(Risk of Ruin continued)

Risk of Ruin Applet

     

• See Instructions Below
• License and Source
• See Notes Below

Instructions

1. Set the bankroll for the player. Player bankroll must be greater than zero and cannot contain characters other than numbers. Do not enter negative values.
2. Set the average wager. The default value is one unit.
3. If you are calculating risk of ruin against the house with an infinite bankroll, leave the checkbox "on" unchecked. In order to set a "goal" win amount or to calculate the risk of ruin against an opponent with less than an infinite bankroll, check the "on" checkbox and enter the house bankroll. Leaving the house bankroll empty will assume a bankroll for the house of 100 * player's initial bankroll.
4. Set the player win percentage using the slider control.
5. Click "calc ror" button.
6. The risk of ruin of the player will be displayed as well as an estimate to the maximum number of trials to ruin.

To run simulation

1. First calculate the risk of ruin.
2. Click the "run sim" button.
3. The simulation will run until either the house or player is bankrupt or 500,000 trials. The actual number of trials to ruin will be tracked and displayed.
4. The "run sim" button will become a "reset" button. Click "reset" and the values of the controls return to default values.

License and Source

This applet is made avaiable for your use and redistribution under the terms of the GPL version 2 or later. This program is distributed in the hope that it will be useful, but WITHOUT ANY WARRANTY; without even the implied warranty of MERCHANTABILITY or FITNESS FOR A PARTICULAR PURPOSE. See the GNU General Public License for more details. The source for this program can be downlaoded in jar format by clicking here.

Notes

Note that this applet has limitations. The purpose of this applet is to help users understand the concept of risk of ruin and is not intended to calculate the risk of ruin for any specific games under any specific conditions.

Entering incorrect values or extremely large values for the bankroll figures will have undetermined results.

The estimate of the maximum number of trials is interesting. Setting the bankrolls for the house and player to 10 and setting the player win percentage to 50%, will produce an estimate of 100 trials (10 * 10). However, setting palyer win percentage to 49% will produce an estimate of 500 trials ( (51/49^20 - 51/49^10) / (51/49^20 - 1) ).

Notice that as the average wager increases, the risk of ruin decreases. Also, as the bankroll of the house increases in comparison to the player, the exact amount of the house bankroll becomes less significant.

Two formulas for risk of ruin of the player:

for 50/50 games
(1) D/c

for games where player has less than a .50 probability of winning
(2) (q/p)^c - (q/p)^d / (q/p)^c - 1

where q = house odds, p = player odds, c = house bankroll + player bankroll D = bankroll of house, d = bankroll of the player

3 formulas to estimate of the maximum number of trials to ruin:

for 50/50 games
(1) D * d

for games where player has less than .50 probability of winning
(2) d/q-p

for games where player has greater than .50 probability of winning
(3) D/p-q