Despite being part of a highly regulated industry, we do not have standards for a variety of things when preparing gaming reports.
For example, there seems to be no standard to how precise I have to be in reports. That is not to say I can be incorrect. In most math/science-based reports, it is considered very important how many decimal places are used when reporting data.
This doesn’t seem to be so important in the gaming world.
As a matter of habit, I usually use 4 decimal places in my reports. In my articles and booklets geared to the Player, I tend to use 2, which seems to be accurate enough. Casinos tend to only use 1 decimal point when they advertise the payback of a game, so who can complain with 2?
I’m guessing most of you don’t really care if the payback of a game is reported as 99.1%, 99.13% or 99.1253%. But, what if you saw the payback of a game reported as both 98.6% and 97.1%? That’s a pretty significant difference. Which is right? What if I were to tell you they are both right? Now you’d be even more confused.
They can both be right because there is no single definition of payback. I have always defined payback as the total units returned divided by the total unit wagered. Others define payback as the average units returned in a deal divided by the base wager.
In a game like video poker this is one and the same. The total wager is the same as the base bet. There are no additional units wagered in any way, shape or form.
In blackjack, the average wager is about 1.15 units relative to the base bet. So, if you are playing a $10 table, you will actually wager about $11.50 on average for each hand. If I tell you the payback is 99.5%, am I talking about 99.5% of the $10 or the $11.50?
In my case, I mean 99.5% of the $11.50. This means you will lose about 0.0575 units per hand. It doesn’t matter how I report the payback, this is the actual loss rate per hand. So, to someone who reports it the other way, they will tell you the payback is 99.425%. Neither is wrong and both amount to the same thing.
Those who report the payback as 99.425% will report that 99.5% as the “element of risk,” which is a term you are probably not all that familiar with. You are not used to the terminology, but it means the very same thing as what I have always called payback.
So, what is the value of the 99.425% vs. the 99.5% being reported as a payback? There are a variety of answers I could give for this.
One of the problems of the calculation I use for payback is that it is difficult to compare two games strictly on payback. If Game A has a payback of 99.4% and Game B has a payback of 98.7% does this mean you should always play Game A, or at the very least you should lose less playing Game A?
The payback doesn’t take into account the average wager. If Game B was blackjack with an average wager of 1.15 and Game A was UTH with an average wager of over 4, you would find, over time, you’d lose a lot less with Game B. The other calculation of payback takes this into account. Whichever has the higher payback will eat at your bankroll at a slower pace.
One of the issues with this other form of payback is that the definition of base wager usually refers to the table minimum, which is not always an accurate reflection of the minimum wager. In a game like UTH, the Player must make an Ante and Blind Wager. If you are sitting at a $5 table, you MUST wager at least $10 per hand. So, reporting the payback as a percent of the base $5 wager is not necessarily accurate either.
Payback is not the only important piece of information you need to know to play a game. The average wager is rather important, too. You can play at a $5 blackjack table with $100 and likely last for hours. It would be far more difficult to do this at a UTH table even though the payback is about the same. Of course, things like Fold rate and qualifying frequencies are important too, but those are for another day.
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Elliot Frome is a second generation gaming analyst and author. His math credits include Ultimate Texas Hold’em, Mississippi Stud, House Money and many other games. His website is www.gambatria.com. Contact Elliot at [email protected].