What Exactly is a Payout Percentage

7 January 2013

If you have been browsing or taking part in online casinos, then you certainly must have noticed the payout percentages advertized all over the sites as well as in their email newsletters. The average is usually 97%. The term "payout percentage" or RTP(return to player) has caused much confusion as to what exactly it represents and how it is calculated, and many people actually have the incorrect definition in mind when they see these words.

The Myth

Now, what most people actually believe to be the payout percentage is completely wrong. Let’s have a look at this using the average of 97%. If, for example, you were to deposit $200 to your favorite online casino for a bit of gambling, you would then expect that casino to return to you, on average, 97%, which in this case is $194. This results in an overall loss of 6%.

This way of thinking is incorrect!

So What is the Payout Percentage Then?

The payout percentage is not based on the payout on the deposits that the casino receives. Rather, it is based on the payout of the casino games; this is where the majority of players get it wrong.
Basically, what this means is that from all the money that has been wagered in this online casino at a certain game by all its players, all the gameplays combined would have paid out 97% and have held a profit of 3%.
So if the total bets would be $100,000 and the total wins would be $97,000, then the game would have a payout or RTP of 97%.

So What Does This Mean?

This is not necessarily something sinister on the part of the casino, it just means that as a player or customer, you need to be aware of what all these terms mean so that when you play you are informed of what to expect.
If the casino has made a monthly profit of, let’s say $100,000 from its players wagering a total of $50,000,000, then the casino games have “paid out” 99.8% which is still an extremely high payout rate. So you are not getting ripped off, you just need to understand how it works.
You could also use this in your favor. If you were to find a game with a 99.99% payout, you would be able to wager a large amount of money at a low cost to yourself. For example, you could wager $100,000 at an average cost of just $10. If you then add to that comp points and bonuses that are always on offer at online casinos, you may find that you are able to put yourself in a very comfortable winning position.

Flexible Payouts

Game payouts can have some degrees of flexibility and so are not necessarily set in stone by the casinos. Two factors that may affect this are:

  • The nature of the games
  • The nature of the software

The Nature of the Games - Skill-based Games

Of all the games that offered by online casinos, you may have picked up on the fact that only a small minority of these allow you to use your skill and possibly affect the results based on your personal input. In roulette, for example, you simply place your stakes on the board, in slots you simply push a button to spin the reels, and in baccarat you just place your bet on either the banker or player.
Blackjack (and its variations) and video poker are the only two games in which you can make a variety of decisions which will affect the outcome of the game, and therefore, the payouts that you will receive. If you play right you will be rewarded, as opposed to getting lucky every now and then in the rest of the game options.

The Nature of the Software - Weighted Reels?

Before investing you money in an online casino it is imperative that you conduct some research as to whether the software of the game is real or manipulated.
In the United Kingdom, for example, all machine games, including video poker, are based upon the slot principle. This means that the outcome of the spins is not natural because the reels are weighted in order to meet a particular overall payout value (usually this is between 70% and 80%). Now, most Americans are not used to video poker games being weighted, so if you were to play a UK game with a seemingly very generous payout of 80%, you could lose a great amount while under the impression that it is a “real game” instead of a weighted slot machine.
This is also possible in the online casino industry where you may once again be playing a video poker game which seems to have a huge payout, but in reality, the video poker software makes it the same as a slot machine.

Are the Games Rigged?

A final aspect to consider is the integrity of the online casino. Sadly, there are some sneaky people out there who rig their games in order for them to win the players’ money in a manner which is immoral. Thankfully, it has become rather easy to spot casinos that have games that are not genuine, as most casinos are subject to third party checks to ensure the randomness and fairness of their games. Reputable online casino software providers will gladly advertize all their awards and stamps or approval, so keep an eye out for these. A fair casino should have its RNG certified by big companies like eCogra, GLI or iTechLabs.
Now that you are armed with this knowledge you will know what to expect in your next gaming session. Ensure that you are playing genuine games that offer what they proclaim to by conducting some thorough research, and keep in mind that the payout percentage is based upon your wager; then pick your online casino with the top gambling software and get out there and enjoy!

7 January 2013

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