Gambler’s Ruin is a mathematical perception that indicates that a player with a defined bankroll is certain to lose to a player with an infinite bankroll, even in instances of even-money propositions.
Most mathematicians find it easy to illustrate this perception by using the concept of wagering when flipping a coin. When a gambler uses $1 to place a bet on a coin-flip, the anticipated return on that bet is $1, or the expected profit is $0, commonly referred to as a loss.
The mathematical illustration is as follows:
- You pay the house a dollar to wager on a coin flip
- The house tosses a fair coin
- If the coin comes up heads, the house pays you two dollars. If it comes up tails, you get nothing in return.
This is an example of a fair game. The fair coin tossed by the house has a defined probability of 50% coming up heads and 50% coming up tails.
Gamblers don’t often bet just once and can gamble at some of the best crypto games for long periods, as long as they still have a bankroll. Gambler’s ruin sets in when their bankroll depletes over prolonged periods of gambling due to the house edge.
Gambler’s Ruin and The House Edge
Gambler’s ruin describes the notion that any time, the house has an advantage in a game of chance; the gambler will eventually lose his bankroll entirely.
Additionally, it can also describe the aspiration gamblers often have of wagering a final big bet after a long streak of bad luck with the hope of striking it rich.
Essentially, the concept of gambler’s ruin is that if a gambler plays against the casino for long enough, the casino most certainly will win.
The Dynamics Of Gambler’s Ruin
In a gambler’s universe, they are always faced with two options, i.e., either to win or lose money.
There are occurrences when a gambler makes it a practice to add a set amount onto the next bet following a win.
In the same light, a gambler reduces the amount of the bet by a specific amount when they lose.
If you identify with the betting behavior of this type of gambler, you could be suffering from gambler’s ruin. The fundamental concept behind this behavior is that it will leave you broke in the end.
In the majority of cases, a gambler can be considered to have a defined amount of money to gamble with, while on the other hand, the house has a limitless bounty of money in which to lure you.
The casino also has the odds stacked heavily in its favor, quite often by a very substantial percentage.
Whenever a gambler begins playing against the casino, the notion of gambler’s ruin highlights the fact that a gambler can never take all the casino’s money, as much as they would try.
Conversely, the casino can take all of the gambler’s money with consummate ease, thus preventing them from continuing to gamble.
With a slightly different point of view, gambler’s ruin can also highlight the desire of a player to try and win big by making a massive bet when they have almost drained their gambling bankroll.
In a typical scenario, the gambler makes a sequence of small bets and loses money gradually due to the casino having an advantage. When the player realises that they have very little money left, gambler’s ruin describes their desire to try and win it all back instantly, rather than coming to terms with their losses and walking away with what money they have remaining.
No matter how fervently the gambler wants to win, if they keep betting, the house will keep winning.
When Does The Concept Apply?
Gambler’s ruin applies to any casino game of chance where the house has any sort of advantage over the gambler. This includes any game that gamblers play against the casino, such as blackjack, craps, roulette, Keno, and slot machines.
The sure way to come to terms with gambler’s ruin is to accept the fact that you cannot gamble to win. With this in mind, gamblers are much more at ease and should only gamble for the enjoyment of the game.
In another illustration; a gambler has 100 dollars and makes an even-money bet on a bet that gives the casino relatively greater odds. Since the odds are in the casino’s favor, the gambler will lose more often than he wins.
He may win on the odd occasion and find himself with more money than he started with, but because the odds favor the casino, he will lose more often than he wins in the long-term.
Due to the unlimited funds available to the casino and the gambler’s budget of $100, he will eventually run out of money and will sadly be unable to make another bet.
Exploring The Theory
One of the most central concepts of playing casino games to a gambler’s benefit is the Gambler’s Ruin theory.
In its basic form, the Gambler’s Ruin theory details how much of a bankroll does a player with an advantage need and at what stage does a player need to weigh their bets at.
It is a requirement for any serious advantaged gambler to master in order to maximize their rate of success while minimizing their losses.
At some point during your play, typically during a lengthy losing streak, you may be tempted to manipulate your advantage by sizing up your wager. In practicing such methods, this can lead to ruinous consequences.
Playing any casino game to positive advantage, and specifically, the game of Blackjack, is what mathematicians refer to as a random walk with an upward drift.
Essentially, this means that you will experience a series of losing streaks and a series of winning streaks when the number of hands increases. Despite this, the overall trend is a positive upward slope that will benefit you.
