Taking insurance and even money sound like good options to beginning players, in reality they are perfect ways for the casino to empty your pockets. Avoid them.

Casino gambling seems to be the polar opposite of insurance. Insurance is all about paying a little money now to protect yourself against having to pay big money later. By contrast, gambling is about playing fast and loose with current funds in the hope of scoring that big payday.

That being said, why does something exist called blackjack insurance? Well, it is an odd mixture of security and risk-taking, allowing the player to hedge against the dealer’s landing a blackjack. This piece will detail how insurance works and why you should avoid it.

Hedging against dealer blackjack

In some blackjack rule variations the dealer will call “insurance” when showing an ace as an upcard. This option allows the player to insure their initial bet up to 50 percent. On landing a blackjack, the dealer pays out 2-1. So if you insure your $50 bet with $25, the dealer will give you $50 back.

This is a side bet, so you still lose the hand and the dealer keeps the $50 you bet in the first place. However, the 2-1 payout means that the $50 are handed right back to you. That’s right, the dealer lands a blackjack, beating your hand, but you don’t lose any money. But things aren’t as rosy as they sound. We’ll get to that later.

Insuring your own hand

In addition to buying insurance against a dealer blackjack, you can also insure yourself when you know you are holding a blackjack. This is referred to as “even money.” Like insurance, the dealer offers even money when they show an ace upcard.

If you accept, you receive a 1-1 payout on your original bet before the dealer shows their hand. You should do this is you think the dealer has a blackjack as well. Without even money, this would result in a push. With even money, you get paid $50 in addition to the $50 you wagered, even if the dealer has a blackjack as well.

Why you should avoid these options

While both insurance and even money sound like smart strategies, hedging yourself against losses due to a dealer blackjack, both increase the house edge in the long run. Why? Just because the dealer shows an ace doesn’t mean he has a high chance of having a blackjack.

In fact, the dealer only has a blackjack in about 30 percent of these situations. In the other 70 percent, taking insurance or even money is a surefire way to lose. Take insurance for example. Its a side bet in which you get paid only if the dealer has a blackjack.

So if the math is correct, insuring carries a 70 percent chance that you will give the house half of your original bet for free. So instead of the 1-1 payout you should receive from the house, really you only get a 3/4 payout. The dealer pays you $50 on top of your $50 initial wager. But, they keep the $25 you up as insurance. The house edge is already .5 percent in most blackjack games and taking insurance only increases it.

The same concept applies to taking even money. You are guaranteed money if the dealer has a blackjack. But in the 70 percent of cases where the dealer doesn’t, you are forgoing a 3-2 payout in favor of a 1-1 payout.

In normal blackjack rules the dealer would pay $75 on top of your $50 when you have a blackjack. By taking even money, you are discarding $25 on the 30 percent chance that the dealer has a blackjack. It simply isn’t good strategy.

When you should insure or take even money

We’ve established that the chances of the dealer having a blackjack when showing an ace upcard are only 30 percent, so taking insurance or even money is a bad investment. However, using a card counting system can help you predict with reasonable accuracy whether the dealer has a blackjack.

Using a standard hi-lo system, recognizing a high count tells you there is a good chance of the dealer having a face card under their ace. This means they have a blackjack, and you should absolutely insure. If you have a blackjack yourself, you should take the even money to prevent the hand in resulting in a push.

While counting helps you predict the dealer’s hole card to a reasonable degree, it isn’t foolproof. You will lose money on some hands by predicting wrongly. However, when counting, in the long-run it is advantageous to utilize insurance and even money when the situation dictates.

In short, when sticking to basic strategy you should absolutely avoid these options. They are primarily ways for the casino to take a little skin off of unwitting players. But when counting, the tables are completely turned. Insuring and taking even money can help you tip the advantage in your favor.