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Casinio Game Information |
(Risk of Ruin continued)Calculating Risk of Ruin  Risk of ruin can be found in the following way:
Whereas R = risk of ruin, q = the odds of the house winning one trial, p = the odds of the player winning one trial, c = bankroll of house + bankroll of player, and d = bankroll of the player.(i) You can also think of q/p as the house advantage plus 1 if the house has the edge or 1 - player edge if the player has the advantage. Also, when playing at a casino, an estimate can be obtained of how many trials it will take to ruin the player in any game where the probability of the player winning is less than .50 by using the following formula: d/(q-p) where d = player bankroll divided by bet per trial, q = probability that the house will win one trial, and p = the probability that the player will win one trial.(i) The risk of ruin formula used in this article assumes a constant payout for each trial and a constant wager amount. In order to calculate gambler's ruin for games like slot machines or video poker, where the payout varies from one trial to the next, the probability of each winning combination (and losing combination for that matter) and its return would have to be considered. For now these more complex risk of ruin calculations will not be covered, since the purpose of this article and the applet is simply to familiarize the reader with the concept of risk of ruin. Reference |
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