Your casino bankroll is the amount of money you have set aside specifically for the purpose of betting on casino games. You should keep this money separate from the rest of your funds. If you’re traveling to Vegas, you want to have money set aside to gamble with, sure. But you don’t want to go without eating because you ran into a bad streak of luck at the craps table. By keeping your gambling bankroll separate from the rest of your funds, you ensure that this sort of misfortune doesn’t happen. Also, you should never put money that you need for bills (like rent, food, child support, or utilities) into your bankroll with the hope that it will be there when you need it.
Professional gamblers and recreational gamblers both need to manage their bankrolls, but how they go about this varies because of the difference in their goals. Professional gamblers need to preserve their bankroll so that they can stay in action long enough for their edge over the casino to kick in. Recreational gamblers just need to make sure they have enough money to have as much fun as they want to during the trip.
So a major concept anyone who wants to manage a casino bankroll needs to understand is the concept of variance. Over time, we know that the results of a casino game are eventually going to resemble the probability. For example, we know that the house edge for roulette is 5.26%. We know that if we play long enough, our results are going to start getting closer to resembling that expectation—we’ll lose $5.26 for every $100 bet we make. But in the short term, anything can happen—that’s called variance.
And that should be obvious, because let’s look at it in the extreme. You place one bet at the roulette table, on black, for $100. You win, and you get paid off at even money. You’ve won $100, and you walk away from the table. Your buddy bet on red. He lost his $100, and he walked away, too. Neither of you had results that mirrored the probability. You won 100%, and he lost 100%. That’s because you’re dealing with a tiny sample size.
Even if you increase the sample size, variance is inevitably going to kick in. Let’s say you bet on black twice, and you won both times. Now you’ve won $200 total. Your buddy again bet on red both times, and he lost $200 total. But you have two other buddies playing, and they bet red followed by black and black followed by red.
They’re both even, because they won a bet and lost a bet. Even though you have four players who have made two bets each, none of you have seen results which mirror the probability.
That’s variance. That’s the difference between short term results and long term results.
What if your goal is to double your money? Would the better approach be to place several bets at the roulette table or one big bet? Let’s look at the math.
You brought $500 to the casino with you. Your buddy did too. You both have a goal of doubling your money, or winning $500. You decide to bet all $500 on black. Your buddy decides to place five bets of $100 each. Who’s more likely to double his money?
The probability of winning a single even-money bet at a standard American roulette table is 18/38, or 47.37%. Your chance of doubling your money is 47.37%, which is almost (but not quite) 50%. You only have to win once, and you’ve doubled your money.
But your buddy has to win five bets in a row to double his money. What is the probability that he will win 5 even money bets in a row at the roulette table? In probability, you calculate this by multiplying the probability, because you’re using the word “and” in the math problem. He was to win his first bet, and he has to win his second, AND he has to win his third bet, and so on.
47.37% X 47.37% X 47.37% X 47.37% X 47.37% = 2.39%
Your probability of doubling your money is 47.37%. Your buddy’s probability is only 2.39%. That’s a huge difference. You’ll double your money almost half the time. Your buddy will only double his money once every fifty times.
The difference in these two strategies is one of boldness. By placing one really large bet instead of lots of small bets, you’re using maximum boldness. Your buddy is using a low boldness strategy. When the casino has an edge, your best chance of doubling your money comes from a maximum boldness strategy.
Professional gamblers, on the other hand, don’t want to risk losing in the short run. They want to play long enough for variance to even out. They want to get into the long run. So a card counter in blackjack might have a 2% edge over the casino, but he’s going to use a minimum boldness strategy to preserve his bankroll while the long run kicks in.
Professional gamblers even have a term for the chance that they’ll go broke in the short run. It’s called “risk of ruin”. The smaller their bets are, the lower their risk of ruin becomes. They also use something called the Kelly Criterion to decide what size bets to place. The Kelly Criterion suggests that you should bet a percentage of your casino bankroll roughly equal to your edge over the casino. If you have a 2% edge as a card counter, you should be risking no more than 2% of your bankroll on any given bet—this minimizes your chance of going broke before the long run kicks in.
Recreational gamblers aren’t usually looking for the best odds of doubling their money though. They just want to play and have fun. They’d prefer to walk away a winner, but their goals for winning are usually more modest than doubling their money. The traditional casino bankroll management advice for such players is to set stop loss limits and win goals. This prevents them from going broke and improves the chance that they’ll go home winners.
A stop loss limit is just an amount of money that you’re willing to lose before you stop playing. If you have a bankroll of $1000, you might have a stop loss limit of $500. You’ll quit playing when you’ve lost $500. Your win goal is the opposite. It’s the amount of money you’ll win before quitting. The same player might have the same win goal as his stop loss limit--$500. Once he’s up $500, he’ll quit, so that he can go home winners.
You can find plenty of advice for how much money you should budget to get the most entertainment from your casino bankroll based on the game you’re playing, its house edge, and its volatility. Here are some example bankroll sizes for various common casino games:
These bankroll guidelines are supposed to make sure you have enough funds to be able to play for at least three hours without going broke. So if you’re playing dollar slots, you should have a bankroll of at least $150, although $250 is probably better. If you’re playing blackjack for $5 per hand, you should have a bankroll of at least $250, and so on.
Author: Steve Mitchell