evenly across all the times you run KK into AA. I think. Consider this my "veteran" post.

i don't see what the problem is in NL players using this. Emre said the players that use IP are generally of a higher caliber than the "industry average". So these are weekend warrior regs, perhaps shortstackers, reg-fish, etc.

Let them use it. If they're smart enough they'll read up, ask around and generally inform themselves. If not, survival of the fittest; evolution baby.


Gee, I wonder why.

Unless I am missing something there does not seem much difference between this service and staking or selling shares. You are limiting your upside and limiting your downside. The "fee" IP collects above the EV is their revenue. The player pays this fee to feel mentally more comfortable and in return probably will allow him to play better, more detached. That said, it is not for everybody, but I know winning players who get staked for this precise reason.

IP, don`t waste your time with these FR nits. There is better market for you. HU Hyper Turbo Sit `n Go. I`d snap pay 1bb/100 to make sure i run at my ev (we rake 11bb/100 anyways).

No ICM in heads-up, that discounts problems you might get at other SnG

ICM based all-in equity insurance for SNGs is something we are looking into.

And yes it's very easy to do for heads up SNGs.

Hey,
Isn't the above quote incorrect? I notice it on the front page of your website too.

The KK wouldn't get 100 in his account, he would only get 80, no?

Hey,

AQ calls and KK gets automatically insured for $20

KK pays the $20 premium first and then gets $100 in his account.

So KK's net winning is $80.

Ok, thanks - maybe should make that clear [clearer?] on the site.

Thread is an interesting read. Ultimately people will decide for themselves whether insurance is worth it for them.

Fwiw, I've started to use it as an experiment ... so far so good.

Emre, I know you seem very proud of the fact that you have a whopping 5 SuperNova Elite customers, but let me try and break the numbers down for you real quick.

There are roughly 250 SNE players in the world, you have 5 of them, that means you have a monopolizing outrageous 2% share of the SNE market out there, not to mention there are about zero competitors in your industry. But of course your price is not too high, you have stated this, and the reasoning is because you and your partners are very smart people and know everything.

The difference is that cash game EV insurance is a totally new product that is more comfortable for the insurer than traditional staking because the EV difference (pre-river AI swing) is independent of the player, hence there's no need to check how well the insured person plays and no need to filter out bad players. The insurance is bad for bad players, unlike a traditional stake, but they can be unaware of it and take the bait. The profitability of tournament insurance does depend on the player's style, but the company hopes that no person will play suboptimally only to destroy them, for normal playing styles the company gains profit on average.
That was a nice try by a historian to do sims, but they tell hardly anything imho. The first 6 sims are sooo swingy that Hero has a whopping 45-49.5% chance of hitting such a cooler that he makes more money with insurance than without it, whereas clearly insurance costs him 312.5 on average. Since the standard deviation is ~4564, four-digit and even five-digit swings are not uncommon. The chances of Hero profiting from insurance in exactly one of six sims are 9.8-13.6% (by the binomial distribution law, 6*0.495*0.505^5~9.8%, 6*0.45*0.55^5~13.6%).The supersim is swingy too, the chances of the insurance being profitable are 40.5-42.1%. Boring math details:

If a person plays the same stake all the time, all-in insurance is of course -EV. The positive effect from it comes when the person using it moves up stakes faster. Boring higher math rants again (why and when the Sharpe ratio defined in my above post is important):

Btw I think Quadrophobia can promote the company very well .

Can you add player transfers as a way to deposit/cashout ?

LOL, are u a rec player or a cheap bastard?

I'm unsure of the thinking behind the claim that using this insurance service allows you to play under-rolled. Suppose you wish to shot-take for a period of time and so choose to use IP to help you in case you end up running $x below EV. The fact that you are equally likely to run $x above EV, means that your IP account needs to be funded with money that would otherwise be part of your poker bankroll, so it doesn't really allow you to play under-rolled in the way it is claimed.

E.g. a 100NL player with 40 buy-ins ($4k) decides he wants to use IP to shot take at 200NL for the weekend as he doesn't want to risk running below EV and his bankroll isn't big enough to play 200NL on his own. He's advised that he could easily experience a $2k+ downswing in EV over that short time period so IP sounds ideal for him. The only problem is he can't sit down at 200NL with his $4k roll, as he has to fund his IP account with half of it!

