To manage their bankrolls properly, all gamblers should have **at least a basic understanding of the house edge and the expected value**. This way, they would know how much they are expected to win or lose per given period of time. As we have said above, blackjack is a negative expectation value, which means that players would eventually lose, while the casino is guaranteed to win over the long haul.

The house edge is the portion of players’ bets the casino is expected to win. It is **also known as an advantage, vigorish, or juice**, and it is expressed as a percentage of players’ total wager. Usually, the house edge in blackjack is around 1% to 2% but with optimal strategy, players can successfully reduce it to less than 1%. It varies greatly from one blackjack variation to the other due to the different rules, the number of decks, the various payouts, side bets available, etc.

Interestingly, the house edge changes dramatically throughout the game, as well, as the deck composition changes – with more low cards left unplayed, the house edge is higher, when more high cards remain in the shoe, **the house edge may even be negative**. This means that players would have the advantage. However, that is something only card counters would be able to detect, which is why we would not focus on it.

So, what is the house edge in the standard blackjack variation? When played under traditional Vegas rules, **the game offers a mathematical advantage of less than 0.50%**. Usually, casinos offer 8-deck blackjack, where the dealer Hits Soft 17, players can double on any two cards and after a split, up to three splits are allowed, blackjack pays 3:2, and there is no Surrender option. Under these conditions, the house edge will be around 0.65, which means that players would lose on average 0.65% of their total wager, or $0.65 from a $100 bet.

But the house advantage cannot predict how much you will win or lose in a given period of time since it is a theoretical unit that is true for an unlimited number of hands. This is why we need to know the so-called **expected value (EV) of the game**. It helps players determine their expected loss or win for a gaming session and based on the amount they bet. To calculate the negative EV, we simply use the formula:

**EV = House edge x average bet x hands per hour**

Considering we play a game with a 0.65% house edge (0.0065), our bet is $10, and we play 70 hands per hour, the EV will be 0.0065x10x70 or $4.55. This means that the casino will win on average $4.55 per hour from the game. This is also **the hourly loss of the player**. If the player spends 5 hours in the casino, he is expected to lose $22.75. When it comes to the EV for card counters, however, it will be positive since the formula will not include the house edge but the player’s advantage over the casino.

View more...Another fundamental concept in blackjack theory is the so-called Risk of Ruin (ROR), which **refers to the chance of losing your entire bankroll**. The math behind calculating these odds is extremely complicated and no single formula for ROR exists. However, researchers and mathematicians have run millions of simulations using special software and have concluded that the risk of ROR is reduced to less than 1% with a huge bankroll of over $10,000.

The exact amount of the bankroll that is big enough to reduce the ROR to insignificant percentages depends on the monetary value of the bet. So, to convert it to betting units, **players would face a risk of ruin of around 1% with a bankroll of at least 1,000 units**. If the bankroll is worth 500 units, the average ROR is around 10% and if it is 400 units, the ROR will be 20%. Players who start with a bankroll of 200 units would face a risk of ruin of around 40%.

However, these ROR percentages have been calculated for a game with no limits on the number of hands played and no point of quitting. **When calculated for a specific number of hands, the ROR is much lower**, however. Let’s say we have a bankroll of 200 units, a win rate of 1.9 per 100 hands (the units we win per 100 hands), and the standard deviation (the range actual results differ from the average) is 27.72 per 100 hands. If we play 1,000 hands, our ROR will be around 1.35%.

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