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How Casino Games Work: Statistics, RTP, House Edge and Volatility

How Casino Games Work: Statistics, RTP, House Edge and Volatility

We have all heard stories about players, winning millions in casinos using secret tricks and not having to work another day just enjoying luxurious holidays, drinking ice, cold margaritas on beautiful, sunny beaches, etc. Well, those stories are fake. The math behind casino games always favours casinos, so there is no guaranteed way for players to win even if you are lucky at first and won. 

If you keep playing long enough, the math will sooner or later turn against you and you will lose your money. Now, let me show you how the math of all casino games works and why the casino always profits in the end. Casino games, such as slot machines, roulette or blackjack are called games of chance, because their outcome depends on luck. You play them against casinos, not against other players.

Regardless of your skill the casino will always have an advantage. Let's take a closer look at how it all works. All casinos and casino games have certified fair randomness, which means that the game results really are random, But remember fair, randomness, does not make a game Fair. 

Here is an example. Imagine a game in which we flip a coin. If it lands on an eagle, I will give you one dollar. However, if it lands on heads, you will give me two dollars. Even though the randomness is fair, the game clearly isn't. Your chances of winning and losing are the same, but the amount you can lose is twice as high as the amount you can win. So does that mean you can't win any money?

Well, you can, but only in the short term, Even in our imaginary game, you can be very lucky and win the first few flips giving you a couple of dollars in profit. However, the incredibly one-sided odds of the game will catch up with you very quickly. Real games in actual casinos (whether land-based or online ), have better odds which might not cause you to lose money as fast as you would in our made up game.

But you can be sure that you will eventually lose. You just have to give it enough time. Now that you know that all casino games are unfair for players let's take a look at how you can distinguish, which of them are more unfair and which are less unfair.

This is where the term 'return to player' (RTP) comes in. It's the long-term percentage of wagered money that you get back from the casino in the form of wins. It essentially tells you how much of your bets you can expect to get back from the casino when playing a specific game. Let's go back to the game with a coin.

In this game, you have a 50% chance of winning a dollar and a 50% chance of losing two dollars. This means you lose half a dollar on average. Let's reformulate the rules, a bit to better illustrate the RTP. You bet two dollars and flip a coin.

If you win, you will get back your two dollars and another one on top of that which is three dollars in total. In other words, you pay two dollars for a 50% chance to win three dollars. You end up with one-and-a-half dollars on average, which is 75% out of the wagered two dollars.

This is the RTP of this game. This means that you only get back 75 % of each bet in the long run. It's not that bad for most games, though most casino games have an RTP somewhere in the range of 95 % to 99 %. 

The Highest RTP slots ranking

  1. Fire Joker (Play’nGo)
  2. Hole in Won (Rival)
  3. Monopoly Big Event (Barcrest Games)
  4. Mega Joker (NetEnt)
  5. Cosmic Quest I (Rival)
  6. 1429 Uncharted Seas (Thunderkick)
  7. Hot Hot Halloween (Habanero Systems)
  8. Golden Chance (BF Games)
  9. King Arthur's Riches (Concept Gaming)
  10. Spooky 5000 (Fantasma Games)

The remaining percentage forms the house edge, the mathematical advantage. Casinos have over players which enables them to run a profitable business. For example, roulette has a house edge of 2.7 %.

Does this mean that you will lose 2.7% of your money when playing roulette? The answer to this question is yes, and no. It depends on how you play. If you wager your money only once you will only lose 2.7 % of it on average, However, if you wager your money over and over again, you will lose 2.7 % of each bet on average, which adds up quickly over time. This is why we also need to differentiate between the RTP of a game and the expected return of a betting strategy.

The expected return of a betting strategy describes how much money you can expect to get back from a gambling session on average. When you follow a certain betting pattern, It is never higher than the RTP of the game you play, but it could be lower much lower. Actually, depending on how you play.

Let's take a look at two examples: both played European roulette with an RTP of 97.3 % and a 2.7 % house edge In the first example. Your strategy is to place a 100 dollar roulette bet and hope for the best. If you win, you take your money and leave. If you lose, you admit defeat and move on. In this case, the expected return of your betting strategy is the same as the game's RTP, because you only wager your money once. Statistical loss is therefore $ 2.7, because the house edge is applied to your money just once. 

Imagine a second example: Let's say you walk into a casino and start placing 10 dollar bets on the color red or black You play until you go through 100 game rounds or until you lose everything In this case, you lose 22 dollars on average, because you wager Much more money in total and lose 2.7 % of each placed bet on average. Okay, you already know how much money you will lose, but how you lose it over time is also important, as well as your chance of hitting a lucky big win.

That's where volatility also known as variance comes in. These two players play a game with the same RTP, but with a different volatility. The player on the left plays a low-volatility game. His wins are frequent but low. That's why the size of his bankroll fluctuates only slightly. The player on the right plays a high-volatility game. The majority of his game rounds end up in a loss, but he hits a big win from time to time.

Having said that, both players will eventually lose everything if they keep playing. So does volatility even matter? And if it does, which games are better? High volatility games or those with low volatility? 