This would be sweet if posible.

I assume that shot-taking is a more continuous process than MeleaB described, i.e. if he 9-tables (I don't know his multitabling coeff, it's likely high if he complains about money flow at all), if the roll is up to $4500, he can open 8 tables of 100NL and 1 table of 200NL, playing effectively 111NL, then, if he's up by 5 BI, close the worst of the 100NL tables and open a second 200NL one, moving up to 122NL, preserving the bankroll-to-buy-in ratio at about 40 or w/e. As only 20 BI are needed to put in an hour 9-tabling session comfortably, I think 15 BI can be held in the IP account (chances are 90% that it will suffice for 30-40 insured hands).

But of course player transfers as a banking option would solve the problem. However, that may require hiring escrowers - reputable HS players who can play such amounts through, as tossing money back and forth without playthrough will be suspicious.

I wouldnt complain any transfer limits

This is an excellent point. If there were some way to have the poker site facilitate an "instant transfer" to and from insurance, that would solve your problem, I think. The only problem is what if put your entire roll on the table and run it up big because you keep sucking out on your 2 outers? The software won't let you go south. So part of the table closing process needs to intercept the funds between their status as being "in play" and being "available." It would have to be integrated into the software. Heck, if I were pokerstars, I would write that in myself and cut out the middleman, as insurance is not a concept that can be patented. Ooops, sorry company spokesman. But don't worry, these sites probably aren't listening to me!

any SNE or anyone putting in SNE required volume on other sites and using this service has to be a complete nutcase.

well, maybe if since it's already mid november and they are late re-acquiring SNE and had to move up to get more VPPs i guess i could understand using IP but if any one of them uses IP for the whole year it would be laughable

so yeah, i'd be proud to have 5 SNEs if they stayed the whole year

What's wrong with players taking advantage of this opportunity to monetize variance and pay a comparatively tiny fee to reduce it substantially?

Absolutely nothing, that would be great.

The problem here is that it's not a tiny fee. Using the rough calculations from an earlier post in this thread, here are the cumulative profits of a small stakes break-even Supernova Elite cash player over five years.

Assuming a best/worst case scenario of +/- $50k in EV over the five years (a very small chance at these stakes) and comparing each of those models with a +$0 EV model, and an InsuredPlay model, it's clear to see that the costs aren't not tiny.

In defence of the InsuredPlay model, you would want to argue that you would gain value (increased winrate, play at higher stakes, etc.) but good luck justifying an increase in value that surpasses your $24k yearly cost.

Im pretty sure it wasn't me who posted what you quoted with this response... I'm on the same page as you with regards to insurance...

I apologise. It was coon74. (I think I must have selected quotes by you and him, and then trimmed the quoted posts down but accidently used your header instead of his.) It was also more of a general comment anyway, rather than a response specifically to his post.

because of the volume SNE requires.

maybe someone could count numbers how much an SNE would pay for this service at for example 1/2 or 2/4 6-max nlhe for the whole year and how it would affect them when they are for example breakeven, 2bb/100 or 5bb/100 winners (the lower your winrate the more swongs you have but i'd be curious to see how much it matters with SNE required volume)

oh someone posted a garph while I was typing

thanks for the graph, beats my wall o' text earlier.

Devils advocate here...what about the fact your graph shows each year's end point and not the journey...we've all seen those HEM graphs with EV and how mountainous and valleyfilled they are, surely this reduces that so that graph is only one line...notice how the EV line is always less swongy than the actual line? If I know my variance is reduced it allows me to do things riskier. So of course it costs money, question is it worth it. $24,000 a year probably not. But I am not clear on how you get that big a figure from 0.25%. I assume all profits in your graph is a SNE who is good enough in the game just to beat the rake and that's it...its all SNE rewards right? And why not throw in a player who is closer to a standard deviation up or standard deviation down, that would be interesting to see instead of just that narrow range. But thanks for making the graph.

Im still for it because in exchange for giving up a tiny edge I can make correct AI decisions without having to worry over things I can't control such as which cards come on the turn and river--luck. My results skew closer to my true skill. My variance is reduced. You agree these are facts, right?