Variance and expected value in slots

Fair play in slots is critical. Like anything else that you purchase, you expect to get value for money. It is simply no good thinking that you are wagering to win a jackpot.

You are in effect, purchasing credit to play a game. So, shouldn’t you be entitled to the same fair play that you expect when purchasing anything else? In short, shouldn’t you get a fair chance to win?

Of course you should! This is why most online casinos have worked on their fair play strategy really hard, and come up with a set of variance and expected values in slots that appeal to all gamers.

It is tricky to understand, but in this article, we will try to walk you through the process of how it all works, as simply as possible. So, without further ado, let’s start with something that you have all heard of. Let’s talk about house edges.

House edges

House edges, as we’re sure you are aware, are how the casino makes money.  It is basically a casino’s way of making a profit on every bet that is staked.

Every single bet that you make has a certain probability of success and a certain probability of failure. If you were to flip a coin, it would be 50-50, this you can agree on.

However, casinos make sure that their games usually have a small house edge, meaning that probability of success to failure is not 50-50; it is actually around 47%-53%, etc. This house edge is not robbery, it is commonly accepted. They are hosting the casino games after all, so think of it as a fee.

Pay-out percentages

The pay-out percentage is the probability that the player can win something, and it is usually only applied to slot machine games.

Most slot machines have a pay-out percentage that ranges from 91% up to 98%. But you should be wary of the term pay-out percentage, as it is a sly one. Just because a slot has a 98% pay-out percentage, does not by any means guarantee that you are going to end your session richer!

Think of the words carefully. It says it has a 98% pay-out percentage rate, but it doesn’t tell you what a pay-out constitutes.

Let me put it another way. If you wagered $1 a spin for 10 spins, and you won on all 10 of them, just $0.20 per spin; you would have amassed winnings totalling $2.00. However, your expenditure on staked wagers would be $10.00.

So the slot machine is paying out over 98% of the time, but you have only won smaller winnings, which make up just a fifth of what you put in. This doesn’t mean that the game is rigged in anyway. It just means that because the machine says it pays out a lot, you still might not land the correct symbols to win a lot (in terms of a total amount of cash).

Slot machine variance

Slot machine variance basically means risk. For example, a high variance slot machine is a high risk slot, and a low variance slot machine, is a low risk slot. Slot games which have a pay-out percentage of between 93% or higher, are known as low variance slot machine games.

Those slot games that have a pay-out percentage of 92% or lower, could certainly be called high variance slot machine games. It is somewhat complicated jargon, but it isn’t that hard to decipher, with a little help.

The way that the variances work, is that low-variance slot machines will pay out smaller wins more common, and bigger wins less. The high variance slots will pay-out larger wins more easily, but you won’t really win very often. Like everything in life, it is a balance, and like almost everything else, it is determined by complicated equations.

We won’t go into the equations here, but they are used to not only understand slot variance but also to know what would be considered expected value in slots. We’ve discussed the slot variance, so let’s talk about expected value in slots.

Expected value in slots

We can again skip the complicated mathematical equations, to get to the bones of it all. Our little short cut will reveal what you should consider expected value in slots. Basically, what it comes down to is what you are prepared to stake when playing.

If you have a couple of hundred dollars to spend, then you are better off playing high variance slots. Don’t blast it all right away, take your time and start off with just $1 wagers per spin. You won’t win all the time, but when you do, you’ll win big. The more you win, the more you can wager comfortably. That would be considered pretty decent expected value for high variance slots.

However, if you are playing with a smaller sum, then low variance slots are for you. You are more likely to pick up smaller wins. Betting on the minimum wager might not seem like it can boost your balance significantly, but it can.

Wagers of $0.25 per spin can often yield the odd results of ten, twenty or thirty dollar wins. The basic idea behind low variance slots is that you build up your stack with small but frequent wins, over time.

It all boils back down to slot variance again. How much of a risk are you willing to take? Expected values can differ, but generally, if you stick to the two rules above (high variance slots if you’re playing with lots of cash, low variance if you’ve got a smaller budget), you should get your expected value. In other words, you should get your money’s worth!

Random number generators and streaks

Of course other factors can take place in a slot gaming session. You may feel like there is a run going, either a lucky one, or an unlucky one? Perhaps you may feel that the slot has already paid out a big progressive jackpot, so it doesn’t really want to pay-out anymore? It is even common for players to assume that playing at a certain time of the day is better than others.

That is all nonsense. The online slot machines use RNGs (Random Number Generators) and are testing by independent auditors frequently, to make certain that they are up to industry standard. Bad runs, and unlucky streaks (or lucky streaks) are all variables, a part of the slot’s random setup. They are not out to get you, and they aren’t rigged.

Now that you know how house edges, pay-out percentages, slot variance and expected values work, you should be able to see just what kind of slot is ideal for you, so you can get the value for money that you are entitled to.