Living off of your winnings

[Nyne]

A lot of it depends on how badly you need that extra $26000/year. Does your pension cover your basic living expenses and this is just the money for the extra luxuries in life? Or do you need it to pay the bills? If the former, you can take more risk because if you run bad, you can stop pulling money out of your bankroll until you recover. If the latter, you need to be extremely cautious, especially if you are older. I say the last part because if I fail, I can go get another 9-5 job and I have time to recover and live my life as a regular working stiff. If you retire to become a professional AP, you may not be able to bounce back from failure as easily.

I also agree with the previous post that you really want to have a separate stash of at least a few months worth of expenses in addition to your bankroll if you expect any kind a steady cash flow. This will act as a buffer during losing months, quarters, or worse. As far as how much you can expect to make annually, it depends on what games you are playing and how many hours you are willing to put in. If you are running below EV, will you spend more time on the road putting in additional hours? I think most full time players would advocate playing at some level below half Kelly, probably somewhere around 1/4 to 1/3 (if you don't understand this, research it). At 1/3 Kelly, you'll need about $60,000 to generate an EV of $100/hr from a good counting game. You will need to aim for an EV quite a bit above whatever income you intend to draw from you winnings, in order to grow your bankroll. If you expect to withdraw all or most of the EV you generate, you will eventually go broke. So if you want to draw $26,000/yr from your winnings, you should probably aim to generate an EV of at least $40,000, preferably more. This also doesn't allow for any expenses, so you'll need to generate more EV to cover that too. So lets just call it $50,000 in EV you want to generate. So, round numbers, you would need to play a minimum of about 500 hours/year with a $60k bankroll plus perhaps another $15k set aside for expenses, all while traveling as cheaply as possible (you will almost certainly have to travel extensively to put in that many hours, unless you live in Vegas), all to bring home $500/week of money you need to live on.

If that sounds a bit dire, part time play might be a better option. You don't have to be nearly as conservative if you aren't relying on the income to live off of. Also, there are a number of different ways to make money in a casino that earn more than counting, or have less variance, or both. In time, you will learn more about ways to boost your advantage, which makes full time play a more attractive option. But the bottom line is advantage play is a tough gig if you need the money to pay the bills.

[Goodboy]

Talking about the same idea the OP mentioned, I have some numbers I'd love to share with you to see if they make sense:

Current BR: 280K
Betting spread from $200 to $2.600 (actually 200 @0, 300 @+1, 850 @+2, 1550 @+3 and 2000x2 @+4, table limit is 2000)
Win rate / hour: $800
Other data: Heads up most of the time (95%), not so good pen @1.85 in average (wouldn't it be lovely with more?), no heat issues besides the bad pen.
RoR: 3,55%
Expenses for playing: Marginal, no more than $40 per trip

So my current yearly income is 90K. I am using that figure even if my actual expenses are lower since I save up a lot. Actual expenses would be 60K but better be safe than sorry, right?

Following previous posts advice, I should aim to generate twice my yearly needs, therefore 180K in EV, which translates into some 20 hours / month or 240 hours / year to round up numbers.

However I'd be lacking the other bankroll you mentioned, with "at least a few months" worth of expenses. Any advice on how many months could be considered safe? Considering the conditions I mentioned before

Thanks in advance for any input you might provide

[KJ]

OK, I looked at this thread yesterday and thought about commenting but I am not sure I am qualified. SauceBoss brings up a great point that while there is all kinds of info out there teaching one to count, as you get into money management, information starts to become less abundant and when you get to a topic as specific as this it really becomes more scarce. I think this is the area where networking and getting info from those few individuals that have gotten to this level really begins to comes into play.

I know, I myself scrambled and came up with ways of doing things that certainly were not optimal.

But basically, what you want to avoid is making frequent withdrawals from bankroll for living expenses, particularly being forced to dig into bankroll at the most inopportune times, such as during an extended negative run. Even if you have the bankroll to withstand withdrawals during a negative run, the psycolgical effect is difficult to deal with. It seems like your bankroll is going in the toilet real quick.

I am fortunate enough now that at the end of year, I reset my bankroll to a certain point and take my profits. I haven't had a losing year yet. I could now handle that but wouldn't have been able to not to long ago.

Now stepping back in time just a couple years before I went year to year, I would have separate living expenses for a specific period of time. First only a couple of months, then 6 months, and hope that sometime during the next several months or 6 month period, my results would be running positive enough to take another specific period of expenses out. But if I was running negative, I would put off taking any kind of withdrawal as long as I could, until things swung around. There was only a couple times that I really had no choice but to withdrawal during down times and I just withdrew as minimal amount as I could to get by until things 'hopefully' swung the other way. Then I would withdrawal some winnings (but less than EV) and continue on.

Again, not recommending this method, just sharing what I came up with at the time.