It does matter. It actually matters more than you might think. Although the preferences of players might differ, high volatility is better from a mathematical perspective. 

In the example above we have taken a hypothetical low volatility slot with a starting balance of 100EUR on the y-axis and a 240-minute playtime on the x-axis. As you can see, low-variance slots provide you with a smooth ride. Every once in a while, you win some sum of money, but the bankroll decreases very slowly. Of course, low volatility slots can provide you with big wins, but that would be a statistical outlier. On average, you can play these games for a more extended period. Unfortunately, the chance of winning is lower as well. 

Let’s use the same experiment to a highly-volatile game. Let’s consider that you end up losing, start with a bankroll of 100EUR and end play after 60 minutes. As you can see in this example, the fluctuations of balance are much more volatile and unpredictable. You may initially start out with a series of losses, followed by big wins. If we remember the law of large numbers, the outcome for the casino or slots provider is mostly the same, but there is an inherently more substantial chance for an initially high win. These games are riskier to play, but can provide big wins! If you are seeking to maximize your playtime, it would be best to avoid games from providers such as Big Time Gaming. The swings can be much higher. But of course, if we remember our earlier statistics lesson, the result, in the long run, will be the same.

Here are even more examples with roulette to demonstrate why. In the first one you start with a bankroll of 100 dollars and keep placing five dollar bets on red or black until you play 100 game rounds or lose everything Playing like this, you have a 35.6 % chance Of ending up with more money than you started with, but you will only win a small amount in most of the winning' cases. Your chance of ending up with more than 200 dollars is only 1.5 %. On the positive side, you will lose everything before reaching the 100-spin mark.

In only 4.3 % of cases On average, you will lose 13.2 dollars Now, let's ramp up the volatility by keeping the same bet size and placing bets on a specific number instead of red or black, When betting on color, you are quite likely to double your bet, While bets on a number give you a proportionally smaller chance to win 36-times your bet, It is therefore pretty clear that the volatility is higher. In this example, your chance of ending up in profit is lower. It is 24.6 % to be exact, which is 11 %. Less than before, However, if you do win, you'll win much more on average.

Quite surprisingly, you are more likely to end up with 500 to 1000 dollars than 100 to 200 dollars. All in all, you will lose 6.5 dollars on average. On the negative side, your chance of reaching the 100-spin mark is smaller than 25 %.

This is a sign that we might have taken it a bit too far in terms of volatility, but that's not an issue, because higher volatility allows you to place smaller bets and get the same ( or even higher ) chance of winning big. 

Let's take a look at the same betting strategy, but with a two dollar bet instead of a five dollar bet, As you can see from the table, this strategy is superior to the first one in almost all aspects, with a chance to win money at over 46 %, including a more than 13 % chance to end up with 200 to 500 dollars and even a chance of getting over 500 dollars. The only thing that's worse is the possibility of reaching the 100th spin. You are guaranteed to play at least 50 game rounds, but need to win at least one of them to have enough money for 36 more game rounds, And if you win at least two spins, you will reach the 100-spin mark. Taking all of this into account, the possibility of playing the full 100 spins is 61.4 % In exchange for the higher risk of running out of money prematurely, you get a much higher possibility of winning a bigger amount and a smaller average loss of only 4.7 dollars, Because the overall amount you wager is smaller on average, Before you ask .. To get all of these numbers, we ran a million-player simulation for each betting strategy in order to get reliable results. What should you take away from this?

Higher volatility enables you to have the same (or even higher ) chance of winning big, even when placing smaller bets, whereas smaller bets make you lose less on average, because the house edge is applied to less money. Overall, even though you lose less on average. You also lose your money much faster in most cases, That might sound bad, but it's actually good for your expected return, because you are often not given a chance to wager your money again and again, statistically losing a part of it. Each time. To summarize, high volatility gives you a better chance of getting a big win, but it also increases your chance of losing your entire bankroll, which is something you need to keep in mind when deciding how and which games to play.

Regardless of the level of volatility you choose, remember that you are always playing at a disadvantage, You might be asking yourself: is there really no way to beat the casino To be fair? There have been people who have managed to beat casinos in the past by finding a trick that worked, And there are some strategies that you can use to get the advantage on your side, such as card counting in blackjack or bonus hunting in online casinos. However, these are very complicated to put into practice and definitely aren't for everyone Chances are. If you are good enough to use these strategies, then you can make much more money by investing your time into something else. Everybody else will have to satisfy themself with always playing at a disadvantage.

So keep that in mind the next time you enter a casino, Because you are always going to lose money. If you keep playing, you might be asking yourself whether you should be playing games of chance at all. The answer to this question depends on what you want to achieve. If your goal is to make money, you should not be playing casino games, because these are not a way of making money or solving your financial issues.

If you just want to have fun and see casino games as a form of entertainment that you are willing to pay for by playing at a disadvantage, go for it but remember to gamble responsibly and only bet what you can afford to spend Subscribe to our channel. For more educational videos about online casinos and casino games.

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