M O N E Y M A N A G E M E N T $mart Gamblers increase their chance of success in casino gambling by managing their money. Money management is the process that once a gambling bankroll is defined, making the most out of it. It enhances the $mart Gambler's enjoyment of gambling by controlling the resource that allows them to stay in the game. Money management includes establishing a betting plan, an appropriate bet size, dividing the total bankroll into playing session bankrolls and establishing a point to quit when ahead. This tutorial covers those techniques. CONCEPT When a business person starts and runs a business they develop a plan. Most house persons develop a home budget or plan. To have a successful retirement, an investment plan is established. When a gambling trip is planned, a budget is created for transportation, lodging, food, beverages and entertainment. To succeed, people routinely plan for these things. If they don't plan to succeed they are by default planning to fail. Gambling is no different. Each gambling trip involves risking some amount of money that is significant to the individual. Over several trips, over a lifetime of trips, proper money management will make a tremendous difference in the success and enjoyment of casino gambling. The process of money management requires self control and discipline, particularly when in the casino with its distractions. Many gamblers know enough about casino games to get ahead but openly admit they just don't keep any of it. These same individuals are often very successful in other aspects of their lives that require the same or greater discipline. A sincere desire to succeed and a positive attitude on the ability to have self control is the first step to managing money. It is not difficult and the more knowledge gained about the odds of winning and money management helps. The act of planning a gambling bankroll in itself will help control it in the casino. In the end, the individual must decide that they enjoy casino gambling sufficiently to want to be more successful in it. Money management is essential for that to happen. Once established, self esteem will rise and the casino will view them as a tough player to be respected. GAMBLING BANKROLL The first thing to establish in gambling money management is how much money will be placed at risk. This is the total gambling bankroll. It will influence the games played and establish the amount that may be bet safely on each event. This is the most important concept of money management and bears repeating. The gambling bankroll establishes the bet size! The casino check cashing lines and automatic teller machines are busy with gamblers who sized their bets arbitrarily and have to keep digging for more funds. The bet size is established from the total bankroll amount at a level that can with stand normal negative streaks of chance. This keeps the player in the game allowing them a normal chance to recoup their losses. A favorite procedure of casinos is to raise the minimums on table games. This was discussed in the Casino tutorial. The casino is quite aware that many gamblers will just take a little more chance and bet more than what their bankroll justifies. One short negative streak and they are out of action. Money for the gambling bankroll must be purely disposable in nature. There is an old gambling saying that "scared money never wins." It is based on the need to concentrate and not be afraid to lose when gambling. Money used for gambling must not be needed to make the rent or mortgage payment, buy food, pay utilities or taxes or provide for other necessary items. It also must be separate of any transportation, lodging, food and other expense money allocated for the trip to the gambling location. Each individual must decide what their bankroll will be based on their situation and what they are willing to risk for their gambling entertainment. If they enjoy gambling lower amounts of money even though they may afford a larger amount, there is absolutely nothing wrong in doing so. A few gamblers seem to get pleasure in boosting how much they lost or "dropped." $mart Gamblers never do this. BETTING PLANS There is no betting system that is going to over come the casino's percentage advantage. There may be systems advertised or promoted as such but do not believe them. They are statistically impossible. Money management will improve the chance of success and increase the enjoyment of gambling. It will not turn a minus statistical expectation into a positive statistical expectation. There are two primary betting plans that will be covered. The first one is called "flat" betting. In flat betting the gambler bets the same amount on every gambling event. Win or lose they continue to bet the same amount. There is no difference in the order that bets may be won or lost. The outcome is solely determined by how many were won and the payoffs for them. The average bet size is the same as the initial bet size. Flat betting does allow for easier management and control. In certain types of games, flat betting is the best choice. These would include slot machines that pay a bonus when the maximum coins are bet. Also most all video poker machines are in this category as they pay a substantial bonus for a maximum coin royal flush. In these situations, the gambler should play the maximum coins every time to reduce the casino advantage to its lowest. If their bankroll doesn't justify playing a particularly coin level of a machine, they should find a lower one that fits their bankroll. Flat betting also may be done in other games if that is the preference. The second primary betting plan is called "progressive" betting. This also may