Bankroll Management: The Complete Guide to Not Going Broke
The most important skill in gambling isn't picking winners — it's managing your money. Here's how the pros do it.
Why Bankroll Management Matters
You can have a genuine mathematical edge and still go broke. It happens all the time. The difference between profitable bettors and broke bettors usually isn't their handicapping — it's their money management.
Setting Your Bankroll
Your bankroll is money you've set aside specifically for betting. It must be:
- Separate from living expenses — rent, food, bills are off limits
- Money you can lose entirely — worst case, it goes to zero
- A fixed amount — don't keep adding from your checking account
Unit Sizing
A "unit" is your standard bet size. Most professionals use 1-3% of their bankroll:
| Risk Tolerance | Unit Size | $1,000 Bankroll | $5,000 Bankroll |
|---|---|---|---|
| Conservative | 1% | $10 | $50 |
| Standard | 2% | $20 | $100 |
| Aggressive | 3% | $30 | $150 |
The Kelly Criterion
The Kelly Criterion calculates the mathematically optimal bet size based on your edge:
Kelly % = (bp - q) / b
Where:
- b = decimal odds - 1
- p = your estimated probability of winning
- q = 1 - p
Example
- Odds: +150 (decimal 2.50), b = 1.50
- Your probability: 45%, q = 55%
- Kelly = (1.50 × 0.45 - 0.55) / 1.50 = 8.3%
Fractional Kelly
Most pros use 25-50% of the full Kelly recommendation to reduce variance. Full Kelly is mathematically optimal but emotionally brutal.
The Risk of Ruin
Risk of ruin is the probability of losing your entire bankroll. It depends on:
- Your edge (win rate)
- Your bet size (units per bet)
- The odds you typically bet
| Unit Size | Edge | Risk of Ruin |
|---|---|---|
| 1% | 3% | ~0.1% |
| 2% | 3% | ~1% |
| 5% | 3% | ~15% |
| 10% | 3% | ~40% |
Golden Rules
- Never bet more than 3% of your bankroll on a single wager
- Never increase bet size to chase losses
- Recalculate your unit size monthly as your bankroll changes
- Track every bet — you can't manage what you don't measure
- If your bankroll drops 50%, reduce your unit size proportionally