If you’ve played more than a couple of rounds of blackjack, you are probably familiar with the concept of insurance. But while it might seem like a safe bet, especially for beginners, casinos have actually been lulling players into a false sense of security.

Follow our advice, and watch your online blackjack skills – especially if you’re playing at Lucky Nugget Casino.

What is insurance?

Lucky hand by Images_of_Money, on Flickr

Lucky hand” (CC BY 2.0) by Images_of_Money

Insurance in blackjack refers to a side bet placed separately to your main wager. It’s placed for half the value of your main bet, and what you’re betting on is the chance of the dealer having a natural blackjack. So, you’ll only be offered the chance for an insurance bet if the dealer has a face-up ace: basically, you’re betting on the odds of the face-down card being a 10-value (i.e. a 10 or a face card).

The bet is placed on a side-table reserved for these side bets – which are usually insurance, but can also include betting on other outcomes depending on the specific game’s rules.

Obviously, you lose if the dealer has a natural blackjack, but by taking out insurance you could break even. If you’ve wagered $10 on your blackjack hand and the dealer has a face-up ace on the table, you can take out insurance for $5. If the dealer then has a 10 face-down, you’ll lose the $10 main bet – but insurance will pay out $10 as well as giving you the $5 back, meaning there’s no money lost.

Dealers will also often suggest that players who are themselves holding blackjack should place an insurance bet on the dealer. In the first hand, if both the player and the dealer have 21 value, then they’ll tie but no money is won or lost – but if you take out the insurance bet, you’ll turn a profit. Your $10 main bet is returned to you, and your $5 insurance also gives you a nice little $10 profit.

Seems good, right? So what’s wrong with it?

Don’t get fooled

Blackjack by oeᴈib, on Flickr

Blackjack” (CC BY-ND 2.0) by oeᴈib

Insurance would be a good bet – but it’s not mathematically correct. The discrepancy between actual odds and the odds of something happening is, of course, where the casino gets its house edge to ensure it turns a profit. But insurance has a higher house edge than in a normal game of blackjack, making insurance a bad bet.

Insurance is paid out at 2 to 1, implying there is a 1 in 3 chance of the dealer getting a blackjack from a face-up ace. But in reality, there are 4 cards out of 13 which could complete that hand, giving odds of 9 to 4 – or 30.8%. This is a marked difference from the 33.3%% chance that a 2 to 1 payout suggests, and so you’re going to lose more money making this bet than you win.

To show this in action, let’s say you make 130 insurance bets of $20. In a perfectly average world, you’ll win 40 bets insurance bets and lose 90; if there was actually a 1-in-3 chance of winning, you’d win 43 and lose 87. In total, winning 40 bets turns a profit of $1,600 (40 wins, each making $40) but nets you losses of $1,800 (90 losses, each costing you $20) which leaves you $200 worse off.

So the next time the dealer offers you insurance, your best bet is to politely decline. Play as best you can with the cards you have, and understand that luck is just part of the game – if your dealer does have a natural blackjack, hopefully it won’t be long before you get one too!

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