[SiMi]

Hi SauceBoss!
I'll take a stab at trying to help using some assumptions... For quick mental calculations I do the following:

I assume I am playing games with 1% win rate and 100 hands per hour. This makes for very easy hourly EV/hr. calculations since your hourly EV is the same as your average bet.

If you're betting at a $25 table with a standard bet ramp (1,2,4,8,16) and not playing with TC less than -2, your average bet is about twice the minimum bet. Here, the min bet is $25 so your average hourly bet is $50 so your hourly EV is also $50.

So, if you want to have an EV of $500 weekly, you will need to play 10 hours per week ($50/hr. x 10 hrs.). I don't know if that's realistic for you or not...

For Risk of Ruin, take 100 times your max bet and this will get your simple RoR down well below 5%. Here, your max bet is 16 x $25 = $400. $400 x 100 = $40,000.

So, your bankroll would need to be $40,000 for a max bet of $400.

Put your own numbers in and you can get really quick answers to these types of questions.

If your bankroll is truly a bankroll then you don't need it for anything else and, OVER THE LONG HAUL, the math says this is what happens. As your bankroll goes above $40,000, you can draw down to $40000 and the math stays the same. When your bankroll goes below $40,000, you keep playing as always because you've decided in advance to take a RoR of <5%. Again, your bankroll must truly be an amount you can lose without killing yourself because there's a chance you will lose it all.

I don't know if that's what you were looking for. I hope it helps a bit.

Cheers!!

[SauceBoss]

Thanks again for the responses guys. It has definitely given me something to think about.

In Response to Nyne: The $500/wk. figure was something I came up with because at the point I start doing this, I would need that much along with my retirement to bring in what I am currently making. In actuality I would probably need not even half of that to actually live off of. If I made $1,000 mo. playing blackjack I could live comfortable and not stress out and have to eat ramen noodles, or have my electricity cut off. The other $1,000 would indeed be disposable income. Beer money, going out to eat with the wife, sporting events, etc. Not to mention, I hate being broke and living paycheck to paycheck. In reality though, I could make due without it for a period of months if the swings were to go that way.

As far as traveling expenses go, I live in the Phoenix area so there are 7 casinos within 30 minutes of me. Another 3-4 casions about 2 hours south and another 3-4 within 2 hours north. So additional expenses would be nominal. I'm also only about 5 hours driving from Vegas if I were to expand my horizons.

I'm also "not that old" in terms of retirement age and there is always work in my industry, even part time if I needed to supplement my income that way.

KJ, would you care to share some numbers with us? They don't have to be your exact numbers but maybe a ratio or something proportionate to your exact numbers so that we can get a better feel from where you're coming from. After all, you HAVE done it and made it work so this is really the info that I am hoping to get. Please feel free to PM me if you feel more comfortable. I would like to hear your ups and downs and any stories you have as well.

Simi, thanks for the numbers. That helps alot. In another post someone said that your risk of ruin is calculated involving 100% reinvestment of your winnings. I wonder how this changes if you were to only take your wins above and only above your set bankroll amount. I'm guessing it would stay the same. If you start with a $40,000 bankroll and you only pull money out when your bankroll is above that, you're still at the starting $40,000. So i don't see how it would change. I can only imagine that your RoR would go down if you keep adding to your bankroll. Then again, as your bankroll goes up, you also bet more. Maybe someone can do a sim for this.

[bigplayer]

Your original risk of ruin is sort of irrelevant. If you take out all of your winnings and reset your bankroll to the same starting amount you are basically just flipping coins with the casino with an EV of $0. The Long Run is bad for you in this situation because your risk of ruin is not just the underlying preset starting bankroll risk (say 1%) but instead is the cumulative risk of the repeated trials. The longer your play the greater the chance that some fluctuation will come along that will wipe you out.

There has been plenty written on this. Don's Book has info, as do the archives over on BJ21.com.

[SiMi]

BP

Great point about the cumulative risk of ruin and repeated trials. Here's an article on the topic that shows how the C RoR can be managed through reinvestment of a portion of winnings:

http://www.bj21.com/bj_reference/pages/riskofruin.shtml

Practical issues always come up in these types of analyses. Anyone who works as an AP long enough to truly hit "The Long Run" will simply NOT be the same person with the same program, same attack, same bankroll, same game, etc. she was when she started out with just card counting at BJ.

This kind of analysis can be useful to bring someone with starry eyes back to earth.

[seriousplayer]

BP

Great point about the cumulative risk of ruin and repeated trials. Here's an article on the topic that shows how the C RoR can be managed through reinvestment of a portion of winnings:

http://www.bj21.com/bj_reference/pages/riskofruin.shtml

Practical issues always come up in these types of analyses. Anyone who works as an AP long enough to truly hit "The Long Run" will simply NOT be the same person with the same program, same attack, same bankroll, same game, etc. she was when she started out with just card counting at BJ.