The theory is a pivotal concept to imprint in the mind of a gambler. It goes a long way to ensure that players do not go bankrupt from playing at a casino.
Moreover, it is a fantastic avenue to discover the appropriate tension between untimely risks and a rewarding return.
If players display too much aggressiveness, they increase their chances of going bankrupt. Conversely, when they are too conservative, they leave money on the table and are not maximizing their earning potential.
At some stage, every gambler will endure a losing sequence and want to diverge from their pre-determined strategy in an attempt to get their losses back rapidly. In moments like those, it is vitally important to allow the math to unfold naturally and let the winnings come to you.
Mathematician’s Analogy Explained
Mathematicians use the analogy Random Walk when they equate the desired result with the number of hands that get larger and larger. This will eventually play out with the desired result being realized.
The analogy can be explained a little differently where one can imagine an inebriated individual walking out of a bar and staggering towards a bus stop. Although he will eventually get to the bus stop, his journey to the bus stop will be an eventful one filled with all types of bends and slants. The path is not the most direct one, but it will get you to where you want to go.
The important thing to remember here is that gambling, even with an advantage, has great elements of risk, and the player needs to take suitable precautions to ensure that they don’t break their bankroll in the process.
The precautions entail having enough of a bankroll to outlast any poor sequences that might occur.
To frame this a little better, if the house paid you two dollars for every heads that appeared on a coin flip and you paid the house one dollar for every tails that appeared, it would be a profitable bet for you.
Despite that, you should have more than five dollars in your bankroll to wager because it is quite conceivable that you may hit a sequence of tails that could wipe out your money. In effect, you have to have enough money to outlast the series of tails that appear.
Similar theories apply to different casino games of chance. In Blackjack, for example, one common technique used to determine a gambler’s Risk of Ruin is the number of large bets that the player makes together with the percentage advantage that the player is gambling with during those big bets.
Additional Risk Management Strategy
Seasoned gamblers who are au fait with gambler’s ruin sometimes employ the Additional Risk Management Strategy. This technique basically leads gamblers to half their bet after losing half their original stake.
By doing this, the total chance of ruin is reduced to the initial risk of ruin multiplied by the square root of the initial risk of return. Bear in mind this should not be used as a motive to bet larger amounts.
The financial strength of the player is also something to consider carefully. If you have an impressive six-figure income, it is quite possible that you would not be too conservative with your bankroll.
With this at the forefront, it influences the overall psychological factors that come into your play, and you will find more confidence in your abilities.
There is an incredible psychological component to advantage gambling at a casino. Mental robustness is needed to navigate through the bad patches and see it through until the desired expectation is realized.
How To Control Gambler’s Ruin
Although you may be skeptical, there are techniques that you can use to control the odds of losing your bankroll. This is possible by the amount you wager in relation to your playing bankroll coupled with the level of your playing skill.
When a player bets larger amounts in relation to their bankroll, the results can become predictable as gambler’s ruin settles in. In the more risky casino games, the most skillful and professional gamblers exercise great discipline in not betting over their limits.
This is because they have a deep understanding that even though they have the edge at the moment, they could go for prolonged periods over multiple casino visits losing more money than they win. One of the golden rules is to avoid Gambler’s ruin, never overbet, and you will always stay in control.
When compared to players of the various casino games, Blackjack players have a lot more control over their destiny. More so than almost every other casino game, actually. This is because, during their gameplay session, they have opportunities to make playing and betting decisions that directly determine the amount that they may win or lose.
Gamblers who discipline themselves to play in Blackjack games usually find a lot more joy in their gameplay. They use more favorable playing options that entail basic playing strategy and typically employ a sound betting strategy that will win a lot more money than those gamblers who are more cavalier.
The Bottom Line
In the same light, as no investor or gambler is correct every single time, Gambler’s ruin does not mean that everybody who gambles at a casino is certain to lose. Gambler’s ruin, like sophisticated mathematical concepts, is a facet of an overall branch of mathematics commonly referred to as the theory of large numbers.
Large number theory determines that while the flip of a coin is certain to result in a 50% distribution of heads versus tails, there is a possibility for the coin to land on heads many times in succession.
On an individual level, it is very much possible to avoid gambler’s ruin by practicing some of the skills that are often employed by poker players and investors. It is important to understand the games you are playing, including the best strategies. Be sure to practice good bankroll management techniques, as well.
Ultimately, casino games are meant for your enjoyment as well as a potential profit. Be wise with your strategy, and always keep an eye on your bankroll. Good luck!
