Risk of ruin is the mathematical probability that you'll lose your entire bankroll before doubling it. It's not about one bad bet. It's about the cumulative effect of variance over hundreds of bets, even when you have an edge.
Understanding this number changes how you bet. A 55% winner betting 10% per game has about a 10% risk of ruin. That same 55% winner betting 2% per game has less than 1% risk of ruin. The math is brutal and it doesn't care how confident you feel.
Even if you're a profitable bettor long-term, short-term variance can destroy you if you're betting too much per game. Risk of ruin calculates the chance that a string of losses wipes you out before your edge can recover the bankroll.
The formula depends on three things: your win percentage, your average odds, and what percentage of your bankroll you're betting per game. Increase any of those and your risk of ruin changes dramatically.
| Unit Size | Risk of Ruin | What This Means |
|---|---|---|
| 1% | < 0.1% | Almost impossible to go broke |
| 2% | < 1% | Very safe |
| 5% | ~3% | Manageable risk |
| 10% | ~10% | High risk |
| 20% | ~35% | You will probably go broke |
These numbers assume you're hitting 55% at standard -110 odds. If your win rate drops to 53%, your risk of ruin at every bet size roughly doubles. If you're hitting 52%, you're barely profitable and your risk of ruin skyrockets even at small unit sizes.
You can be a 54% winner and still go broke if you're betting 15% per game. Variance doesn't care about your long-term edge. It only cares about whether you survive long enough to see that edge pay off.
This is why bankroll management matters more than handicapping for most bettors. You can be slightly above breakeven and make money for years if you manage your bankroll correctly. You can be a sharp handicapper and go broke in two months if you bet too big.
If your risk of ruin is above 5%, you're gambling, not investing. Professional bettors target risk of ruin under 1%. They survive downswings that would destroy recreational bettors because their unit sizing protects them.
Three ways: increase your win rate, decrease your unit size, or both.
You can't control variance. You can't will yourself to hit 60% when your true win rate is 54%. But you can control how much you bet per game. Lower your unit size and your risk of ruin drops exponentially.
If you're betting 5% per game and your risk of ruin feels too high, cut your unit to 2.5%. Your profits grow slower, but you're nearly guaranteed to survive long enough to actually see those profits.
Sports betting is a marathon, not a sprint. The goal isn't to double your bankroll in a month. The goal is to still be betting in six months with more money than you started with.
Risk of ruin is the single most important number in bankroll management. Keep it under 2% and you'll almost certainly survive. Let it drift above 10% and you're one bad week away from starting over.