True Odds in Insurance

When it comes to odds in casino games, many are actually quite accurate, or true. I know, surprising considering how the casino like to take money. However, at least in most games the odds are true. One of the exceptions though is an insurance bet in blackjack.

First off, what are true odds?

True odds are quite simple. Odds are true when they are even with the payout. Meaning the payout has to be the same as the odds of landing that payout. Take roulette for example. In a game of roulette there are thirty six numbers. If you were to make a wager on one of those numbers and won that round you would receive a 36-1 payout. And that matches the odds of landing one number, which is naturally thirty six to one.

Now let’s take a look at insurance in blackjack.

If you were to win an insurance wager you would receive a 2-1 payout. However true odds on insurance are not two to one.

As an example we are going to assume that you are not holding any ten value cards; obviously the dealer has an Ace and you do not know what his other card is. We are going to look a single deck game to make the math easier to see.

In a single deck game there are sixteen ten value cards, which means that there are thirty three cards that have other values. This means that there is a 33-16 chance of the dealer having a card worth 10 for his hole card. Reduce 33-16 and you have 2.0625 to 1.

And that means that you should be paid $2.06 for every $1 of your insurance bet. On a $10 insurance bet you should be paid a total of $20.63. Instead you receive $20. Since you do not receive $20.63 the odds on an insurance bet are not fair, which further makes insurance a bad bet in blackjack.

Oh, and the amount that you should be paid goes up the larger your insurance wager is. So the larger your insurance bet is in blackjack, the more unbalanced the odds are.