Breaking even refers to a situation where a gambler wins an amount of money equal to the amount they have wagered over a certain period, resulting in neither a net loss nor a net gain. It is a point where the initial stake has been recouped, and the gambler’s financial position is as it was before betting commenced.
The concept of breaking even has a significant psychological impact on gambling motives. Since part of the utilityIn decision science, "utility" refers to a quantitative measure representing an individual's preference or satisfaction with respect to a particular outcome. In this framework, utility... of gambling comes from playing itself, gamblers will often frame a break-even day of gambling as a net gain. Alternatively, players who have lost a lot will often use strategies that seek to help them recoup those losses. As such, the desire to break even can lead to the continuation of betting and the escalation of bet size in an effort to recover lost funds, often referred to as “chasing losses” or just “chasing”.
In behavioral decision theory, the idea has taken hold as a more general phenomenon affecting sequential decisions involving wins and losses due to the influential paper,l “Gambling with the House Money and Trying to Break Even: The Effects of Prior Outcomes on Risky Choice” by Richard Thaler and Eric Johnson. The paper’s findings suggest that past outcomes are important to risk preferences and that the need to break even can lead to irrational and often riskier gambling behaviors, as individuals try to avoid the aversive state of a net loss.
There are a variety of reasons why casino gamblers often embrace strategies that seek to break even, some that are arguably rational given the utility of gambling, marginal utility, and the gamblers’ aspirations. Even in games with a more-or-less fixed expected valueExpected value or EV is the average return one can expect to get from a repeated decision, such as from a gamble, if it is..., such as rouletteRoulette is a popular casino table game originating from France. Players place bets on either a single number, various groupings of numbers, the colors red... More, player strategies can increase or decrease the likelihood of breaking even so that gamblers may be repeatedly rewarded for a strategy that maximizes their chances of breaking even, despite the fact that such strategies—when they do not work—can have disastrous consequences for the gambler. Gamblers who have lost more money than they can afford or who have been dishonest with a loved one or an employer may justifiably feel that the utility of that risk outweighs the utility of leaving the casino with that significant loss. Long-term gamblers will often have a different attitude about such strategies than early stage gamblers, since they are more likely to have experienced the dire consequences when such strategies go awry.
Examples like these will be discussed with concrete context when they come up in discussing common playing strategies.