What Risk of Ruin (RoR) are you willing to accept?
Bob Dancer's latest (15 Jan) Video Poker 365 Dancer's Answers column
talks about Bob's friend Joe. Bob thinks that Joe plays well enough,
and has a sufficient enough bankroll, to move from quarters to
dollars, but Joe doesn't want to do this. Joe's only willing to lose
at most $10k in any given year and he's afraid he'd lose more than
that if he should hit a cold streak playing dollars (I'm paraphrasing
of course).
Suppose Joe plays $.25 FPDW at a Station Casino with .025% freeplay,
which, for arguments sake, let's say is exactly equivalent to CB.
This may or may not be the best place to play FPDW in LV, but let's
say it's where Joe plays so we know the CB.
Joe seems to be risk adverse. For him, the potential of winning more
doesn't outweigh the possibility of losing his $10k per year. If Joe
could tolerate a 1% RoR, then Wolf Video Poker (WVP)indicates his
bank roll should be 8820 bets or $11,025. So, Joe most likely won't
lose the $10k he's willing to lose playing FPDW in any given year, if
ever.
Suppose all of the $.25 FPDW were replaced with $1 FPDW? Then WVP
indicates that Joe's bankroll needs to be 34,010 bets or $170,050 for
the same 1% RoR (If you thought it would be 4 times the bankroll for
quarters, then think again. For an eye opener do the calculation for
$5 FPDW). Alternatively, WVP indicates that Joe would have a ~26%
chance of losing $10k. So, if Joe kept to his max loss limit of
$10k, he'd lose that much once every 4 years, on average.
I'm using FPDW because it has the highest EV of any $.25 game that's
generally available. Joe may or may not play it. Lower EV games
would require higher bankrolls for the same 1% RoR (for example $1
10/7 DB would require $807,450, more than 4 times as much as FPDW).
Higher EV games would require less. Variance also comes into play.
RoR calculations don't tell you anything about the upside. Joe might
win enough more playing dollars in the other years to more than
compensate for losing $10k every 4 years. Bob thinks he would.
Then again, as Bob says, people DO go broke playing VP. Maybe Joe
would be the 1 in 100 who would eventually lose $170k playing $1 FPDW.
So, the question still stands. What Risk of Ruin (RoR) are you
willing to accept?