This kind of analysis can be useful to bring someone with starry eyes back to earth.

Cumulative risk is a topic in risk management. I was doing research into that topic lately. Little has been written about this topic. One good book that talks about risk management is "Fortune's Formula: The Untold Story of the Scientific Betting System that Beat the Casinos and Wall Street". In there it has a separate chapter about the Kelly Criterion. Not trying to promote books here but I think it is a good read.

[Joker21]

BP

Great point about the cumulative risk of ruin and repeated trials. Here's an article on the topic that shows how the C RoR can be managed through reinvestment of a portion of winnings:

http://www.bj21.com/bj_reference/pages/riskofruin.shtml

Practical issues always come up in these types of analyses. Anyone who works as an AP long enough to truly hit "The Long Run" will simply NOT be the same person with the same program, same attack, same bankroll, same game, etc. she was when she started out with just card counting at BJ.

This kind of analysis can be useful to bring someone with starry eyes back to earth.

Why does he refer to half Kelly as 1.8% RoR? Also am I missing something or is his math for the formula of (1-13%)^10=17% incorrect?

[SiMi]

Hi, joker21,

I had the same problem the first time I read this article. I believe the author was trying to say that betting 1/2 Kelly without resizing your bets results in a RoR of 1.83%. I believe that is correct. The sentence in question, however, reads:

"Then the probability of doubling a bank before going bust (RoR) is about 1.8%."

I'm pretty sure he means the RoR before doubling is about 1.8%, which is a helluva lot different than the probability of doubling the bank is 1.8%.

As for the math, the formula he shows is all screwed up. His formula in the text shows: (1-13%)^10=17%. This is wrong. This leaves out the first part of the equation and it uses 13% instead of 1.8%. That might be due to the actual RoR being 1.83% and he left out the 8 and, for some reason, a decimal point. I have no idea what went wrong there... The formula probably should read:

1 - ( 1 - 1.83% ) ^ 10 = 16.86%

If you convert 1.83% to a decimal, it is 0.0183. Subtract 0.0183 from 1 and you get 0.9817. If you raise 0.9817 to the 10th power you get 0.8314. Subtract 0.8314 from 1, you get 0.1686. Convert that to a percentage and you get 16.86%. Round that to 17% and you get his answer.

He raises the RoR to the 10th power because he earlier said the player doubled his bank TWICE a year and plays for 5 years, which equals 10 bank doublings. He's saying that the CRoR in that case is 17%. In other words, the player has a 17% chance of failure within 5 years if he does NOT reinvest any of his winnings.

After 10 years, there will have been 20 doubling periods so the CRoR is 31.1%. In other words, there's a 30% chance the player will go bust in 10 years if he does not reinvest any of his winnings.

Continuing his logic, the player has a greater than 50% chance of going bust if he keeps doing this for 20 years.

Frankly, the article is not easy to follow, but the gist is helpful.

I think he's trying to say that the Cumulative RoR is ultimate death if winnings are NOT reinvested but it can be managed (even with bet resizing) by reinvesting a portion of a doubled bank.

In the fabled "Long Run" ANY RoR will ultimately kill you.

[bigplayer]

In the fabled "Long Run" ANY RoR will ultimately kill you.

Which is why players who use their BR for income generation play to a very small fraction of Kelly. If you play 1/4 Kelly your ROR is 0.03% and couple that with moderate resizing when you have a downswing that causes you to lose 1/4, 1/3, 1/2, etc of your bankroll your ROR is essentially 0.0% which means that C-ROR is also 0.0%

The term of income generation is also very relevant. Is it for life (and the player is in his 30's) then c-ROR is a very strong consideration. Is it just for a few years, then he can probably get by without worrying too much about it.

[Blitzkrieg]

I read a Tommy Hyland interview not to long ago where he talks about the benefits of playing on a team vs. going alone. With multiple counters working a casino it gives the players a chance to win more because if your playing alone, the table you may be playing on may not get to a positive count for awhile. Of course there are disadvantages to team play but with the chance to get on more tables with a hot shoe/game, I see an upside.

[seriousplayer]

I read a Tommy Hyland interview not to long ago where he talks about the benefits of playing on a team vs. going alone. With multiple counters working a casino it gives the players a chance to win more because if your playing alone, the table you may be playing on may not get to a positive count for awhile. Of course there are disadvantages to team play but with the chance to get on more tables with a hot shoe/game, I see an upside.

To execute team play profitably and effectively. You will need to find a casino that offers many blackjack games with lower house edge to count. For example, let say you play the six deck S17, DAS, DOA, RSA, LS with 80% penetration and that game is only available in the VIP pit with three tables. Even if they allow mid shoe entry. Team play might be hard to do. It is more profitable for a team to wong in in positive counts and do a bigplayer call in than to sit in a table and play shoes.