The online gambling industry raked in over $92 billion USD globally in 2021 but how much of those massive revenues actually get paid back out to players? While luck may seem to rule over any single gaming session at LuckyDays Casino, math determines the house edge and payout rates that guarantee online casinos consistent profits over the long run. Understanding these key mathematical principles can lead to more informed decisions in the virtual field.
- Payout percentage – The percentage of wagered money expected to be paid back to players over time across a game or casino. For example, a game with a 95% payout would pay back $95 for every $100 wagered, keeping $5 as profit.
- House edge – The mathematical advantage built into casino games that ensures the house profits over time. Typically presented as a percentage, it’s the inverse of the payout rate. A 5% house edge equals a 95% payout rate.
- Return to player (RTP) – The payout rate is expressed as a percentage denoting how much is paid back to players over time. A 95% RTP is a 95% payout rate.
How Payout Rates Are Calculated
Payout percentages aren’t determined randomly or adjusted on a whim. They are carefully calibrated based on the game’s rules, odds, and probabilities. By factoring in all possible outcomes along with their corresponding payouts, casinos can mathematically derive the long-term expected return.
Take a simple coin flip bet, for example. Heads you double your money, tails you lose it all. While each individual flip is 50/50, over 1,000 flips, the casino will slowly earn money as they keep half your lost bets. This represents a house edge of 2.5% and a payout rate of 97.5%.
Extend that concept to more complex games like slots or blackjack with far more variables and outcomes, and you’ll find that the same mathematical certainty underpins their profitability. Let’s look at average payout rates across popular online casino game categories.
| Game Category | Average Payout Rate | House Edge |
| Slots | 95-98% | 2-5% |
| Blackjack | 99-99.5% | 0.5-1% |
| Roulette | 94-98% | 2-6% |
Variance Adds Volatility
It’s important to understand that these payout rates reflect long-term mathematical expectations across thousands, if not millions, of bets. In the short term, anything can happen that introduces variance and volatility.
You might hit a lucky streak and double your bankroll in an hour. But flip that coin enough times, and the math will eventually catch up to erase your good fortune. This variance equals excitement for players, but the house edge is the casino’s insurance to still profit in the end.
Comparing Payout Rates
Savvy players look for games with payout percentages at the higher end of that range to gain the best mathematical advantage. Comparing payout rates between online casinos can also reveal better overall value.
For slots, a 98% RTP is vastly superior to one with just 90% payouts. An online casino offering 99.5% blackjack is preferable over one with just a 99% return rate. It doesn’t guarantee you’ll win in the short term, but the math indicates it’s where you’re most likely to lose less over time.
Takeaway
While hot and cold streaks inject variance and volatility into any gambling session, payout rates expose the mathematical certainty that ensures online casinos remain profitable. By understanding house edges and seeking games with better payouts, players can slightly counterweight the odds stacked against them.
You might still lose on any given bet but your bankroll will endure slightly longer playing blackjack over slots or opting for versions of games with better returns. And knowing the math empowers you to manage bankrolls appropriately to extend playtime.
So, while luck drives individual outcomes, math determines who profits over the long haul. And by crunching the numbers on payout rates, savvy players can slightly shift those odds back in their favor.
