Issue 33
April 25 - May 1, 2001
Volume 1
page 3

The Experts Hedge on Wall Street, Why Not At the Casino?
By Al Krigman

Hedges in gambling are means of "protecting" one bet with another -- akin to taking out an insurance policy. The idea is widely employed by sophisticated investors in the stock and bond markets. It can be applied in the casino as well.

Casino gambling hedges are most common at craps. An example would be $2 "any craps" to cover $15 on the Pass Line during come-out rolls. The former would pay $14 on a two, three, or 12 -- just the bets the latter lose. The trouble is that craps bets used this way have high edges and therefore raise net house advantage.

Roulette players can also hedge. And, they can do it without increasing the house advantage. In fact, in double-zero games where even-money outside bets lose only half when the ball stops in 0 or 00, hedging with these wagers lowers the overall edge.

The practical effects of hedging go well beyond edge, however. To illustrate, consider a typical hedge at single-zero roulette:

a) $2 on each of five black numbers -- five ways to win $62, 32 ways to lose $10;
b) $1 on each of five black numbers, hedged with $5 on red -- five ways to win $26, 18 ways to push, 14 ways to lose $10;

In both cases, the house edge is 2.7 percent. Where the options differ, on a spin-by-spin basis, is in the chances and amounts.

But the bottom line at the end of a session is more important to the majority of solid citizens than the results of individual spins. It's here that the real trade-offs of hedging become significant in terms of personal gambling objectives.

Two somewhat contradictory factors can be considered. First is the likelihood that players betting fixed fractions of their bankrolls in each round will survive the normal downswings of a game for some specified number of spins. Second is the prospect that, the number of spins notwithstanding, bettors will hit some win peak before losing their stakes.

Suppose, as a representative situation, players bet five percent of their stakes per spin -- for instance a total of $10 starting with $200. Also assume they want to survive at least 100 rounds without being busted by a normal cold streak, and hope to realize a gain equal to half of their stakes -- $100 in this example.

A "risk of ruin" analysis reveals the following for a single-zero table:

a) Betting $2 on each of five numbers, players have 55 percent chance of lasting at least 100 spins and almost 64 percent probability of earning $100 before losing $200.
b) Betting $1 on each of five black numbers and hedging with $5 on red, chances rise above 88 percent of surviving 100 spins but drop to 52 percent chance of reaching the $100 goal.

The projections for a double-zero game with the "return half" feature are:

Get $70 free at Grand Hotel Casino!
a) Betting $2 on each of five numbers, players have 51 percent chance of lasting at least 100 spins and nearly 61 percent probability of earning $100 before losing $200.
b) Betting $1 on each of five black numbers and hedging with $5 on red, chances rise above 83 percent of surviving 100 spins but fall to 48 percent chance of reaching the $100 target.

Specific values would differ but the trend would be the same for any of countless other similar hedges. Namely, this conservative approach to gambling improves chances for a long session on a given bankroll, but makes reaching any specified profit level less likely.

Should you hedge or go flat out? Shoot for the moon or opt for as much action as your money can buy? You'll have to decide on your own, in light of your reasons for gambling in the first place. I can only give you the pros and cons of the approaches. More or less what the poet, Sumner A Ingmark, had in mind when he wrote:

What's best for me ain't best for you,
So I can help you with a clue,
But ought not say what you must do.

More Gaming Strategy articles by Alan Krigman

$2,000 Monday Video Poker Tournament
President Casino at Broadwater, Biloxi, MS

First prize wins $1,200!
Registration: $10
800-843-7737 for more information

Double Down Twin Blackjack Tournament
Colorado Belle Hotel & Casino, Laughlin, NV
May 11-12, 2001

First prize wins $5,000!
Call 877-460-0777 for more information

Passport to Egypt Slot Tournament
Golden Nugget Hotel Casino, Las Veags, NV
April 26-28, 2001

Call 800-634-3404 for more information

Blooms and Blossoms Slot Tournament
Riviera Resort Casino, Las Vegas, NV
April 26-30, 2001

Registration: $595
Call 800-437-7951 for more information

Mad Hatter Twin Stakes Slot Tournament
Tropicana Resort Casino, Las Vegas, NV
May 3-6, 2001
Registration: $1,000
Call 800-521-8767 for more information

Dice Tournament
Kewadin Hotel Casino, St. Ingace, MI
May 4-6, 2001

Registration: $200
Call 800-KEWADIN for more information

Tell us what you think about our newsletter.
Copyright � 2000-2001 Casino City. All rights reserved
Casino City is a trademark of Please read our Disclaimer of Warranty