Tuesday, April 23, 2013

What Is Return to Player (RTP)?

Gambling lingo is some of the most confusing lingo in business. Making matters worse is that with the split between online casinos and physical casinos, the lingo has likewise split. While we could spend hours discussing differences between edges, holds, and takes, it would provide little help to those who actually need help: the customer — the player.

From the player perspective, there are few concepts more important than Return to Player, also known as RTP. You'll hear it discussed ad nauseum in online forums, and if Casinomeister is any indication, many of the people involved don't understand it at all. But in the grand tradition of online dialog, that doesn't stop them from making their thoughts heard.

In its most basic formulation, RTP is the percentage of money put into a machine that is then later returned, unsurprisingly, to players. Whatever is not returned is the profit of the casino. So for example, if a total of $100 is put into a slot machine, if the slot machine has an RTP of 95%, it will return $95 to players.

The 5% not returned is generally referred to as house edge. This is the flipside of the RTP coin. There is some extra complexity involved with determining the true house edge, what with jackpots and other rewards, but this doesn't much concern the player. For the players, all they want to know is how much of what goes in, eventually comes back out.




In discussions online, RTP is usually associated with discussions about variance. This is a surprisingly difficult term to nail down. Chris Colby, president of Galewind, tried this in a thread on Casinomeister. Even with many intelligent contributions, a definitive, quantitative definition remained elusive.

A chart representing a zero variance game
Colloquially, variance is used to describe how often big wins happen in comparison to small wins, or to put it another way, how many times must a player bet before something happens. A high variance slot machine would therefore have very few small wins, but big wins every now and then, thus requiring a player to make many bets before anything happened. This is why variance is so important when determining the "nature" of a slot game.

A game of zero variance and 95% RTP would simply return 95% of whatever you put in, every time. Very boring. Also, impossible to win anything. The goal of a slot player it to hope for some degree of variance, such that other players put money in that they do not get back. This builds up a “pile” of money inside the slot machine that is eventually dumped out in some big win, thus ensuring that 95% of all money is returned. Because remember, when it says that 95% of money put in is returned to player, it doesn't say which player gets the money.

This is the reason why a game's RTP may not be seen until a sufficient number of games have been played. If a game is a high variance game, players could conceivably pump thousands of bets into the game until it produces a big win. Until that big win happens, the game's RTP seems very low. This is also the reason why the only hope to “win” at a slot machine is to go in, bet high over a short period of games, and then walk away. The longer you play, the more likely you are to follow the RTP.




There is a distinction that has bizarrely sprouted up in some forums online whereby people differentiate between theoretical RTP and observed RTP. This is stupid. There is only one RTP and it is a mathematical construct determined by the design of the game. I suspect that this distinction was created by casino reps who were trying to cloud the issue of what RTP is and why it is important.

That's not the only obfuscation that defenders of online casinos will use. Conversations in online message boards, especially those that have representatives of casinos in them, will try to lead you away from RTP entirely, be it theoretical or observed. They will try to get you to focus on variance. They do this because RTP is the most important number for them as well as you. It's the number that affects their profit sheet at the end of the month. That means that any wiggle room in player comprehension of RTP is wiggle room in which they can try to squeeze more profits.

To disarm any statements that these represenatatives may make — yes, variance is important in a game. Different variance models is the reason we have so freaking many different casino games. All of them do the same thing — slowly take away your money — they merely do so in different patterns.

That said, all casino games have good variance. All of them. That's why they are in casinos. If they had awful variance models, no one would play them and they would understandably never be carried by any casinos. As such, you can rest relatively assured that any game you play is going to be a good game. Variance is thus an unimportant variable to consider. All you want to know is the RTP.




Hitherto, I have been discussing slots, but the importance of RTP applies to all games

Some games, like blackjack, have set RTPs based on perfect play. Player strategy has an affect on the RTP since player choices directly affect the way the game transpires. RTP is, if anything, more important for these games since it is here where players who are suitably inclined can reduce the house edge to an absolute sliver. Many online casinos have blackjack RTPs of over 99%.

A baccarat table
Other games are in fact a wide variety of RTPs contained within a single rule structure. Baccarat, for example, is essentially three slot machines in one game. Player, banker, and tie all have set RTPs, and the user can place bets on any of them, but the user cannot affect the outcome of each round of play. The same goes for craps and roulette. The various bets on the table all have set RTPs because the outcome of a round is unaffected by player decisions.

Still other games have artificially variable RTPs. A true variable RTP should change its RTP based on the mechanics of the game's parts. For example, blackjack has a variable RTP because if a player hits, that card is no longer available for the dealer. Many game designers, dishonestly in my opinion, attach a mechanism to the RTP that isn't required by the game.

This mechanism can be found in slots that alter their RTP based on how long a player plays. There is nothing about the design of the slot, such as number of reels, stops, and pay table, that necessitates this. It is a feature that is bolted on to an otherwise complete game. This is sometimes touted as a "feature," it it's actually just a way for a casino to squeeze a bit more cash from you.

Other ways that this variable RTP could be achieved are even more nefarious than the above mentioned method. And these methods can apply to card games like blackjack. Indeed, my associate Lincoln has gone over these strategies in detail (Part 1 & Part 2), calling them, I think appropriately, cheating. They are also incredibly difficult to spot.

For example, let's say that you are playing blackjack. The game decides that you are winning too much money and selectively removes certain cards from the virtual deck, thus reducing your RTP because the mechanics of the game have been altered. If a customer's willful and knowledgable action alters a game's RTP, that is fine. But when RTP is altered secretly or by some arbitary method, it is always bad. In my opinion, even if the the casino lets you know it is happening, as with game time-dependent slots that I mentioned, it is bad.

RTP is a mathematical result that springs forth from the rigid mechanics of the game. The RTP of a slot is determined by the number of stops, the number of reels, and the pay table. The RTP of a card game is based on the pay table and a virtual deck of cards. Anything else is an invitation for funny business on the part of the casino.

This again reinforced the fact that as far as the math of the casino games are concerned, RTP is the most important number there is for you, the player. It doesn't matter what the variance is; it doesn't matter what the design is; you must always seek out games with the highest RTPs. A general rule of thumb that I follow is that anything below 95% is crap. Any companies that refuse to divulge their RTPs are worse than crap. They are scams waiting to happen, if they haven't already.

That's why I play blackjack — sweet, sweet, 99% RTP.

2 comments:

  1. Could you please elaborate more on "There is a distinction that has bizarrely sprouted up in some forums online whereby people differentiate between theoretical RTP and observed RTP. This is stupid". Why this is so stupid?
    Thank you in advance. Piotr.

    ReplyDelete
    Replies
    1. Hi Piotr. Sorry it took me so long to respond. I've sorta' given up on online gaming and as such have allowed this blog to fester.

      It's stupid because the observed RTP can be anything to anyone. Even with a T-RTP of 100%, there are many people who will experience an O-RTP of 50%, 9%, or 150%. The observed RTP tells us nothing about the game. All it tells us is what someone experienced during a SINGLE period of play time.

      This is a side effect of a game being based on probabilities. The O-RTP at any time can be anything, it is only LIKELY to be one way over another. That's why we need to know the number that tells us how likely it is for one way or another to be observed.

      The RTP of a game is something that springs from the math. It is a number that never changes. The O-RTP changes, and as such is not a real number. It's just chance.

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