The other day I was having a discussion with a guy who is a long-term profitable player. His goal is to make the leap to PROFESSIONAL PLAYER within the next year. And, because of his family situation, he really NEEDS to do this.
As we were talking, I asked him about his money management strategy. This is always one of the first questions I ask because most players have no real money management strategy.
What is MONEY MANAGEMENT, anyway?
Money management is the strategy you have in place to grow (or preserve) your bankroll.
Have you ever heard my story about how unbeatable a casino is with a small advantage? I did a very popular podcast about theÂ Gambler’s Ruin ProblemÂ a couple of years ago. The topic of that podcast is how the house is literally unbeatable on the colors with only a 5.26% advantage. The chances of the house losing 100 units is less than one-in-SEVEN-THOUSAND!
Back to the player. He said that, while he has an advantage, getting the money to come in regularly was almost impossible.
I asked him, “What if every bet that you make comes with a 70% chance of winning at even money?”SESSION PLAY is what I am referring to and I strongly advocate for it.
Here is how it works:
1. You have a bankroll of (say) $1,000.
2. Each session you play is for 20% of your bankroll.
3. You play session until you double your session amount or lose it.
4. When the session is over, the money from the session is added back into the bankroll.
5. Go back to step #2.
To be clear… using the above example, the first session is $200, and you play until that $200 becomes $400 or goes away.
Now, assuming that you have a positive expectancy – even a small one – a reasonable session hit rate is 70%. I know that sounds high, but considering that the 5% advantage the casino has translates into a session rate for the house of well over 99.9%, 70% is just not so crazy.
So, let’s take a moment and do the math.
If you played 100 sessions for $200 each…
30 losses return nothing
Profit = $8,000
Advantage = 40%
What we have done here is to turn the SESSION into the BET. This gives us both consistency and a solid hit rate. The odds are always the same. Think of it as a single-horse play where you are hitting 70% winners at a $4.00 mutuel.What’s that? You don’t think 70% is possible? Trust me, that it is, but what about 60%?
Could you make money with a constant stream of horses that win at a 60% with a $4.00 pay?
SESSION PARLAYS are also allowed. You want a bigger score? So, parlay all your winning sessions!
In other words, when you win your $200 session (i.e. it becomes $400), bet the $400 back and play until it becomes $800. In this case it works like this:
49 wins parlay wins return $800 = $39,200
51 losses return nothing
Profit = $19,200
Advantage = 96%
So, now your advantage has leaped to a whopping 96%!
Okay, so what if your session hit rate is back at only 60%? That is just like betting $2 on a $4.00 horse and parlaying back. Now your hit rate is 36% and the payoff is $8.00. That is a whopping 44% advantage.
Okay, so this is what I do. This is my strategy for managing money.
Want to hear more about this? Maybe you got lost in the math?
Come join theÂ Talking Handicapping Facebook group. We’ll be discussing this very topic all week.
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