You can have a winning strategy and still go broke. This is the paradox of gambling caused by Variance.
The Risk of Ruin (RoR) helps you determine the mathematical probability of losing your entire bankroll based on your win rate and bet sizing. It is the ultimate “survival metric” for serious bettors and poker players.
How to Use the Risk of Ruin Calculator
To get accurate results, you need to be honest about your performance metrics.
- Bankroll ($): The total amount of money set aside strictly for betting.
- Unit Size / Bet ($): The fixed amount you wager on each event.
- Win Rate (%): The percentage of bets you win.
- Crucial: At odds of 2.00, a win rate of 50% is break-even. You need >50% to have a positive edge. If your edge is negative, your Risk of Ruin is always 100% in the long run.
- Avg Odds (Decimal): The average price you bet on (e.g., 2.00).
Example: The Danger of Over-Betting
Imagine you are a skilled sports bettor with a solid edge.
- Odds: 2.00 (Even Money).
- Win Rate: 55% (This is a massive edge).
- Bankroll: $1,000.
Scenario A: Aggressive Betting ($100 bets)
You decide to bet 10% of your bankroll ($100) per game to get rich quick.
- Because your bankroll is small (only 10 units), a standard “bad run” of luck can wipe you out quickly. The calculator might show a Risk of Ruin of around 10-15%. That is a 1 in 7 chance of going bankrupt despite being a good player.
Scenario B: Conservative Betting ($20 bets)
You lower your stake to 2% ($20). Now you have 50 units.
- With a 55% win rate and 50 units, your Risk of Ruin drops to near 0%. You can weather the bad storms and let your mathematical edge work over time.
Frequently Asked Questions (FAQ)
What represents a “safe” Risk of Ruin?
Professional investors and serious gamblers typically aim for a Risk of Ruin of less than 1% (often even < 0.5%). If your calculation shows anything above 5%, your bet sizing is likely too aggressive for your bankroll size.
Why does the calculator say 100% Risk?
If your expected value (EV) is negative (e.g., playing Roulette or Slots without a bonus), your Risk of Ruin is mathematically 100% over an infinite amount of time. The house edge ensures that you will eventually lose all your money if you keep playing.
How can I lower my Risk of Ruin?
There are only two mathematical ways to lower your risk:
1. Increase your Edge (Win more often).
2. Decrease your Bet Size (This is the easiest and most effective method).