One of the risks of gambling is losing more money than you can afford. That happened to me in 1979, when I lost a lot at backgammon. After I bailed myself out of debt, I vowed to never let that happen to me again. So far, I’ve been able to keep that promise to myself. But nobody knows precisely what the future holds.
Video poker is one of the easier games to successfully avoid bankruptcy. I didn’t say it was easy. I said it was easier. The reason it’s easier is because you can learn to precisely measure how much a particular game returns and how much the slot club pays. Those are key elements in avoiding going broke. And games are nicely denominated. You can play for quarters, dollars, etc., and after a bit of playing, you know how bad the bad days can be at that denomination.
In games like live poker, it’s hard to precisely know how good you are compared to your competition. And even if you can accurately quantify this, the nature of “no limit” and “pot limit” games is that you can lose everything you bring to the table every time you sit down.
An excellent starting place in avoiding going broke is to never play games where the casino has the edge over you. If you insist on playing games that don’t meet this criterion, play games that are small in denomination compared to your gambling bankroll.
Easier said than done for some players. Most of the “fun” of gambling is playing for stakes where it hurts when you lose. If you’re a millionaire and always play for single-line quarters, no matter the pay schedule, you’ll never go broke. And you probably won’t have any fun either.
The Kelly Criterion, named after John Kelly, a theoretician at Bell Labs in the 1950s, is a method of sizing bets so that you will never go broke and, indeed, will grow your bankroll at an optimal rate. It’s defined as maximizing the logarithm of your wealth. For most of my readers, that definition is way too technical to be useful.
What it means in very simple terms is that if you lose a significant percentage of your bankroll, you cut back on your bets. If you’ve been very successful at a particular bet size, the Kelly Criterion tells you to increase your bet size.
Unfortunately, exact bet sizes in video poker are rather limited. While you can play $1.25 per hand, $2.50, $5.00, and $25 on single-line games, you can’t play $17.34 on one hand. Also, at a given casino, the return on quarter games may be very different than the return on $5 games. At one casino I frequent, on their multi-denomination machines, you can get 8/5 Jacks or Better if you bet dollars, 9/5 Jacks or Better if you bet $2 denominations, and 9/6 Jacks or Better if you bet at the $5 level. They have a similar breakdown for all games on the machine, including Bonus Poker, Deuces Wild, Double Bonus Poker, Double Double Bonus Poker, and several others.
At this casino, you sometimes have the advantage if you bet the $5 game (i.e., $25 per hand), depending on various promotions, but you basically never have the advantage if you bet smaller than that. Playing $25 per hand is beyond the means for most players.
Video Poker for Winners has a bankroll calculator, but the program hasn’t been updated for several years and will not work on newer computers. Dunbar’s Risk Analyzer for Video Poker, available at Huntington Press, among other places, is probably the most useful tool out there for figuring out how much bankroll you need to play most games. It’s inexpensive and very useful.
When I was starting out playing $5 9/6 Jacks or Better (with 0.67% cashback and juicy promotions — those were the days!), it seemed to me that having a bankroll of 3-5 times the royal flush was a sufficient bankroll, assuming you were playing games similar to what I was. I published that “3-5 royal flushes” rule — and since then I’ve apologized several times for doing so.
The actual bankroll depends on how big the variance of the game is and how much of an edge you have. For the same return, a Double Double Bonus player needs considerably more bankroll than a Jacks or Better player does.
Today, the slot clubs are considerably tighter than they were 30 years ago, so you need considerably more bankroll to play the same games as you used to.
How much bankroll you need also depends on your age and your other responsibilities. I’m 77 years old now. If I go broke, there are very limited employment opportunities available to me. When I went broke in 1979, I was 42 years old. I was able to find a fairly lucrative job and was able to rebuild my bankroll. That option isn’t available to me today.
Your income stream, from whatever source, also affects how much bankroll you need. Possibly you have a job, or Social Security, or a pension, or an inheritance, or royalties of some sort, alimony, or whatever. Some players have none of these things. Everyone has a different income stream, which is why there is no “one size fits all” answer to “how much bankroll do I need.”
Avoiding going broke should be a strong priority to all successful gamblers. If you don’t pay attention to this, you may well end up in a position you don’t want to be in.
Good article as always, Bob.
HOWEVER, there’s a math issue near the end. If you’re 77 now, you weren’t 42 back in 1979, you were 32. As someone less than a decade younger than you, I remember the difference between 32 and 42, and would like to be either with the knowledge and bankroll I have now!
Great article. Was going to say the same as Raymond about your age. And he is even more correct, I am 70, and would like to be either 32 or 42 or 50, and know what I know now. As for bankroll, with promotions so slim, (I do not have your resources) and not knowing where any good game/combinations are, I just play the best I can and hope I come out even. I am fortunate that I have the money to play, and losing will not hurt me. With the free food and rooms, its still fun, but not profitable for me. I wish I still had the memory to play any game close to perfect.
I live in Northern Wisconsin and play at the local Indian casinos, so I don’t know if it’s the same out in Vegas. But about 15 years ago, the casinos I frequent used to give the same amount of points for video poker play as they did for slots. ($4 CI = 1 point earned at the one I visit most frequently). About 10 years ago, they changed it to double the CI needed on video poker to earn that same point. So now it costs $8 of play to earn one point. They also had a $1 denom 2 coin max bet bank of progressive 9/6 jacks or better that the royal started out at $1199. And when it got up to around $1800, it was to the positive advantage to play in addition to full compensation in points. 2006-2011 were very profitable years for me and I made enough to sustain an otherwise unaffordable 2 income mortgage after my fiancé passed away unexpectedly in 06. Those machines reached end of life and were not replaced with anything nearly as generous and I finally lost the house in 2015. Even with the promotions and drawings, I can’t find anything there that’s to the positive advantage. I still play a little for fun, win on occasion by sheer luck, but the long term profitable opportunities are long gone. Things just aren’t as good as they used to be.