be referred to as parlaying or pressing the bet. In progressive betting, the gambler starts out with a 1 unit bet. If that wins they bet 2 units. If that wins they bet more, typically 3 units. If they lose at any point they return to betting 1 unit. There is a significant difference in the order that bets are won or lost. In progressive betting, the gambler is playing for a good positive streak and takes advantage of it. The biggest benefit of progressive betting is that it adds to the excitement of gambling. In general, the gambler will lose at a slow pace but may win at a fast pace when conditions are right. When conditions are "choppy" such that one event is won then one lost, they casino's percentage advantage will assert itself over the long run. There are some important considerations regarding progressive betting. First the average bet size not the initial bet size must used in money management techniques. The average bet size will be greater than the initial bet size. Second the gambler must not let the size of the increased bet influence decisions. These would occur in things such as doubling down in blackjack or taking odds in craps. These are essential actions that reduce the casino's percentage advantage. Third the gambler must have the discipline to leave the game after experiencing a good positive streak of chance. There are other betting plans but none of them are recommended for $mart Gamblers. One is the "double-up" plan or sometimes called the "Martingale." This involves starting with 1 unit and if that loses betting 2 units. If 2 units lose then betting 4 units and so on. Once a bet is won the gambler returns to 1 unit. The problems with it is that it takes a huge bankroll, a high casino table maximum and nerves of steel. Also it wins at a slow pace and loses at a fast pace. This is opposite of what most gamblers enjoy. A variation of this plan is the "reversal of trend" betting. This is usable on games such as roulette, craps or baccarat where the gambler can bet on one side or the other to win. If the last outcome was for example a red win on roulette, black would be bet to win. This is essentially betting on hunches. The problem with it is that most gambling events are random and cannot be predicted. The roulette ball and wheel doesn't know or remember that red just won. This betting plan might work for a short period during a choppy situation but there is no way to predict that it would continue. Likewise if red won six times in the row there is no difference in the odds on whether red or black will win on the seventh spin. It is just as likely to land on a red number as a black number. BET SIZING Bets should be sized related to the standard deviation that was covered in the Odds tutorial. In review, standard deviation is a measure of dispersion. If the expected outcome of a gambling event is X dollars, 68.3% of the total out comes are expected within one standard deviation of X. 95.5% are expected within two standard deviations and 99.7% are expected within three standard deviations. The following assumes the gambler has selected to play a low casino percentage advantage game of less than -1.0%. $mart Gamblers only play at the best opportunities. The bet units required is established to with stand a negative fluctuation of two standard deviations. This would mean that in 19 times out 20 the bankroll should be able to with stand a normal negative fluctuation. It could be established based on three standard deviations but most gamblers find that less attractive. The chart below shows the approximate minus two standard deviation level for different time durations. The units are rounded off for convenience and in the conservative direction for safety. Again it assumes that the game has a casino PC of less than -1.0%. Playing at worst casino games makes money management ineffective. The chart is based on an average of 100 gambling decisions per hour that is typical of most games. Never change the plan while gambling. If the bankroll for a particular duration or session of play is lost, quit. Repeat, quit and regroup to play the next session with a fresh perspective! Bankroll Bankroll Bankroll Units for $2 for $5 for $10 Playing Time Required Avg. Bets Avg. Bets Avg. Bets ------------ -------- --------- --------- ---------- 1 hours 25 $ 50 $ 125 $ 250 2 hours 40 $ 80 $ 200 $ 400 3-5 hours 60 $ 120 $ 300 $ 600 6-8 hours 80 $ 160 $ 400 $ 800 9-10 hours 100 $ 200 $ 500 $1000 11-15 hours 120 $ 240 $ 600 $1200 16-20 hours 150 $ 300 $ 750 $1500 21-25 hours 200 $ 400 $1000 $2000 Remember that first the amount of money to be placed at risk is established. Then decide the length of playing time and find the bet size that can be justified. For amounts other than shown, multiple the units required times the average bet size. If a trip was planned for 20 hours of total playing time in 1 hour sessions, divide the total bankroll of 150 units into session bankrolls of 25 units. Only risk those 25 units during that one hour. If 15 hours of playing time is planned over two or three days, establish a 1 hour session bankroll of 25 or 30 units. Always round off bankroll amounts in the conservative direction. The $mart Gambler program's Planning-Money Management feature performs these bet sizing and session calculations easily. The results can be printed directly or along with the data collection form. It is important to remember this is for the average bet size. If a progressive betting plan is used it is recommended that the bets be increased as follows: Initial bet 1 unit If won bet 2 units When any bet is If won bet 3 units lost at any point, If won bet 4 units return to 1 unit If won bet 5 units If won bet Stay