Payout Ratios And Strategies for Playing Games of Chance

Variance and volatility are closely related but not exactly the same. While both deal with risk and unpredictability in casino games, they describe different aspects of the gambling experience. Let’s break it down:

📊 Variance vs. Volatility in Gambling

✅ Variance – This refers to how much actual results can differ from expected outcomes over time. It measures risk by looking at the range of potential payouts in a game.

• High-variance slots: You might win big, but wins happen less frequently (e.g., progressive jackpot slots).
• Low-variance slots: You win smaller amounts, but wins come more often (so you can play for longer periods).

✅ Volatility – While often used interchangeably with variance, volatility specifically refers to short-term fluctuations in results.

• High-volatility games: Expect big swings, including long losing streaks but large potential wins.
• Low-volatility games: More consistent payouts, but usually lower rewards per win.

📌 In short:
Variance is the statistical measure of risk, while volatility describes the real-world experience of streaks and swings in casino games.

Types of Variance & Volatility in Casino Games

Variance and volatility can be categorized in two main ways, though some players recognize a third:

• High-Volatility Games
• Low-Volatility Games
• Mid-Volatility Games (for those who differentiate three types)

Bet sizing is crucial in these games. As highlighted in the previous section about variance, every game has its upswings and downswings. Taking the coin flip as an example, a game of ‘heads’ or ‘tails’ shows that variance sometimes defies probability. Over time, however, probability will balance the results.

Given that the odds are 50/50, the coin flip can be considered a mid-volatility game.

🎰 High-Volatility Games: Risk & Reward

Imagine a game where for every dollar you play, you’re expected to get 98 cents back. This is called a Return to Player (RTP) of 98%. If it’s a slot game, you might win a lot of money during special bonus rounds, but win less money during regular play. These big wins don’t happen often, but they are possible.

Let’s say you play $10,000 in this game over a month. In theory, you should expect to get back about $9,800 because of the 98% RTP. But your actual winnings can vary a lot:

• Month 1: You might lose all $10,000.
• Month 2: You bet $10,000 again and win $14,600, making a $4,600 profit.
• Month 3: You bet $10,000 again and win $14,800, making a $4,800 profit.

Even though you lost everything in Month 1, over three months, you end up winning back almost all of your money. This shows how the game’s RTP and volatility work. It can be frustrating to lose a lot at first, but understanding these ups and downs can help you manage expectations.

🃏 Low-Volatility Games: Steady Play & Lower Risk

These games frequently return smaller amounts, reducing the risk to your bankroll compared to high-volatility games.

To illustrate, blackjack played using basic strategy is a low-volatility game. Typically:

• 45% of hands are won
• 48% result in a loss or a push
• 7% have other outcomes (mainly splits)

What’s the likelihood of losing five consecutive hands?

Using probability:
📌 0.48^5 = 0.012 or 1.2% chance

📊 Blackjack Losing Streak Probabilities %