Blackjack Insurance and Even Money

Insurance is a pretty well-known concept in blackjack, put simply, with insurance a player would insure themselves against losing their bet to a dealers blackjack. As well-known as it is it is not very well understood. In fact it is so misunderstood that many blackjack players play this commonly offered side bet without realizing that they are playing into the house’s hands bringing the 0.5% house edge right up to 8%.

chips messy

Insurance is offered to all players at the blackjack table when the dealer’s up-card is an ace. So what are the chances exactly that the dealers hole card is a 10 value card? That’s a little over 31%, so the dealer has about a 1 in 3 chance of getting a blackjack with an ace already on the table.

Hold that thought and let’s come back to it in a minute. Assuming the player has put down a £100 chip from his £500 chip stack leaving him with £100 on the table and £400 in the stack. The dealer’s up-card is an ace and the player gets offered insurance, which is 50% on the bet. Bear in mind that when he takes this offer the player is now running 2 bets; he has £100 on his hand betting that the dealer will NOT have a blackjack and another £50 on insurance betting that the dealer WILL have a blackjack. Back to the players chip stack, he now has £350 after placing the insurance bet

31% of the time the dealer will get a blackjack and the bets will be paid out as follows. The player loses his £100 bet on his own hand but is paid 2 to 1 for accurately predicting that the dealer will get blackjack. What the player has essentially done is bet that the dealer will not get blackjack and that he will get blackjack at the same time just so that he is guaranteed a win. He is then paid accordingly for his bet of £50, which at 2:1 gives him a profit of £100 on the insurance bet. The dealer slides over the £50 chip and adds another £100 chip bringing the players chip stack right back up to £500 where he started.

So what happens in almost 69% of the cases when the dealer doesn’t get blackjack? In this instance the player loses his £50 side bet and the hand plays out where he either loses another £100, with his chip stack down to £350. Or he wins double his initial bet of £100, the dealer slides over £200 in chips, £100 from the original bet and an extra £100, leaving his chip stack sitting at £450.

As for insurance, there you have it, but how does this refer to even money bets? Even money bets don’t only exist on the blackjack table, they can also be found on the roulette table. Even money is usually the cumulative effect of more than one bet. For example betting £50 on red and £50 on black taking £100 from your chip stack, one bet will be lost and the other will be doubled, essentially putting exactly £100 back onto your stack. You lose nothing, you gain nothing.

As seen in the example above, placing the insurance side bet, 31% of the time the player will neither win nor lose anything, so it works out exactly the same as an even money bet.

Even money in blackjack is offered to a player who already has blackjack when the dealer is showing an ace. As discussed the chances of that happening is only a little short of 69%. In theory the player has already won unless the dealer gets blackjack in which case the player neither wins nor loses and simply gets his bet returned returned.

I love using the chip stack analogy because it is so much easier to relate to instead of throwing numbers, percentages and probabilities in the air. Real money terms. So again the player places a £100 bet, leaving him with £400 in his chip stack and is dealt blackjack. The dealer shows an ace and offers the rest of the table insurance but the player with blackjack gets offered even money. This scenario can play out in one of three ways.

The player takes the even money and gets his original £100 bet plus another £100 bringing his chip stack up to £600. Now we are talking! Or are we? 31% of the time the dealer will flip over a 10 value card and the player would neither win nor lose. Chip stack remains at £500. 69% of the time however, the dealer will not get blackjack and the player gets his 3:2 payout, resulting in the dealer sliding over £250 in chips, the players original £100 bet plus £150 in winnings. With the chip stack now at £650 and the probabilities of this almost touching the 70% mark this seems like the better option.

In theory you will hear all the blackjack gurus say it. Neither even money nor insurance bets are good bets. Both bets push the odds into the casinos favor and they play on the fact that as human beings we are scared to lose.

As we have mentioned in previous articles the point of blackjack strategy is to minimize the amount of money you lose. Insurance and even money bets are designed to do just that. Card counting is one way to shift the odds just enough to start winning. Card counting also helps the player make educated guesses about the probabilities of the dealer hiding a 10 value card. This is why card counting is so helpful; it guides the player into taking calculated risks and profiting big on a small number of hands.

Once again the moral of the story is the avoid side bets even though they promise to save your stack in the short term.

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