at 5 units The progression to 5 units will provide a fair amount of excitement when positive swings are experienced. The 5 unit progression will result in an average bet size of approximately twice the initial bet. If blackjack is played at a $5 initial bet and progressed to $25 a hand, a bankroll for one hour of play will be needed of $250. For 15 hours of play, $1200 will be needed. The $mart Gambler program's Planning-Money Management feature performs its calculation based on the selection of either a flat or progressive betting plan. This may appear to be excessive and considerably above what many gamblers have been doing. Maybe that is why they have not been as successful as they would like. The negative swings do in players betting at levels not justified by their bankrolls. Good luck takes a good sized bankroll. If the bankroll doesn't justify playing at the level desired, to be successful the gambler must drop down to the level justified. If the casino doesn't offer a lower betting level game, play may need to be done during off hours or elsewhere. For craps players, it is always recommended that the free odds be taken to lower the casino's PC. See the tutorial on Craps for more details. When this is done the odds bet must be accounted for in the average bet calculation. Odds will not be taken on every situation, just the numbers 4-5-6-8-9-10. The odds amount will vary with the number but for single odds a conservative method is to multiply the initial bet by two to get the average bet. If using a progression betting plan remember to multiply it again by two. WHEN TO QUIT Most gamblers never want to quit when they are winning. The problem is to decide when the winning streak has likely ended. Many gamblers never do and give back to the casino all their winnings. The standard deviation is a good solution for this and can be used to decide when it is a good time to quit when ahead. The two standard deviation betting units also establishes a win level that would likely only be exceeded 5% of the time. Some gamblers may wish to stop right there. Another method is to establish a quit percentage point off of the two standard deviation level reached. The following chart shows the plus two standard deviations for various time durations and common stop percentages. Top Units Quit Quit Quit Playing Time Reached at 80% at 70% at 60% ------------ ------- ------ ------ ------ 1 hour 25 20 18 15 2 hours 40 32 30 25 3-5 hours 60 50 45 35 6-9 hours 80 65 60 50 9-10 hours 100 80 75 60 11-15 hours 120 95 90 75 16-20 hours 150 120 115 90 21-25 hours 200 160 140 120 The numbers have been aproximated for easy reference. If playing for one hour at $5 average bet and ahead $125, quit when falling to plus $100, $90 or $75 depending the plan. If playing two or three days for a total of 15 hours and $600 ahead, quit and savor the win when falling back to plus $475. It is not vitally important whether an 80, 70 or 60% quit point is established. Each individual may set theirs based on their gambling temperament and experience. It is very important though that once a quit point is set that it be strictly followed! Do not change it in the middle of a playing session or trip. This also will benefit the $mart Gambler in that they will not have any second thoughts later such as "if only I had quit." Most of the times the plus two standard deviation level won't be reached. A conservative money management technique is to limit the negative swing to two standard deviations off of the top level experienced. This means if playing for one hour and plus 15 units is reached, the player would quit if a negative streak drove the bankroll to minus 10 units. That would be a 25 unit or two standard deviations drop from the top level. Conservative players who like the satisfaction of more winning sessions, also may choose to apply a percentage quit point before reaching plus two standard deviations. If they got ahead 15 units when playing for one hour, they might quit when falling to 10 units ahead. Their wins will be smaller and actual sessions shorter but if applied consistently the long term result will not be significantly different. REPORTING The $mart Gambler program's reporting features also will help in making decisions on bankrolls, bet sizing and quitting points. If gambling experiences are inputted accurately, the $mart Gambler reports and graphs will be useful in understanding the results. They can be analyzed and the information learned from them applied to improve future gambling plans. There is another benefit to keeping an accurate data base of gambling results. Imagine the following situation. Throughout the year a gambler made several trips playing dollar slot machines. To date their losses are fairly significant. On December 31st at 11pm, they hit a big jackpot. The casino is required on large payoffs to obtain their social security number for filing with the Internal Revenue Service. On very large payoffs they are required to deduct 20-30% for the IRS. Gambling losses may be deducted on income tax returns to offset gambling winnings. Of course the losses only may be deducted up to the amount of winnings for that year. The problem is that losses must be proved with among other things accurate records. If they don't exist, the deductions will likely be disqualified and taxes will have to be paid on the casino's reported win. SUMMARY $mart Gamblers understand these money management concepts and apply them without fail in their casino gambling. They know from experience the importance of this and how it improves their success in the casino and increases their enjoyment of gambling. Copyright 1992 PC Information Systems All Right Reserved