Managing Your Money and Bankroll - Part I

By Lou Krieger and Arthur Reber

Can you take it with you? Are there money management methods to offset the casino's goal of separating you from your hard-earned cash? Money management and managing your playing stake need to be accounted for in poker, as well as other casino games. This series of columns will deal with it all. Some of the long-held misconceptions about managing one's money in a gaming establishment will be debunked, and you'll learn all you need to know about building and keeping a playing bankroll.

If it seems like almost everything you encounter in a casino, from the absence of clocks anywhere – if you knew it was 3 a.m. and you'd been gambling since noon, you might feel guilty and get up from the table, and they wouldn't want that, would they? – to the free drinks, sights, sounds, and smells (some casinos even pump authentic scents into their ersatz gardens), is designed to loosen your grip on your wallet, you're right. They want your money; that's their business. But that's OK; you want theirs, too, and fair is fair.

So, the battle is engaged. The casino's objective is clear: If you're playing table games or machines, they want a fair shot at your bankroll. Your objectives are more sublime: to have a good time, to win if possible, to minimize your losses (at least you don't wind up walking away feeling fleeced), and, of course, to receive as many freebies as you possibly can. Heck, if you can't beat them, at least make sure they pay the maximum for assaulting your wallet. Going broke is no fun. After all, if you're broke, you can't win it back. And if you've gone broke while on vacation, you're pretty much guaranteed to have a miserable time. Casino games, after all, are not really spectator sports; they're made to be played.

Of course, it's important to protect your gaming bankroll, and you should never be betting the rent money under any circumstances. That's not the kind of "money management" we're going to debunk, though. We're talking about all of those silly theories that purport to tell you when to quit based on whether you've won or lost some predetermined amount.

Money Management: Why it Doesn't Work

Money management is one of those concepts that should have died long ago. The upside of money management is based on the timeless adage, "Quit while you're ahead." Folks who subscribe to this philosophy are fond of telling anyone within earshot to "walk away from the game with more money than you had when you walked in."

Money management mavens tell you that quitting as a winner lets you take some profit out of the game and prevents you from giving back money you've already won. While seemingly a seductive argument, it really makes sense only if you decide to quit gambling entirely. If you're never going to play again – ever – and you're ahead right now, stuff that jack into your pocket and quit as a winner.

But if you quit as a winner today and lose tomorrow, are you any better off than if you simply played on and lost what you had won earlier? Of course not; you simply pocketed those winnings for a few more hours.

Downsiders advise setting stop-loss limits. "Once you've lost $500 in one session" – it doesn't have to be precisely $500, you can plug any amount into the equation – "it's time to quit. Give it up and go home; you won't make it back today. Come back tomorrow. Lady Luck's given you the cold shoulder and you ought to know better than to chase your losses."

Stop-loss limits, or their counterpart, quitting when you've won a predetermined amount of money, won't stop your losses nor protect your winnings. Most casino games can't be beaten no matter what you do, although skillful players in beatable games like poker, sports betting, and horseracing will establish an expected hourly win rate that won't be affected by quitting or continuing to play. Playing fewer hours by quitting when you're ahead only makes the process take longer.

Does this make any sense? Is it correct to quit while you're ahead? Should you quit once you've lost some predetermined amount? If you quit when you're ahead and quit when you're losing, do you play only when your results are banded between your stop-loss and stop-win limits?

Because it really makes no difference whether you gamble for two hours today and two hours tomorrow or four hours today, what is the logic behind money management theories?

Something to Remember

There are reasons for quitting, but they have nothing to do with whether you're winning or losing some predetermined sum. If you're emotionally upset, stressed out, exhausted, fighting the flu, or otherwise not at your best, you're better off not playing, because your condition will ultimately take itself out on your bankroll.

Getting in Control: Your Bankroll

Bankroll management is all about maintaining control over your playing stake, not some ersatz strategy that would have you walking a fine line between winning and losing some predetermined amounts as a way to ensure better results at the table. Your gambling bankroll is just that – it's money you can afford to lose. Never gamble with money earmarked for the rent, the kid's college fund, or your automobile insurance. If you believe it's OK to gamble with money set aside for necessities like these, you probably are a problem gambler, shouldn't gamble at all, and ought to consider getting some counseling.

While everyone's financial situation is different, gambling more than you can afford to fritter away can be disastrous. Your gambling stake is money you may never see again, and when you think about it that way, it only makes sense that this money is really superfluous to any real-world needs. If you're lucky and skillful enough to win, you can buy an Armani suit with your winnings, play baccarat, or get some new pinstripes for your pickup: It doesn't matter. Excess money isn't needed for life's necessities, so go out and enjoy it.

Mastering Your Bankroll:

What it Really Means

Bankroll management involves dozens of small decisions that require the exercise of discipline time and time again. It means not betting the triple on the last race to "get out for the day" when there's no clear-cut case to be made for one or two horses with value. It means picking up your chips and going home after a disastrous run at blackjack – when you busted on every 12 and 13, while the dealer caught nothing but fives and sixes every time he drew to a 14 or 15 – not because you're losing, mind you, but because you are tired, depressed, and beginning to make bad decisions.

It means getting up from a good poker game in which you've won some money and leaving, not because you believe the cards are about to turn against you, but because you are hungry and are prone to making poor decisions unless you get some food in your belly.

Managing your bankroll properly means not betting the overs on a football game just because you overheard a couple of blowhards remarking about how porous UCLA's defense is.

Bankroll management is all about discipline; knowing one's limits, knowing when to take a risk and knowing when to quit, knowing what level you feel comfortable playing at, and knowing when the stakes are too high for your financial circumstances. Still, if you are around gambling for a while, you may quickly learn that walking the walk is much tougher than talking the talk. We can always do a better job of managing our bankroll. When it comes to gambling, it's probably the toughest lesson of all.

Our advice might sound simplistic, but it works: Quit when you are no longer having any fun. It's all too easy to lose, and grow depressed as a result of losing, and begin to take your troubles out on your bankroll. If you keep on playing when you're in this condition and continue to lose, you're liable to reach the point of no return. You can become so numbed by the losses that succeeding losses will no longer hurt you, and that can be ruinous.

It's easy to say and hard to do. One thing your authors have come to understand with the sagacity of age – after a few less-than-memorable experiences like this in our exuberant youth – is that the casino and the games will be there tomorrow. Once that's understood, and once that's been implanted into your mind and into your emotions, it really does make it a lot easier to get up from the tables when you're stressed or distressed. After all, the game really has no beginning and no end. It's here today and it will be here tomorrow. If you're going to gamble, you owe it to yourself to play only when you're in the best shape possible.

Lou Krieger is the author of Poker for Dummies, Hold'em Excellence: From Beginner to Winner, and More Hold'em Excellence: A Winner for Life, available at major bookstores and online outlets everywhere. His next book, Gambling for Dummies, co-authored by Arthur Reber, has just been published. Lou Krieger's co-author for this series of columns, Arthur S. Reber, Ph.D., wrote The New Gambler's Bible and has authored many works in the field of psychology, is a professor of psychology, and has been a poker player since childhood. Visit Lou online at www.loukrieger.com.