2. A roulette wheel is divided into 38 labeled pockets, 18 of which are red, 18 are black, and
2 are green. Each round, you can place a $1 bet on one specific red or black pocket with
odds of 35: 1. That is, if you are correct you receive $35 in addition to the dollar you bet,
and if you are incorrect, you get nothing. Your friend has developed what he describes as a
"foolproof system" for winning. It involves him repeatedly betting $1 on red pocket number
7. You try to discourage him, but he is insistent.
(a) What are your friend's expected winnings after one spin of the wheel? What are his
expected winnings after 36 spins of the wheel?
(b) Despite showing him the outcome of the above calculation, he is unwavering in his
opinion, so you decide to at least try to make some money for yourself. You bet your
friend $20 that at the end of 36 spins he will have lost money, i. e. have less money than
he began with. What are your expected winnings in this bet? What are your friend's
expected winnings after 36 spins taking this side-bet into account as well?
(C) Explain what went wrong.