As you become more skilled and informed in the art of card counting you are likely to encounter a concept known as Risk of Ruin (ROR). While many blackjack authors have written extensively about the subject and described it in terms of complex mathematical equations, risk of ruin can be simply described as your chance of doubling your bankroll versus busting out during a blackjack session. It can be a tricky subject to handle and one that is rife with misconceptions but understanding the basics of ROR will make you a better player in the long run and increase your chances of making a profit.
What is risk of ruin, really?
If you want to be very basic about it the risk of ruin is the risk of going broke. For a professional blackjack player losing an entire bankroll is the kiss of death. Without a bankroll you can’t get in the game, and without getting in the game you can’t win. Therefore, a concept such as risk of ruin which is meant to quantify the numbers and percentages of that possibility happening in a blackjack session is a useful piece of ammo in the card counter’s arsenal of weapons.
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Try to think of it in the most basic terms before we explore the mathematical side of things: what is the chance that I will lose my entire bankroll during a single session of blackjack. What is the chance that I will double it?
You should be able to see right away that this is a subjective subject. The truth is that you should never suffer “Gambler’s Ruin” at blackjack or any other gambling game because at no time should your entire bankroll be at risk in a single session. You can’t lose everything if everything is not in play. That is why we emphasize sound bankroll management as the most important blackjack strategy.
Understanding the numbers
Take a look at the following numbers. They can be just a little bit depressing:
Bankroll versus Probability of Doubling
As you can see by these numbers, based on those given by Don Schlesinger in his blackjack book Blackjack Attack, your chances of doubling your bankroll actually goes down the larger your bankroll becomes. But wait, you say. Haven’t you said many times that a bigger bankroll gives me a better chance of winning at blackjack? Yes, of course it does, but the problem here is with the approach of trying to double your money during each session.
Let’s take a look at what happens if you use a 50-percent win limit as we have suggested before on the Counting Edge website. In that case your chance of having a winning session soars to 64.12 percent when you begin with 20 units.
The evidence is somewhat clear: a bigger bankroll won’t necessarily lessen your odds of risk of ruin but a wise bankroll management strategy will.
Bigger win goals, not a bigger bankroll = bigger risk
Blackjack is a negative-expectation game. In simple terms this means that for x amount of hands you play you can expect to lose x amount of dollars. This is how the casinos make money. Without getting into a deep discussion of the house edge let’s just assume that a typical blackjack player is at a 2 percent disadvantage (that number can be much higher if the player does not stick to basic strategy or plays side bets and other gimmicks). For every dollar bet the house returns ninety-eight cents in winnings, giving them a profit of two cents on every dollar. With property strategy and card counting you can cut that number to 0.5 or even a little less but eliminating the house edge completely is nigh impossible.
Therefore, you must first understand that the risk of ruin is present each time you sit down at the blackjack table. It only makes sense that the bigger your bankroll is the more you have to lose and therefore your personal risk of ruin is greater. With a bigger bankroll, however, you also have a chance to win more.
An inherent problem with the Risk of Ruin concept is that is presupposes you will lose. You are basically asking yourself how long you can play before going broke. While we understand the advantage of knowing this from a standpoint of creating a bankroll management strategy, your goal should not be to log hours at the table but to win. Winning can be accomplished within fifteen minutes of sitting down at the table. So can losing if you manage your money improperly.
To truly counteract risk of ruin you need to satisfy yourself with smaller win goals and build your bankroll over time.