Bettors should beware the risk of ruin
November 07, 2018 3:00 AM
by Bill Krackomberger
Last week, I wrote about dealing with adversity and loss. This week, I would like to talk about the risk of ruin.
The risk of ruin, as it relates to gambling, is the probability of someone losing all, or substantially all, of their bankroll. As an example, if you were to bet your entire bankroll on a coin flip, your risk of ruin would be 50 percent.
In my opinion, one of the worst things you can do, if you want to bet sports professionally, is to risk more than your bankroll will allow. If you do this, it will catch up with you sooner or later and put you out of business.
One of the the major reasons this country went through a recession was because the big banks were risking more than their bankrolls could withstand if positions were turned against them.
There are going to be some very bad days, weeks, and possibly, even months ahead in this business. You will not be able to turn things around if you are tapped out because you were risking 5 percent or more of your bankroll on each play and then you hit a bad streak.
If you are betting 5 percent on each play, all it takes is a 35-50 run over any length of time to bankrupt you.
I strongly recommend that you never bet more than 2 percent (even less is safer) of your roll on any one play; and I would adjust the wager amounts based on the bankroll at the start of each week.
For example, let’s say you have a $10,000 bankroll. The first week, you make each play for $200. You had a tough week and now the bank is $9,500. Your plays for Week 2 will now be $190 each.
Things turn around nicely this week, and you end with a bankroll of $11,000. Now you can wager $220 on each play in Week 3.
Using this method, you are able to reduce your risk of ruin, limit your downside on a bad run, and also grow your bankroll faster while on a good run.
You may be tempted to bet a higher percentage when you are on a run; good or bad, but do not do it. Stay disciplined. You will thank me later.