Risk of Ruin Calculator: Understanding Variance

## Understanding Risk of Ruin Risk of ruin is the probability that you will lose your entire bankroll before recovering. It is a function of your win rate, standard deviation, and bankroll size. Understanding this concept is critical for long-term survival in poker. A simplified risk of ruin formula: RoR = e^(-2 * win_rate * bankroll / standard_deviation^2). For a NLH player with a 3bb/100 win rate, 80bb/100 standard deviation, and 25 buy-in bankroll (2,500bb), the risk of ruin is approximately 6%. At 30 buy-ins, it drops to about 3%. Rakeback reduces your effective risk of ruin by increasing your effective win rate. A player with a 2bb/100 table win rate and 3bb/100 equivalent rakeback has an effective win rate of 5bb/100, which dramatically reduces their risk of ruin compared to the same player at a room with lower rakeback. ## Rakeback Connection Rakeback is directly relevant to bankroll management because it provides guaranteed income that cushions downswings, accelerates bankroll growth, and reduces your overall risk. When making any bankroll decision, factor in your expected rakeback — it changes the math significantly.