Why probability calculation is an essential part of gambling. Perhaps you just started playing in online casinos. All the new terms can be quite overwhelming. How do you know what ‘house-edge’ means for example, or ‘payout rate’ and ‘game odds’?. They’re all part of probability calculation. It absolutely gives you an advantage when you’re good at calculation and when you know the correct terminology.
What does payout ratio mean?
One important term in the casino industry is ‘payout ratio’. It means the percentage of money that is paid out after someone has made a bet. Casino players spend a lot of money in the casino every day. The payout rate is the profit margin of an online casino. So the amount of money that the online casino keeps after one day. Usually online casinos have a higher payout than land-based casinos. For example, the payout ratio of Holland Casino is about 90 percent, whereas at most online casinos the percentage is about 98 euros. So imagine that you play in a popular online casino. From every 100 euros, just 1.5 euros isn’t paid out as a prize. This is a big advantage of online casinos, if you realize that 10 from the 100 euros isn’t paid out as prize money. Only 90 euros end up in the prize pool.
Play Craps and do the math
The best (online) casino players are often quite good in math. For example, they calculate their winning chances when playing on a slot machine. They are also very realistic about their chances. Were you good at probability calculation at high school? It makes gambling more interesting. You can calculate your winning chances for example. Perhaps you like to play Craps. There are 36 possible combinations in total. Six of these combinations make 7 in total. It means that if you bet on 7, you have a winning chance of 6/63. Or perhaps you like to win the game with even numbers. In that case you play with 2,4 and 6. Your chance of winning is 3/6, so 50 percent.
Some things are clear from the beginning. For example, your winning chances are usually lower when the slot machine offers big prize money. You also need to realize that the winning odds from a game of chance are usually low. Imagine that you have a payout ratio of 95.5 %, for example. This doesn’t mean that you keep 95,50 euros when you play with 100 euros. In that case you give away 5 euros from every 100 euros, which doesn’t happen.
The disadvantage of a progressive Jackpot
Maybe another example makes it even more clear. Imagine that 100 people play with 1 euro. From every Jackpot of 100 euros about 98 euros ends up in the prize pool. Things change when the Jackpot is only 50 euros. In that case the regular payout for 99 players is 48.5 percent. This is known as a ‘progressive Jackpot’. The former calculation means that your chance of winning the progressive Jackpot is actually quite small. Even the winning odds for smaller prizes are small. You cannot influence a game of chance. Your previous bet doesn’t influence the outcome of the Roulette wheel or dice! So if you’ve rolled a dice with the number four, it doesn’t mean that it won’t happen next time. It is entirely beyond your control, so just go with the flow.
The meaning of house edge
Casinos always have a so-called ‘house edge’. The payout ratio and winning chance or both part of this. The casino always has a profit after you’ve been gambling, but why? This is because of the payout ratio. Perhaps a practical example makes it more clear. Imagine that you play Roulette with 38 numbers and one zero. American Roulette even uses two zeros. Because of the zero there are 37 numbers for the casino. In that case you make a simple calculation, namely 36/37. This is 0,973, so 97.3 %. Then you do 100%-97.3 % = 2.7 %. So the house edge of 2.7 percent is 27 euros when you place a bet of 1000 euros. Obviously, this is just in theory. A lot of casino players aren’t very experienced and make mistakes. Because of this the casinos often keep more than 1000 euros.
Hopefully the house edge or your inexperience doesn’t withheld you from playing a great game such as Roulette! Imagine that you place a bet on the numbers 25 and 36. This means that you can win with 12 numbers. The payout is 3, because you calculate 36/12. Or perhaps you place a bet on the number 22. You can only win with one number, so you calculate 36/1. The payout rate is 36. Or perhaps you’re a big fan of Blackjack. In that case the house edge is 0,-1 percent. It means that the casino keeps 50 cents to 1 euro from every 1000 euro bet. However, in reality this is 12 to 15 euros. In the casino industry this is known as the ‘hold percentage’. So good luck with making your calculations, perhaps it brings you luck!