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The gambling industry is growing every day and is only expected to grow further in the upcoming years. With so many options for online casino games, betting websites, and lotteries, it is easy to get lost in all the new terminology, which can be surprisingly difficult to grasp at first.
This is why we’ve decided to collaborate with the Slot Day analytics team and explain the nuances of the four most commonly misunderstood gambling terms: from RTP and RNG to volatility and house edge. Let’s dive right in.
RTP
RTP stands for Return to Player. It is a percentage of money put into casino games that the establishment has to return to players. For example, a good RTP for an average slot machine is around 97%, which means that for every $100 wagered, it will have to return $97.
In general, RTP is one of the most important metrics of casino games, with governments all around the world demanding casinos to meet certain RTP requirements. John Forest, co-owner and content manager at Slot Day, offers the UK Gambling Commission as an example — the organization requires local casinos to provide that information on gaming machines in the form of a label or in-game help screen.
While it sounds like RTP is a genuinely nice idea, it has a lot of issues, and we’ll have to analyze all of them.
Let’s start with the most obvious one: a lot of players misunderstand the way RTP works — and for a good reason. RTP is incredibly confusing at first glance, and most casinos don’t bother themselves with explaining it in detail. Some players are led to believe that if they wager their money all evening, they’ll get almost all of it back by the end of the night. Other players see this promise and know for certain that this is not how it works, but no one provides an explanation, so they just ignore it or think of it as misinformation.
Either way, the situation is bad, and the lack of guidance leads to players being unable to make truly informed decisions. So, how does RTP really work?
As Slot Day’s co-owner John Forest explains, RTP isn’t a fake number — it is a legitimate measurement of how much money the game will return to players. However, the percentages only really add up over hundreds of thousands of games due to the random nature of casino games. Most of them have millions of possible outcomes, and so estimating RTP requires a huge dataset. So, while the numbers hold true, you as a single player might not get to experience anything close to the 97% return rate.
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Secondly, RTP uses the number of games played as a measurement unit and doesn’t account for individual players. If you lost $40 today and then over a week several people won an extra $38.80 split between them, then the 97% RTP machine works as intended.
Finally, remember that RTP is calculated for every wager, which is why if you were to put your winnings back into the machine over the course of millions of games, you would theoretically reduce them to almost nothing.
If RTP sounds rather useless to you now, then you have to remember that it is still by far one of the best available metrics players have. You shouldn’t think of it as a guarantee to return wager money, certainly, but you also shouldn’t ignore it and choose games with low RTP — statistically, you will still lose more playing them, even if it doesn’t feel this way.
House edge
Now that we’ve properly explained what RTP really is, understanding house edge will be way easier. To put it simply, House edge is the advantage the casino has over players, which is reflected in the percentage of money the casino takes from their games. Mathematically, house edge is simply what remains when you subtract the RTP from the 100%:
What should be understood about house edge is that the fact of its existence makes any game you play at the casino slightly unfair, and you need to come to terms with that if you want to play it further. Sometimes, players think that house edge means the casino cheats in some way, but that’s not the case.
The casino doesn’t need to cheat in games — it just needs to design them in a certain way to ensure players don’t get to win too much. This mostly applies to games of chance, which is why casinos almost entirely rely on them in their business, with Relax Gaming UK and other companies as providers for their online experiences.
“Imagine a chess grandmaster walking into a casino that has allowed chess matches with their dealer as one of its games. This situation is extremely unfavorable to the casino, so it will never happen. Instead, the establishment will offer you to play roulette, betting on a 37-number wheel that is completely out of your control. Even when there is a certain skill requirement, like in poker, the game is still largely decided by chance and lucky draws”, says John Forest.
All of that doesn’t mean that you can’t have fun in the casino — just remember that there is no way for you to outplay the establishment, and there is no competition here.
Volatility
Another one of the most misunderstood terms, volatility can be simply explained as a characteristic of whether a game offers bigger rewards with lower chances to get them, or smaller rewards with higher chances to win. High-volatility games are generally significantly less predictable and can lead players to lose most of their wagers with no results. While this can be true for low-volatility games as well, the odds of this happening are significantly lower.
Despite seeming unfavorable, high-volatility games are highly attractive to many players and have become something of a dream casino experience, which sells well. Think of how huge jackpots have become so iconic over the years, with many players secretly or overtly hoping to get them one day. High-volatility games play well into the weaknesses of the human psyche — we are generally rather bad at estimating risks, and the promise of an absurdly high reward makes us even worse at that.
At the same time, for a lot of people, most of the fun associated with the casino experience comes from the emotional aspect of it, and huge potential winnings are definitely way more exciting than small and steady wins. Overall, the choice of games depends on you, your goals, and your budget.
RNG
RNG stands for random number generation, which is a process involving a special computer program outputting long strings of unpredictable numbers with no clearly identifiable pattern. As you can guess, RNG is at the very core of most digital casino games, like slot machines. Now that we know the basics, we’ll have to dive deeper. However, random number generation is an extremely nuanced topic that is closely tied to advanced mathematics.
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First of all, we have to say that RNG is called that for simplicity’s sake, but in reality, no machine can create something truly random — it generates them using mathematical formulas, after all. Now you might think that an AI could maybe do it, but the answer is once again no. Well, can mechanical slots output truly random numbers? Nope. Okay, maybe you can? Also no, not really.
According to physicists, the only thing we can consider truly random is the behavior of subatomic particles. Everything else is deterministic, and with enough information, one could theoretically tell what the next number in the string would be. While it is possible to build a machine that uses quantum noise as a source of randomness, you can see why it isn’t a very popular choice.
So, in practice, when we say random, we generally mean unpredictable enough to feel random to humans, and RNG is good enough for that. However, there is another thing…
Lots of digital casino games don’t really produce unbiased unpredictable numbers. Don’t get us wrong, we’re not talking about scams — it’s just that it turns out that high levels of unpredictability aren’t all that great for everyone involved. Nowadays, lots of digital casino games are compensated, which means their output depends on the previous outputs and the computer ensures a somewhat equal distribution of wins and losses necessary to reliably achieve the stated RTP of the game.
For example, a casino slot machine will remember just how many wins and losses it produced over the current month and will base every single roll based on that information. If it turns out that at this moment players have received 98% of their bets back while the RTP of the machine is 97%, it will generate more losses to compensate, and vice versa. This way casinos can guarantee much more stability in the short run, and players aren’t going to face streaks of seemingly endless losses.
So, not only have we learned that almost nothing in this world is truly random, but it also turns out that casinos don’t even try to achieve that randomness — and that might be a good thing.
