Risk of ruin: the odds of going broke

Even a genuinely winning strategy can bust your bankroll if you stake too much. Risk of ruin is the probability that a bad-but-normal losing streak wipes you out before your edge has time to pay off. It's the number that justifies every "bet small" rule in this track.

The three levers

Risk of ruin rises and falls with three things:

• Your edge — a bigger, real edge lowers ruin. No edge means ruin is essentially certain given enough bets.
• Stake size — the single biggest lever you control. Bet a large slice of the bankroll per game and even a modest cold run can zero you out.
• Variance — higher-odds bets win less often, so they bring longer losing streaks and a higher chance of ruin at the same stake.

Why streaks are longer than you feel

An 85%+ pick loses about 1 in 7. Independent losses cluster: backing 85% picks, a run of three losses in a row happens roughly once every 300 bets — routinely, over a season. At 60% win rate, streaks of five or six losses are ordinary. If your stake can't absorb a run like that, the streak — not the model — is what ends you.

Staying on the safe side

• Keep per-bet stakes small (the flat 1–2% rule, or fractional Kelly) so no streak is fatal.
• Never raise stakes to "win it back" — chasing multiplies ruin risk exactly when variance is against you.
• Size for the drawdown you can survive, not the profit you hope for.

Going broke is permanent; a losing week is not. Bet small enough that variance can't end the game before your edge gets to play out.