Answer to Question #318224 in Statistics and Probability for CEDIE

Question

A roulette wheel in an amusement park has the numbers 1 through 60. If you bet ₱100.00 you will

have a chance to win a cellular phone worth 5,000.00. How much the organizer will earn if 100 games

will be played?

Answer 1

The expected value is the sum of each outcome multiplied by the probability of that outcome,

For the person betting, the two outcomes are winning 5000 and losing 100.

The expected value is then 5000 * 1/60 + (-100) * 59/60 which gives an expected value of -15 meaning you can on average expect to lose 15 every time you play.

The operator has a 1/60 chance of losing 5000 and a 59/60 chance of winning 100.

The expected value of the operator is -5000*1/60 + 100 * 59/60 which is 15.

Since the tries are independent, the operator can expect to gain 15 for each game or 1500 for 100 games.